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How To Improve Value for Money for Donor Funded Programs

How To Improve Value for Money for Donor Funded Programs


Value for money takes a critical view on development assistance for development programming in low- and middle-income countries with full perspectives of how resources can be optimally used to bring about desired change for the benefit of communities.  This then involves how planning, implementation, and evaluation of a program is undertaken to achieve the following;

  • Economy – doing things at a relatively lower cost. 
  • Efficiency – achieving at reasonable effort the right way. 
  • Effectiveness – meeting the objectives optimally. 

Value For Money (VFM) in development projects is therefore an objective, professional and systematic examination of systems and procedures that management has established to ensure: financial, human and physical resources are managed with due regard to economy, efficiency and effectiveness; and accountability relationships are served.

Methods and Practices to Improve VFM

Budget Management – Properly managing the sources of funding and expenditure, and allocating those resources in line with organizational and donor priorities and their cost-effectiveness. It calls for a detailed understanding of sources of funding, and lining these up with outputs, outcomes, and long-term strategy. The implementing organization should strive to ensure effective budget management happens when funding and expenditures are in line with strategic priorities and based on a clear understanding of performance expectations in accordance with the proposals that gave birth to these programs.

Financial Controls – Ensuring all rules, processes, and procedures that address risks and assure that financial resources are being recorded and used in the right way, for the right purpose, and at the right time. Financial control will be fully achieved when the implementing organization has a complete and comprehensive understanding of the requirements of internal audit, external audit, risk management, controls of the organization, and their potential costs and benefits thereby ensuring accountabilities at each level of financial delegation and known tolerance levels.

Governance and Accountability – this quite talks to roles, responsibilities, delegations, and decision-making structures through which strong financial management can be introduced, practiced, and overseen. It requires a perfect understanding of the frameworks for stewardship and making decisions, the accountabilities at each level of financial delegation and the relevant accountabilities outside the organization, the performance management framework and how effective financial performance reporting helps decision-makers and managers to monitor and manage assessment and progress.

Accessibility to Donor Finances – Securing funds has always been a major challenge for NGOs in implementing development projects. Accessing donor funds has been noted as an essential element in NGOs undertaking of projects in the communities beginning with project preparation/design, and conducting due diligence on the viability of the projects. Resource mobilization in the organization will require to be improved by basically setting up a department responsible for resource mobilization, building their competence, setting targets and continuously monitoring the progress of resources mobilization efforts to the organization. It is key that the organizations have continuous resources to sustain program financing and sustainability.

Capacity Building – Donors and Development partners should embrace knowledge sharing and knowledge management in their development agenda to support implementing partners and NGOs attain certain allowable competencies to manage programs adequately. Internally, individual implementing organizations should strive to get their staff adequately prepared to understand community work dynamics. The capacity building of staff implementing projects will result into quality delivery of results; thus, achievement of long-term goals will be made possible.

Observing Donor Funding Policies – various countries have procedures on how local organizations can access funding for development while donors have also made their conditions well known. There has been a shift from traditional conditionalities with the aim of achieving shared outcomes; a requirement whereby external donors are to realign their aid disbursements methods and donor policies to be in the same spirit with the developing countries. Local and global partners should arrive at a harmonized understanding on the implications of existing policies with the development projects and their sustainability. The main objective is to bring sustained change to communities by efficiently and effectively using available resources

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