Maximizing the Value of Philanthropic Efforts through Planned Partnerships between the U.S. Government and Private Foundations. The Millennium Challenge Corporations Indicators

05/01/2009

Using clear metrics and measurement can help to depoliticize sensitive decision processes. This was a core motivation shaping the MCC approach to foreign aid: using clear criteria for establishing countries eligibility for first receiving aid and continuing to receive it. Country eligibility for MCC assistance is based on the countrys performance in three categories: (1) ruling justly, (2) investing in people, and (3) encouraging economic freedom. Each category corresponds to the aims of the USG Foreign Assistance Framework. MCC publishes the indicators annually in the form of a score card. To pass on an indicator, a country must score above the median for countries at similar levels of economic development. Each countrys score is then considered along with other factors, such as opportunities to reduce poverty and spur economic growth in the country and the availability of resources, in deciding whether to grant assistance.

The origins of these indicators add to their credibility. They were developed by independent third-party institutions that rely on objective, publicly available data and an analytically rigorous methodology (MCC, 2009). These institutions include the World Health Organization, the World Bank Institute, Freedom House, and UNESCOgroups not entirely unaffected by politics, but independent and respected organizations whose involvement adds credence to the indicators as sound criteria for country selection. MCC has also sought indicators that can be used consistently over time and across countries, which adds to their apparent objectivity and credibility, and potentially supports the development of knowledge about successful aid practices.

Once countries are receiving MCC aid, they are evaluated against benchmarks derived from a consistent process. The criteria for evaluating aid recipients are not identical for all nations, since the interventions MCC supports are quite varied. However, the criteria are developed through consultation and with the same three overarching goals in mind (just rule, social investment, and economic growth).

The use of standard indicators to increase objectivity and diminish the role of politics in investment decisions might have applications for entities other than MCC. Respondents from MCC were enthusiastic about the use of indicators to depoliticize aid and bring accountability and transparency to the process. They felt that other donors, both in and outside of USG, could potentially apply such indicators in thinking about where to direct their efforts. Still, in a note of caution, they emphasized that their work was focused strictly on a group of relatively high-performing countries having clear opportunities for economic growth. They noted that U.S. foreign aid, as well as private philanthropy, includes multiple purposes, not all of which are entirely amenable to this approach (for example, disaster relief or national security).

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