This is a guest post by AidSource member Fredrick – he’s not an aid worker himself, but rather the partner of an aid worker, and so offers an interesting perspective on our world. Fredrick has written for us before in the Work & Life section of AidSource.

Today he shares his thoughts, as a true expert, on the meaningless fractions that aid agencies like to use in their marketing and publicity materials.

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Aid Agencies and Meaningless Fractions

Since becoming a partner of an emergency aid worker I have spent quite a lot of time learning about the different organisations. This entails looking at their web sites. You learn a bit from this. One of the things is that they seem to compete over who spends the largest fraction on humanitarian activities, programs or whatever they call it. So CARE is happy to report that more than 91% all resources go directly to programs. Save The Children, for example, use 90% of all expenditures on program services. Oxfam UK reports 83% used on aid, development and campaigning. Medecins Sans Frontieres is happy to report that they use more than 80% on direct humanitarian services. Oxfam America, clearly the laggard, uses slightly less than 80% on program services.

All these NGOs report that the rest is used on administration and fund raising. The main point it seems is to demonstrate that the fraction of income spent on administration is low and this should somehow be indicative of the agencies’ efficiency.

I happen to be a bit of an expert on efficiency and the measurement of productivity, so I know what numbers are important and what numbers are not. And the fractions happily reported by all these aid agencies are totally meaningless as indicators of anything beyond their definition. What any person who knows a little bit about productivity measurements will tell you is that you have to relate the amount of outputs to inputs. The numbers reported by aid agencies relate, in a manner that is quite arbitrary, the fraction of costs of a particular input to total cost of inputs. It is like a farmer bragging about using as much as 90% of the total of cost running a farm on fertilizer and only 10% on seeds. Who cares? What you should care about is how much the farmer produces for a given cost.

This really had me stumped. So I asked a few people who work for aid agencies about why these numbers are reported and if they thought that they carried any valuable information.

The answers were quite depressing. The numbers were acknowledged to be meaningless. But it looks good for potential donors that a large fraction of their money isn’t “wasted” on administration, so the numbers are basically reproduced for marketing purposes. Whether aid agencies know that these numbers are meaningless and just report them in order to fool donors or they actually think that these numbers is a measure of efficiency I have no idea and I really don’t care. Corporations fib in their advertising all the time and are often clueless about what they are doing and there is no reason why professional aid agencies should be different. But the question is whether this practice does any harm. I believe it does.

Administrative support is an input like any other.

If aid agencies compete over making this cost as low as possible relative to total costs, it does not take a genius to see that this can result in too little support from an understaffed and underpaid head office. Further, the practice provides incentive to transfer tasks better executed centrally to individual programs.

I’ll provide what I think is an example. Many aid agencies have a group of experienced aid workers employed centrally. These aid workers are supposed to be first responders or augment local staff in programs when programs must be rapidly scaled up, i.e. in extraordinary situations (like disasters). I have been told that there has been a shift in how these employees are treated. Where they previously were given substantial breathers when they we’re not needed, they are now sent to work for programs on tasks of a much less critical nature. I have no proof of intention, but one effect is that these workers spend longer periods being paid for by programs and less time being paid for by the head office. Thereby they shave a couple of percentage decimals of what is considered administrative costs and inflate the fraction of costs that is charged to programs.

Great! Mission accomplished for some clever accountant somewhere. This does however mean that these aid workers get less time for recovery and professional development, which will surely diminish their efficiency over time or induce them to find a different job.

To be fair, it is possible that better measures are hard to compute, possibly for lack of resources. Also, it is possible that these numbers, although in themselves meaningless, send a signal about the frugality of the aid agencies. Even if this is true, it does not validate the use of measures with no informational value. It is a very general rule that if you establish silly criteria for success you get suboptimal outcomes. On top of this, it is a dubious strategy to base your marketing on the stupidity of you donors. At some point they will catch on and you end up looking silly.