Making ‘Common Cash Delivery’ Efficient: The Devil is in the Details
In December, the heads of several UN agencies announced the creation of a “common cash system” with the aim of improving coordination , and ensuring that affected populations receive assistance in a cost-effective manner. The announcement repeats a common truism in the cash community: that solutions which bring multiple partners together to deliver cash will necessarily result in less duplication of effort, and a greater proportion of funding ending up in the hands of the people we work with. As this effort moves forward, the UN heads should review evidence on what features of coordinated cash delivery actually drive greater value-for-money, and measure the efficiency of this new system rigorously and transparently to ensure these goals are met.
But as others have noted, while “we know that [common cash delivery] is coming, we just don’t know…what it actually looks like.” This is worrying because ample data has shown that fixating on a model which should deliver efficiency gains, without paying attention to the details of scale, structure, and mandate, can end up driving delivery costs up rather than down.
In fact, cash can be more cost-efficient than in-kind aid at meeting the needs in humanitarian situations…when cash programs are run in a particular way. A 2015 study by the IRC showed that the value of seven of our cash transfer programs to our end users cost more per dollar on average than the value of seven of our in-kind distribution programs. How could that be?!
It turns out that, in addition to the choice between “cash” vs. “in-kind” delivery, the scale of programming has a huge impact on cost-efficiency. These economies of scale are so big they can outweigh efficiency gains from switching to cash, and that’s exactly what was happening. As the IRC switched to cash programming, we were running small-scale pilots to refine our model and manage the risks of this new approach. At the same time, our in-kind programs had been running for many years and reached thousands of clients.
Simply “switching to cash”, without a focus on delivering that cash at equal scale to NFIs, wouldn’t increase our efficiency at all. (And, to paraphrase a point from Paula Gil, would cost a lot for us to attend those working groups discussing that new cash approach!). That is why we have matched our commitment to increase the use of cash with an ambitious target of 25 percent of humanitarian assistance via cash programming by 2020.
Newer evidence is showing that a focus on achieving “common”, or “coordinated” cash delivery suffers this same kind of slipperiness. If designed right, it can deliver a smoother experience for clients accessing cash, without increasing the costs of that delivery. But this is hardly a sure thing. The IRC recently worked with the Cash Consortium of Iraq, analyzing the allocation of resources from each member to activities like client identification, conducting distributions, and post-distribution monitoring.
Results showed that the consortium structure had reduced the resources needed to deliver cash in some areas (e.g. sharing community-level needs assessments), while actually increasing it in others. In some cases some duplication persisted, for instance where multiple members were still serving households in the same communities, double-incurring the costs of transport to distribution sites. Based on these lessons, the consortium improved their efficiency by providing distributions to larger groups at one time, and increasing the geographic specialization of each agency or sharing field office resources when delivering in the same site.
It was not the simple fact of operating in a consortium which guaranteed that duplication would be avoided — it was the dedication of the staff to measure efficiency rigorously, weigh efficiency with issues of quality and timeliness, and adapt their structures accordingly. In the same way, the UN’s endeavor to establish a common cash system is not guaranteed to be more cost-effective than current practice, nor is it doomed to inefficiency. But the details which are missing from the announcement are precisely those details which will make that difference.
And so, as the project moves forwards, UN heads should review available data on the efficiency of different coordination structures, and use this evidence to inform the design of the common cash system. They should measure the cost-efficiency of this new system with rigorous and comparable cost-efficiency analysis, and carefully weigh the benefits of streamlined delivery with the consequences for effective, appropriate cash delivery. Or else the intention to increase cash programming by improving coordination may come at the expense of both cost-efficiency and cost-effectiveness.
