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The MM Model – Transforming Aid


3rd Edition

 

 

“We are living in a perverse democracy where laws are passed that which permits and even prolongs the dismal existence of almost half the world’s population; ravaged by hunger, disease and environmental insecurity. A bold corrective measure is necessary”

Renu Mehta,
Fortune Forum Founder

“To overcome desperate poverty in the midst of unprecedented prosperity, Aid will need to become more intelligent as well as generous. People want to contribute more; but voluntary donations will increase dramatically only if aid becomes more visibly effective.”      

         Sir James Mirrlees,
Nobel Laureate Economist

CONTENTS

 

Chapter One: The MM Aid Model   
      Introduction
     Raising Contributions
     The REAL AID Fund (RAF)
     Private Sector Office
     Building Public Confidence
Chapter Two: The Case for MM Model International Roll out
     UK Adaption; ‘UK Aid Match’ matching charity appeals
International Support
     Praise & Endorsements
   
                                                

Chapter One: The MM Aid Model                                                  
  • Introduction

One billion people will go to sleep hungry tonight. More than 30,000 people die of malnutrition, avoidable diseases and hunger every day. Every minute of the day a mother dies in childbirth. With continued use of fossil-fuel technology, the world will become hotter, and the oceans will rise. Unless we act, there will be famines, widespread drought, an extreme climate, loss of valuable species, a grave risk of social turmoil and violent conflicts.  Poverty and poor living conditions generate ethnic and political conflict, migration and pandemic disease. Rising world population exacerbates the problems. Global action is necessary and urgent.

In 2000, the nations of the world adopted the UN Millennium Development Goals (MDGs); which include the reduction of extreme poverty, disease, child mortality, climate change and gender inequalities, and the improvement of primary education and maternal health. At the United Nations Sustainable Development Summit on 25 September 2015, world leaders adopted the 2030 Agenda for Sustainable Development, which includes a set of 17 Sustainable Development Goals (SDGs) to end poverty, fight inequality and injustice, and tackle climate change by 2030.They seek to build on the Millennium Development Goals and complete what these did not achieve. The SDG programme needs funds. The 193 UN member governments backed these new goals. To meet the need, the developed nations reaffirmed their aid target of 0.7 per cent. of their national incomes to the developing nations. Only five of them currently meet the target. Most contribute less than half the pledged level. In 2013, the shortfall was $165B, roughly 55%. That shortfall represents widespread human misery and a great risk of global insecurity. The MM Model provides a way for Nations to move faster toward meeting the funding shortfall.

The model is a way of arranging for Nations, Individuals and Corporations to contribute their ‘Fair Share’ towards these urgent needs. We propose to encourage increased private sector contributions by matching these donations from governments’ development-aid budgets, and by establishing better monitoring control, coordination and transparency of delivery systems. We further propose that additional funds are generated by mandatory donations from business profits. Improving the performance of development aid, by vigorous oversight and by the creation of special management funds, are essential parts of the model. The quality of aid is as important as its quantity, in achieving the development goals. And better performance justifies increased giving. As part of the model, we propose arrangements to engage trusts and foundations in the model.

There are numerous ways in which a country’s government can encourage its residents’ and citizens’ giving by matching and enforcing good and effective use of these funds. Following the publication of the MM Proposal in 2008, and its detailed blue print and global government dissemination in 2009, its core concepts have since been applied by the UK DFID in a scheme to match donations to projects proposed by NGOs. The expanded MM Aid Model set out here provides a broader set of adoption possibilities that countries can tailor in accordance with their administrative capabilities and funding priorities. The paper also contains additional recommendations in pursuit of aid effectiveness.

In addition to the richer OECD Nations, our recommendations have now been expanded to include middle-income nations, where donations would be mainly for development aid within the nation and offshore territories, which normally do not have provision for aid donations, so as to invite them to collectively participate in the mission to provide enough Real Aid.

  • Raising Contributions

How can donations be increased? By making aid expenditures more effective and people more aware of the good their donations achieve; and by increasing the aid that a donation accomplishes. These measures strengthen the incentive to make donations. We propose that incentives be increased by Governments using part of their overseas development assistance (ODA) budgets to match private voluntary donations one-for-one. With this matching, a donor knows that the donation would achieve twice as much as if it was not matched. The incentive to donate is thereby considerably increased. Matching and giving could be optimized for most people by allowing them to make voluntary donations along with their tax payments.

These contributions, along with the matching public funds, should be channelled through a special fund, to be set up by the government or the government aid agency. We call this fund the Real Aid Fund (RAF). Its spending remit would be determined in accordance with the country’s aid agenda. Every donation made to the RAF by a private individual, should be matched by an equal contribution from the government’s aid budget earmarked for matching; a part that, in the absence of the scheme, would have gone to governments and government aid agencies directly and unconditionally. Donations to the RAF can be made along with income-tax payments, as direct payments, or as legacies. Alternatively, donations could be matched via NGO appeals. Donations may come from people who are not domiciled or resident, and from accumulated wealth, including funds held offshore.

The optimal method would be to invite Tax payers to donate at least 0.7 per cent. of their taxable income. They could choose a different rate or opt out entirely. That amount would be collected with their tax payments, unless they chose to opt out, or chose a different level of donation. This proportion echoes the commitment to increase government development assistance to 0.7 per cent. of GDP. Alternatively, donations in response to appeals could be matched, as in the Aid Match system established by the UK government aid agency DFID. Territories lacking an income tax or an overseas aid budget, such as many of those known as offshore territories could organize a general appeal to their citizens through an annual invitation letter.

Higher-income tax-payers would be invited to donate at least 1.0 per cent. of their taxable income. In order to generate more revenue, we also propose that businesses be required to pay a minimum of 1.0 per cent. of their net profits (when positive) to the RAF, and allowed to contribute more. To encourage additional contributions, government matching should be applied to business contributions beyond the required 1% levy as well as to personal donations. These contributions would not impose a serious or unusual burden. Businesses in some countries are already required to contribute a proportion of their profits or revenues to good causes. Many higher-income earners and businesses would of course donate more than 1.0 per cent.

Other ways of increasing the quantity of Real Aid

As of 1st April 2014, the Indian government mandated a minimum spend of at least 2% of their average net profits on development initiatives within India. It is suggested that the other BRICs Nations and emerging economies should follow India’s lead by imposing a similar requirement on their nation’s companies thereby sharing their country’s growth with the investment in their poorest populations.

Aid is often misdirected due to tying to political and commercial interests. For instance, if ODA is tied to the purchase of goods from the provider’s country, it can create a bias towards projects with a large import content in areas of particular export interest to the originator and towards commercially advantageous developing countries; this, in turn, tarnishes the credibility of providers of development co-operation.

If implemented by all OECD nations the model could, in combination with untying aid and trade from the donor’s national priorities, make available more than US$100 billion per year. To achieve such a high level of additional donations, savings and contributions, all OECD member states and offshore regions would have to implement various aspects of the MM Model such as clear display of on the invitation form and, on a website, reports of aid results, from additional monitoring, and the availability of specialist donor support through the creations of a Private Sector Office. An exceptional matching incentive alone will not work – recipient NGOs, UN Agencies andGovernment ministries have to accept an independent evaluation process, such as the one we now sketch.  

  • The REAL AID Fund (RAF)

 The RAF would have three tasks of the first importance, to select the best programmes and projects, to assess their performance, and to inform public perceptions. 

The Fund will receive donations and matching funds, as described, and will have to decide where that aid will go. It is for the Country RAF to decide, but we have some suggestions. It is generally thought that NGOs are effective at applying money to poverty alleviation projects. Many of them have a good record of creating, implementing and supporting the kinds of programmes that the Fund could support. The scale of these programmes is often too small. Scaling up good projects, and providing independent monitoring, evaluation and reporting of these programmes can only enhance them.

The Real Aid Fund is essentially designed to aggregate thematic concerns within the scope of international development. The RAF will allocate its resources to development programmes, proposed to it by the organisations and agencies that will implement them. RAF has to build public confidence in the results of these programmes, both to attract donations, and to serve the Sustainable Development Goals.

Sizable contributions from individuals, trusts/foundations and businesses could be directed in ways selected by the donor, with the guidance of the Private Sector office (see p. 7).

RAF needs to be attractively presented on the tax return or invitation form. An associated website should display the brand logos of the delivery organizations to make the destination of the funds immediately clear. Effective presentation would engage and encourage the donor.

The success of pooled funding is clear. Public private mobilization around the GAVI, The Vaccine Alliance which is forged around a single issue of global health has proven to be attractive to private funders and has seen impressive tangible results. Gavi which has an annual income in excess of U$4billion, its Private funding commitments accounted for 21% of Gavi’s funding between 2000 and 2020, and continues to expand with the launch of public-private partnership initiatives, such as the Gavi Matching Fund (see UK Adaption at page 10).

It is worth noting that grouping NGOs in appeals for aid has also proved successful in the UK, where the Disasters Emergency Committee (DEC) initiative brings 13 leading UK based international aid charities together in times of crisis. These member brand logos are used in DEC’s humanitarian appeals which adds considerable strength to their fundraising. These appeals have raised more than £1.1 billion since the DEC’s inception.

Government aid agencies already provide some funding to NGOs. In 2013, USD 19.6 billion of official development assistance (ODA) was allocated to and through CSOs by OECD DAC members compared to USD 18.2 billion in 2009. While the share of bilateral aid allocated to and through NGOs/CSOs differs widely among DAC members, the equivalent of 11.6% of DAC Members’ total gross ODA was channelled to and through CSOs in 2013. That proportion should be increased. We propose that NGOs’ total income should be at least doubled and this could be achieved by putting aside as little as 10% of total aid budgets for matching NGOs directly, as is likely that good enough projects are available to fund. That additional income would much more than compensate for any possible diversion of private donations direct to NGOs as a result of the MM Model.

We would emphasize the importance of voluntary donations, People generally choose to give their money to NGOs because NGOs are able to appeal to their motives. As this is a voluntary donations scheme it therefore makes sense that much of the funds should be delivered through NGOs alongside the Government’s existing channels to address the necessary challenges associated with development.  The RAF’s choices should reflects the donor country’s aid priorities and earmark funding to trustworthy NGOs with a good track record and a clear capacity to deliver  the promised aid. This portfolio would of course include relevant and effective UN agencies.  CIVICUS, an international alliance dedicated to strengthening citizen action and civil society around the world, would be the ideal partner to advance the NGOs’ stake in development.

A major part of development is achieved by strengthening government systems to ensure that poor people have access to essential services. The State could best provide improved infrastructure: roads, hospitals and clinics, agricultural support services, schools and colleges, water supply and sanitation. It is for the donor Government to determine its bilateral support of transparent recipient Nations. Much of the funding by the RAF should therefore provide for bilateral support of recipient governments in developing economies. However, there are valid concerns with the corruption associated with Bi-lateral aid, this can be minimized by channeling aid directly through the government ministries themselves.

RAF would reflect issues that make up the 17 SDGs such as health, education, gender equality, infrastructure etc and which could also reflect broad geographical and wider delivery interventions. Each implementing government can set out guidelines on how its expenditure, implementation and monitoring should be handled.

With regard to the relationship of RAF with its existing national aid agency expenditures, a notable  characteristic of RAF would be that the entire selection of Funds and its projects that are chosen for funding are those that represent the most visible impact, providing clear and compelling reporting to donors. Such projects are often referred to as ‘tangible’ or ‘identifiable’ and relate to most interventions where there are measurable outcomes; providing a set number of immunizations  or utilities that provide a certain amount of clean water are two clear examples for the sake of illustration here. Other important aspects of development such as, security and the rule of law, protection of property rights, and a social safety net which are longer term or not so predictable can continue to be funded by the National Aid agency, the UK example being DFID. In effect, the existing national aid portfolio would be split in this way to attract substantial and continuous private donations to RAF.

The RAF would have the task of measuring what the spending achieves. Planning and evaluating the programmes necessarily requires many consultants and experts, but it is important that most of the funds are spent on the programmes rather than the advisors. At the same time, we have to recognize that reducing or eliminating corruption in the aid process has a cost attached. Contributing donors can be confident that their giving will be channelled successfully, because the whole distribution process through to assessment of the effectiveness of proposed recipients, and subsequent evaluation of results obtained.

  • Private Sector Office

RAF would be set up as a legal entity owned by the Government and this new government aid collection programme would act as the gateway to the private sector. We propose the creation of a Private Sector Office to cultivate private sector relationships and to communicate efficiency of the RAF portfolio. This office would provide specialist support to its major donors with the aim of optimizing their giving. This support will include; reinforcing the donor’s connection to the causes through the dissemination of reports, events and thanking and recognising major donors, and engaging their funding expertise. Small and Medium Enterprises (SMEs) can account for as much as half of GDP in high income countries such as the UK. SMEs has good reason to engage with funds, notably it is convenient because the grant making process is undertaken by RAF.  A company’s CSR efforts would ordinarily consist of establishing a dedicated department to assess development needs, to undertake and allocate programmes directly or through NGOs and to conduct regular impact evaluation studies. RAF should therefore appeal to this valuable contributing sector.

Private philanthropy fosters innovation because philanthropists often take risks, but if things work with great success on a small scale, proven philanthropic results should be scaled up by governments to speed up progress and coordination. To attract foundations and trusts to contribute to the RAF, and also to enhance the impact of their resources, the RAF should invite them to submit their best funding practices for funding consideration. RAF would not be able to relate its expenditures exactly to individual intentions, but it should be guided by performance outcomes. The recommendations would not take place on the tax return rather through the ‘Private Sector Office’ who would get in touch to process the donation, but more importantly this will instigate the donor cultivation process. We further suggest that an innovation department be set up to consider a variety of these recommendations as well as other emerging innovative models.

Governments may decide to match innovative large scale Social Business projects whereby businesses may opt to further utilize their unique assets, expertise and networks in formatting their uniquely designed Social Business, a term commonly used to describe business models that are characterized by their goal to maximize the social impact instead of the return on investments. Often production facilities are being set up in poor countries to produce inexpensive, affordable products that are highly beneficial for the people in that country (e.g. shoes, healthy food enriched with vitamins etc.). The profits are either being reinvested in the production facility or given back to those who have created it – the employees e.g. through shares or direct payments. By investing in scalable models that can produce sustainable business solutions to boost local employment and incomes is becoming one such development trend to achieve this goal.  Germany has an excellent example of a 10 year, eight figure private public partnership with the Cotton Made in Africa initiative pioneered by Dr. Michael Otto. Through its training programs, Cotton made in Africa improves the living conditions of smallholder farmers and allows continuous knowledge transfer to smallholder farmers to improve their living conditions and to promote environmentally friendly cotton production.

A common aspiration that social investors share is for local communities to work ‘their own way out’ of the reliance on the international donor community. Social Business as popularized by Prof. Mohammad Yunus enables local entrepreneurs to solve social problems in a financially self-sustainable way. Yunus Social Business would be a good advisory body for knowledge transfer.

A decent provision for grassroots organisations should be made so as to fund innovative sustainable practices that have the potential of being scaled up. Smaller organisations tend to have the vision, concept, and determination to start new ground breaking initiatives, but often lack the resources to finance them. We therefore propose that a selection of Randomized Controlled Trials (RTCs) projects are on offer to major donors. RTCs conduct randomized evaluations around the world. The Abdul Latif Jameel Poverty Action Lab (J-PAL) designs, evaluates, and improves programs and policies aimed at reducing poverty and would be the ideal partner to guide policy with scientific evidence.

It is generally thought that Agencies and NGOs are good at applying money to addressing the root causes of poverty. Many of them have a good record of creating, implementing and supporting the kinds of programmes that the funds will support. The scale of these programmes is often too small. Scaling up good projects, and providing independent monitoring, evaluation and reporting of these programmes can only enhance them.

  • Building Public Confidence

 We suggest that a RAF commission of independent-audited projects and initiatives that rate its aid expenditures by their impact and results. That would provide a competitive environment amongst grantees. It would reward good performance, improve or eliminate inefficient programmes, and facilitate better coordination of aid efforts. The result would be a higher yielding portfolio of development programmes. An independent panel of experts who represent the development, charity, NGO and aid agency sectors should oversee the process.

The programmes have to be well chosen, serving development priorities, not defence or donor-trade priorities. RAF will be responsible for evaluating their performance, and reporting to donors. It also has a responsibility to counter, through programme selection and direct monitoring, the inefficient use of development assistance through corruption and wasteful administration. Waste and corruption are among the reasons why donations to these causes are so much less than their importance requires.

Complete independent monitoring of aid programmes is not always practicable. RAF should obtain full reports from their delivery partners of their activity and the use and effectiveness of their funds, and audit them critically. RAF should also undertake some field auditing of randomly selected programmes. It is not sufficient to rely on reporting by the NGOs and governments of recipient countries. Auditing has to be undertaken the way school and bank inspections are done unannounced. Honest reporting is the right basis for positive publicity. In this way, Governments could make a valuable contribution to the great task, increasingly a focus of national and international aid agencies, of ensuring Aid effectiveness, and help to show what can be achieved in a believable way. Evaluating the programmes necessarily requires consultants and experts, but it is important that most of the funds are spent on the programmes rather than the advisors.

Donors are to be given good information about development programmes they have financed through the RAF, information that should be publicly and transparently available on line.  Donors contributing through the RAF can be confident that their giving will be channeled successfully, because of the RAF’s independent audit of the whole distribution process, from the criteria driving allocation of funds through to assessment of the effectiveness of proposed recipients, and subsequent evaluation of results obtained.

RAF would publicize the Funds’ achievements to potential donors, and show that the donors’ performance expectations are met by reports that would also be available on-line. By doubling donations, channelling the money more effectively, and by publicly demonstrating successful outcomes we create a multiplier effect to attract donations from the private sector.

The MM Model would help give the world’s poor access to food, water, shelter, education, health-care, a cleaner environment, making available a more dignified existence, and the power to work themselves out of poverty once and for all. Let’s honour their dignity by granting opportunities to fulfill their human potential. Let’s help these people win their struggle. Chapter Two: The Case for MM Model International Roll out

  • UK Adaption; ‘UK Aid Match’, matching charity appeals

 The UK Government has demonstrated that a Model along these lines can generate substantial contributions to the UN SDGs. We are encouraged by their decisive leadership.

The co-authors of the MM Aid Model Sir James Mirrlees and Renu Mehta, had explored the ideas,  and recommendations of the MM Model and held consultations with UK Government officials at the Department for International Development (DFID) and the UK Treasury from 2008 up to briefing of the incoming International Development Secretary Andrew Mitchell in late 2009. DFID independently adapted, developed and established MM’s central concepts and guidelines with its formation of UK Aid Match scheme and various other programmes. UK Aid Match was set up by DFID to boost public support for charities focused on poverty reduction in developing countries. It doubles public donations appeals run by British international development charities.

The MM Aid Model core ideas that have been taken up by DFID include; a) For Government to utilise its aid budget to match and therefore galvanise private sector donations from individuals, businesses and foundations b) It had set up a ‘Private Sector’ office to optimise and service sizable donations in line with defined major initiatives. Our other recommendations taken up include the setting up in 2010 of an Independent Audit of Aid.

UK Aid Match resulted from DFID tailoring our submissions to suit its infrastructure, administrative and other objectives, thereby involving charities and NGOs to match donations and to advertise DFID’s role in the matching endeavour.

The UK Aid Match commitment totals £265m over a 6 year period from 2011-2016. The UK Aid Match commenced with an initial £37.5M pilot matching fund in 2011 and, due to the public popularity of this matching scheme, the UK has since increased its matching budget several times (derived from ODA). This initial pilot fund benefited NGOs include Retrak, Action Against Hunger, Islamic Relief, READ Foundation, WaterAid, Riders for Health, World Vision West Africa Appeal, UNICEF, Christian Aid, Trócaire, CAFOD, Sport Relief 2012, Sightsavers and Save the Children. Total UK Aid Match funding supported over 66 appeals.

Within this total £265m figure we include the five rounds of funding subsequent to the initial pilot and interim funding phases and DFID’s Private Sector Department £50m commitment. This dedicated office was set up to cultivate public-private partnerships, namely by establishing a £50m GAVI matching fund alongside $50 m from Bill & Melinda Gates Foundation, used to match contributions to GAVI Vaccine Alliance from corporations, foundations and other organisations, as well as from their customers, members, employees and business partners.

Whilst it is laudable that UK has taken the lead in adopting these core ideas, this £265m total matching commitment over a six year period is a striking contrast to the UK’s overall ODA budget of £12.1 billion in a single comparative year (2015). Evidently only a small fraction, on yearly average, only 0.46% of its ODA, is actually being utilised for matching private sector funds. The UK could obviously do much to scale up the funds made available to UK Aid Match.

Meanwhile, DFID enjoys substantial public recognition for UK Aid Match as orchestrated by its eligibility criteria which stipulates, in their own words, “organisations must, through their own and their partner channels, ensure that the public are aware that their donations will be matched pound for pound by the UK government. All Appeal publicity must carry UK Aid Match messaging and the UK Aid Match logo.” Their criteria goes so far as setting out a minimum publicity threshold of 400,000 opportunities to view.  In the UK Aid Match endeavour DFID’s communication partners do much of its well-deserved publicity.

The influence of these ideas embodied in the UK Aid Match has spawned more than £265m of funding for trusted charities and organization impacting well over 100 million lives across the globe. If 5% of the UK Foreign Aid budget is used for UK Aid Match, this could positively impact over a billion people. If the major G8 countries used 5% of their aid budget, this could bring in enough money to touch the lives of the majority all the world’s poorest people.                  

                                                                                                     
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 The MM Model –“Giving a chance to everyone”  

MM FAQ’s


Everyone. The scheme includes individuals, businesses (small & large), trusts and foundations. Donations can be made along with income tax payments whereby individuals can choose to opt out from a default minimum level of 0.7%. Higher-income tax payers would be invited to donate 1% or more of their taxable income and businesses would be required to pay a minimum of 1% of their net profits (when positive), but have the option to pay more. Other methods of payments are through direct payments or as legacies. Donations may also come from people who are not domiciled or resident, and from accumulated wealth, including funds held offshore. All private donations will be matched from governments’ development aid budgets and businesses donations will be matched if over the 1% minimum requirement.
The funding will be channelled through the Real Aid Fund (RAF), which will be set up by a government or the governments’ aid agency. The RAF will then allocate resources to international development causes proposed by credible and trusted organisations, which includes; foundations, trusts, NGOs, international aid agencies, private humanitarian organisations, social businesses and grassroots organisations.
The MM approach is a hand up approach. We believe in investing in the potential of all our fellow humans. Governments’ RAFs’ will invest in scalable and economically empowering programmes to help boost local employment and incomes allowing local communities to work ‘their own way out’ of the reliance on international donors. By tackling the root causes of the issues and addressing them at every level of society; individual, community, infrastructure services and governing policy we can work towards giving people a hand up from poverty.
By improving transparency of aid projects, matching donations to achieve twice the original donation and channelling them through a trusted body we create a multiplier effect. The increase in development aid income (through matching) combined with better evaluation and transparency improves results in project impact, boosting confidence with donors who can see their donations working effectively. This makes it more desirable to donate again, which is in turn matched, and leads to further increases in development aid income. This positive cycle continues, transforming the aid system.
The RAF would be set up as an entity owned by the main government aid agency and will perform as an organ of the government aid agency, primarily acting as the gateway to the private sector. RAF will become a complementary subsidiary of the main government aid agency to improve and communicate its reporting and service new large donations by providing specialist advice and support.
The independent panel would be made up of experts who represent the development, charity, NGO and aid agency sectors. There would also be a chair of the panel which should be an elected post selected by a government appointed select committee.
This donation scheme is intended to be separate from the particular tax arrangements currently in force for charitable contributions. Donations made within the scheme would not qualify for any additional tax relief nor imply tax avoidance. Off-shore funds that are currently not being deployed for charitable purposes could contribute greatly to global development. Tax dodging would not occur as the offshore entities would be abiding by the international tax regulations.
Private philanthropy fosters innovation because philanthropists often take risks, but if things work with great success on a small scale, proven philanthropic results should be scaled up by governments to speed up progress and coordination. To attract foundations and trusts to contribute to the RAF, the RAF should invite them to submit their best funding practices and projects for funding consideration. The recommendations would not take place on the tax return, rather through the ‘Private Sector Office’ who would get in touch to process the donation and instigate the donor cultivation process. We further suggest that an innovation department by set up to consider a variety of these recommendations as well as other emerging innovative models.
The Private Sector Office would act as a gateway to the private sector. Its purpose would be to cultivate private sector relationships and maintain donor relationships in order to optimize their giving levels. This offices main functions would be; reinforcing the donors’ connection to the causes through the dissemination of reports, events, thanking and recognizing major donors and engaging in their funding expertise. It would also be the conduit to pass on funding successes for RAF consideration. By publishing these outputs in the public domain, the RAF will catalyze stronger consensus within philanthropy and government on the most effective options for meeting the challenges of the SDGs.
All funds will have to abide by the tax regulations of the country the RAF is set up in.
Although initially NGOs/ charities may notice a small diversion of funds directly donated to them, this would hopefully be a short experience. We propose that NGOs total income should be at least doubled with as little as 10% of total OECD DAC aid budgets made available for matching NGOs directly to projects intended to help fulfil the SDGs. This would not only counteract any initial loss in funds, it should lead to a substantial increase in the amount of income NGOs currently have.
The government would estimate each year in advance how much of its aid budget it should set aside to be used for matching contributions, this would be capped at somewhat more than the expected level of total matching. Business contributions will be made in the form of a levy, as such they will not require matching funds and are likely to make up a good percentage of additional income, this reduces the amount of matching required.
In order to have a predictable budget, governments should cap total matching contributions that could be made by government at somewhat more than the expected level of total matching. However, funding through the RAF cannot be precisely forecast. In the UK for example, DFID should be able to borrow from the Treasury to deal with any shortfall in the finance of planned expenditures, and would carry forward donations and matching above predicted levels to future years.
One for one matching has a clear and simple effect; it doubles the donation. The general argument that a multiplier should increase donations for development suggests that a bigger multiplier will achieve even more. There is evidence that matching beyond 100% does not elicit larger donations. Additionally if a one for one level of matching was implemented it would make a really positive difference in terms of uptake and for the impact of the scheme.
Donations to global development have a special character. The UN SDGs were developed to replace the UN Millennium Development Goals. These 17 global goals are the world’s most pressing problems covering a range of issues; poverty, health, hunger, education, climate change, gender equality, water, sanitation, energy, environment and social justice. The RAF aims to create a multiplier effect to people’s donations for development causes and in the development context, matching should have a greater effect than in other areas. Although there are many charitable issues that deserve additional funding the UN SDGs are the world’s principal development targets which aim to transform our world and lift billions out of poverty, creating a sustainable development plan for all human life, enabling the future we want to live in.
The MM Model is a roadmap for Governments to adopt and adapt any or all of the Model’s tenets on their own accord. For example, Our pivotal influence on the genesis of UK Aid Match has spawned more than £200m of funding for trusted charities which is on its way to impacting nearly 100 million lives across the globe. The MM Aid Model core ideas that have been taken up by DFID include; a) For Government to utilise its aid budget to match and therefore galvanise private sector overseas donations (from individuals, corporates and foundations b) To set up a ‘Private Sector’ office to optimise (and service) sizable donations, also for defined initiatives. Our other recommendations taken up include the setting up an Independent Audit of Aid and a Global Innovation Fund. These concepts have been developed and adapted by the UK Department for International Development (DFID) whereby the UK Government matches charity appeals through their formation of UK Aid Match. The long term goal is, with our collective efforts, to have the majority of the richer countries sign on and be rolled out globally to harness the Model’s full global potential of unleashing $100bn for development.
The donations form should also offer the opportunity to donate shares and other assets to the RAF; these also attract matching at their fairly calculated value, and, as now, not to be subject to capital gains tax.
No. The opportunity to contribute donations to the fund certainly does not make evasion safer or easier. It may ease the donor’s conscience, but it is hard to believe it would affect his decisions to report income to the tax authorities.
Nothing in our proposals affects the ability of the collecting authorities to scrutinise off shore funds.
For the sake of minimising administration costs, we propose that there should be a minimum level of donation for individuals, of £10 a month or roughly US $15
Governments largely respond to strong public opinion - If you take action by joining the MM model campaign, signing our petition and campaigning locally, you can help influence all of the richer OECD Nations to take on the MM Aid Model, this could bring in around $100bn that can be invested in those who need it most, so they can take charge of their own lives.
Although we do donate a portion of our taxes to development issues through government bodies it is not nearly enough. By donating to the RAF we are directly increasing the money available for NGOs who work on the ground with a proven track record of providing the most effective and accountable aid. Children and adults are without; education, food, water, sanitation, security, resulting in death and suffering from entirely preventable causes and as such we have an obligation to help our fellow humans. However, if individuals feel they do not wish to donate to the RAF there is an opt out feature that will enable them to stop their donations.
An estimated 705 million people, or roughly 10 percent of the world’s population, lived in extreme poverty in 2015. This is still a massive portion of the global population. Whilst we recognize that there is relative poverty in developed parts of the world as well, poverty in the developing countries is generally far more substantial than anything seen in most wealthy societies. We must help our human counterparts around the world, it is our duty as developed nations to lend a helping hand to those who need it, to help lift the millions of people suffering for a daily existence a hand up out of poverty for good.
Unfortunately, it is possible that corrupt offshore money could be used in the RAF. But at least these ill-gotten gains would be used for a worthwhile cause.
Spending money on aid is proven to directly benefit the giver of the aid, as we improve the living standards of people around the world they are more able to contribute to the global economy, this in turn provides a direct benefit to the aid giver. An example of this can be seen with the UK, in 2014 a report carried out by the Overseas Development Institute (ODI), showed that the UK spent £3.7 billion ($5.9 billion) in direct bilateral aid, increasing UK exports by almost £810 million ($1.3bn). Or put another way, £1 of direct bilateral aid leads to a £0.22 increase in UK exports. This in turn created up to 12,000 jobs in the UK.
There are many reasons that tying aid is a bad idea. It increases the cost of many goods and services by between 15-30%, increases administration costs, subsidizes jobs in the donor countries and creates fierce competition for securing donor contracts. By exclusively allowing aid contracts to be won by donor contractors it prevents firms and consultants in developing countries from competing, this prevents them from having the opportunity to work themselves out of poverty. Using local contractors would enable local businesses to benefit; the income raised would be put back into the local economy, which would in turn create more jobs and so on. Although it may seem beneficial for the donor country to tie their aid it makes aid inefficient, wastes large sums of money and in the long term makes developing countries dependent on them. By untying aid projects the contracts would be carried out by the most suitable party, limit wastage and providing the best possible service, benefiting the people who need it most, instead of a corporate few.
There is an additional level of monitoring that will be undertaken by the RAF as it will be evaluating projects performance and reporting this to donors. Whilst we recognize that this will be an additional cost it is of utmost importance as direct monitoring and reporting will limit the scope for corruption and provide donor confidence in the aid projects. The administration of the RAF will be paid for out of its income, but only a small proportion would be needed. There should also be a proportionate reduction in monies spent on monitoring and evaluation by those implementing the work compensating for the initial outlay on RAF scrutiny.
Social businesses would be under the same process of evaluation as NGO projects, aid agencies, foundations and trusts. As such the social business would only receive funding from the RAF based on the impact the project was making relative to the costs of running it. This would remove any project that is carrying out wasteful practices such as overly high salaries for social business CEOs or management and limit the scope for corruption as corrupt projects would be inefficient and recognizable as such, therefore their funding would be removed until these wasteful practices have been stopped.
Charities and NGOs would be invited to bid for funding on the basis of performance whether by long term or short term indicators. Performance would be defined by a “results-based” criterion whereby proven and exceptional results would attract increased levels support. We further propose that the fund would identify the latest innovations in development practices. One way would be to distribute some funds to smaller pioneering organizations, so as to scale up excellent local initiatives.

Glossary of Terms

A target of official aid flows of 0.75% of gross national product was proposed to be reached by 1972, based on work by Nobel-Prize winning Jan Tinbergen, who estimated the inflows required for developing economies to achieve desirable growth rates. Only a handful of countries have ever actually met 0.7% – Sweden, Norway, Denmark, Germany, the Netherlands, Luxembourg, United Arab Emirates, and the UK – the only major economy to hit the target.
An Aid organisation distributes aid by providing; money, food, medicine or other supplies in order to help people or countries that are suffering. Aid agencies are typically government bodies (e.g. AusAID, USAID, DFID, EuropeAid, ECHO) or between governments such as multilateral donors and UN agencies (e.g. UNDP). Included also are private voluntary organisations or non-governmental organisations (NGOs) e.g. ActionAid, Oxfam, WaterAid etc.)
The African Development Bank Group is a multilateral development finance institution, founded in 1964. It’s mission is to fight poverty and improve living conditions on the continent through promoting the investment of public and private capital in projects and programs that are likely to contribute to the economic and social development of the region.
An anonymous shell company is a corporate entity that has disguised its ownership in order to operate without scrutiny from law enforcement or the public. They do little or no actual business. Instead, they often exist and function entirely on paper, opening bank accounts and owning assets without ever revealing the name of the true person benefiting from its conduct, whether licit or illicit.
Bilateral support is the assistance given by a government directly to the government of another country.
BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa. Originally the first four were grouped as "BRIC" (or "the BRICs"), before the induction of South Africa in 2010. The BRICS members are all leading developing or newly industrialized countries, but they are distinguished by their large, sometimes fast-growing economies and significant influence on regional affairs; all five are G-20 members. As of 2016, the five BRICS countries represent over 3.1 billion people, or about 41% of the world population; all five members are in the top 25 of the world by population, and four are in the top 10.
Budgetary support is a particular way of giving international development aid. Money is given directly to a recipient country government, usually from a donor government. In practice, budget support varies dramatically and is done in a large range of different ways. One of the broadest distinctions is between general budget support and sector budget support. General budget support is un-earmarked contributions to the government budget including funding to support the implementation of macroeconomic reforms (structural adjustment programmes, poverty reduction strategies). Sector budget support, like general budget support, is an un-earmarked financial contribution to a recipient government’s budget. However, in sector budget support, the dialogue between donors and partner governments focuses on sector-specific concerns, rather than on overall policy and budget priorities.
The Civil Rights Act of 1964 is a landmark civil rights and US labour law in the United States that outlaws discrimination based on race, colour, religion, sex, or national origin. It prohibited unequal application of voter registration requirements, racial segregation in schools, employment, and public accommodations.
Concessional loans that are extended on terms substantially more generous than market loans. The concessionality is achieved either through interest rates below those available on the market or by grace periods, or a combination of these. Concessional loans typically have long grace periods.
Corporate Social Responsibility (CSR) refers to "the ethical principle that an organization should be responsible for how its behaviour might affect society and the environment". Since 1960, "corporate social responsibility" has remained a term used indiscriminately by many to cover legal and moral responsibility, with companies focusing on the impacts of their operations not only on profits but the society and environment.
A developing country, is a nation or a sovereign state with a less developed industrial base and a low Human Development Index (HDI) relative to other countries.
The European Commission is the executive of the European Union which promotes the general interest of the EU by proposing and enforcing legislation as well as by implementing policies and the EU budget.
Fair share is a way to ensure that all individuals, corporations and nations contribute an equitable or reasonable portion or share of their income to development aid causes.
Freedom of association is the right of coming together with other individuals to collectively express, promote, pursue and/or defend common interests and encompasses both an individual's right to join or leave groups voluntarily. Freedom of association is manifested through the right to join a trade union, to engage in free speech or to participate in debating societies, political parties, or any other club or association, including religious denominations and organizations, fraternities, and sport clubs. It is closely linked with freedom of assembly, particularly under the U.S. Bill of Rights. Freedom of assembly is typically associated with political contexts.
Freedom Riders were groups of white and African American civil rights activists who participated in Freedom Rides, bus trips through the American South in 1961 to protest segregated bus terminals. Freedom Riders tried to use “whites-only” restrooms and lunch counters at bus stations in Alabama, South Carolina and other Southern states. The groups were confronted by arresting police officers—as well as horrific violence from white protestors—along their routes, but also drew international attention to their cause.
The G20 (or G-20 or Group of Twenty) is an international forum for the governments and central bank governors from Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russian Federation, Saudi Arabia, South Africa, South Korea, Turkey, United Kingdom, United States, and the European Union. Founded in 1999, the G20 brings together the world's 20 leading industrialised and emerging economies and aims to discuss policy pertaining to the promotion of international financial stability. The group accounts for 85 per cent of world GDP and two-thirds of its population.
Is the process by which decisions are made and implemented (or not implemented). Within government, governance is the process by which public institutions conduct public affairs and manage public resources.
Illicit Financial Flows are illegal movements of money or capital from one country to another. An illicit flow is when the funds are illegally earned, transferred, and/or utilized.
The International Monetary Fund (IMF) is an international organisation headquartered in Washington, D.C., of 189 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
Infrastructure is the basic physical and organisational structures and facilities (e.g. buildings, roads, power supplies, communication systems, schools, water supply etc) needed for the operation of a society, enterprise, city or area. These are required for an economy to function.
Lobbying is the act of attempting to influence the actions, policies, or decisions of government officials in their daily life, most often legislators or members of regulatory agencies.
Microcredit is the extension of very small loans (microloans) to impoverished borrowers who typically lack collateral, steady employment, or a verifiable credit history. It is designed to support entrepreneurship and alleviate poverty. Many recipients are illiterate, and therefore unable to complete paperwork required to get conventional loans.
The United Nations Millennium Campaign (UNMC) was a UN campaign unit that was set up in response to the Millennium Declaration signed by 189 member states. Established in October, 2002 the UNMC aimed to increase support to achieve the Millennium Development Goals and seek a coalition of partners for action. The Millennium Campaign targeted intergovernmental, government, civil society organizations and media at both global and regional levels.
The Millennium Challenge Corporation is a bilateral United States foreign aid agency established by the U.S. Congress in 2004, applying an updated philosophy toward foreign aid based on the principle that aid is most effective when it reinforces good governance, economic freedom and investments in people.
The Millennium Development Goals (MDGs) were the eight international development goals for the year 2015 that had been established following the Millennium Summit of the United Nations in 2000, following the adoption of the United Nations Millennium Declaration. All 191 United Nations member states at that time, and at least 22 international organizations, committed to help achieve the following Millennium Development Goals by 2015. 1) To eradicate extreme poverty and hunger 2) To achieve universal primary education 3) To promote gender equality and empower women 4) To reduce child mortality 5) To improve maternal health 6) To combat HIV/AIDS, malaria, and other diseases 7) To ensure environmental sustainability 8) To develop a global partnership for development
Multilateral institutions are international organizations, such as the United Nations (UN) and the World Trade Organization are multilateral in nature; typically having members or contributors from several groups, especially several different countries to create a larger organisation. In relations to multilateral aid, this refers to certain bodies or organisations such as UN agencies who receive funds from multiple donor countries and establish a collective fund. The United Nations, the World Bank and other 200 multilateral agencies and global funds receive about one third of total ODA.
Multi stakeholder partnerships are where parties agree to cooperate to advance their mutual interests. The stakeholders in a partnership may be individuals, businesses, interest-based organizations, schools, governments or combinations. Organizations may partner to increase the likelihood of each achieving their mission and to amplify their reach, sharing their collective strengths to achieve a gold more effectively.
Neo-colonialism or neo-imperialism is the practice of particular developed countries using capitalism, globalization and cultural imperialism to influence a developing country in lieu of direct military control (imperialism) or indirect political control (hegemony). Typically operating through indirect forms of control and, in particular, by means of the economic, financial, and trade policies of transnational corporations and global and multilateral institutions.
Non-governmental organizations (NGO), are usually non-profit and organizations independent of governments that are active in humanitarian, educational, healthcare, public policy, social, human rights, environmental, and other areas to effect changes according to their objectives. Sometimes the term is used as a synonym of "civil society organization" to refer to any association founded by citizens.
Overseas Development Assistance (ODA) is the flow of official financing administered with the promotion of the economic development and welfare of developing countries as the main objective. Some of this assistance comprise of loans that are concessional with a grant element of at least 25 percent (using a fixed 10 percent rate of discount). ODA flows are made up of contributions by donor government agencies, at all levels, to developing countries (known as bilateral ODA) and to multilateral institutions as well as NGO’s.
The Organisation for Economic Co-operation and Development is an intergovernmental economic organisation with 35 member countries, founded in 1960 to stimulate economic progress and world trade. The member countries of the OECD are; Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, United States.
Philanthropy is the desire to promote the welfare of others, expressed especially by the generous donation of money and services to good causes, often by an individual who is known as a philanthropist.
Plutocracy is a society ruled or controlled by the small minority of the wealthiest citizens.
The Private Sector is the part of the economy, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the State. (Areas of the economy controlled by the state are referred to as the Public Sector).
Randomised Controlled Trials (RCTs) is a type of scientific experiment which aims to reduce bias when testing a new treatment. The people participating in the trial are randomly allocated to either the group receiving the intervention under investigation or the control group not receiving it. Different comparison groups allow the researchers to determine any effects of the intervention, while other variables are kept constant.
Recession is a period of temporary economic decline (business cycle contraction) during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
Social business was defined by Nobel Peace Prize Laureate Professor Muhammad Yunus as a business created and designed to address a social problem that is a non-loss, non-dividend company, i.e. It is financially self-sustainable and the profits realized by the business are reinvested in the business itself (or used to start other social businesses), with the aim of increasing social impact, for example improving the products or services or in other ways subsidizing the social mission. Unlike a for-profit business, the prime aim of a social business is not to maximize profits (although generating profits is desired). Furthermore, business owners are not receiving any dividend out of the business profits, if any.
Sustainable development is the organizing principle for meeting human development goals while at the same time sustaining the ability of natural systems to provide the natural resources and ecosystem services upon which the economy and society depend. The desired result is a state of society where living and conditions and resource use continue to meet human needs without undermining the integrity and stability of the natural systems.
The Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations. The SDGs cover a broad range of social and economic development issues. These include poverty, hunger, health, education, climate change, gender equality, water, sanitation, energy, environment and social justice. The SDGs target is to achieve these goals by 2030. The goals were developed to replace the Millennium Development Goals (MDGs) which ended in 2015. Unlike the MDGs, the SDG framework does not distinguish between "developed" and "developing" nations. Instead, the goals apply to all countries. For more in depth information please see The The UN Sustainable Development Goals.
A tariff is a tax imposed on imported goods and services. Tariffs can be used to restrict trade, as they increase the price of imported goods and services, making them more expensive to consumers.
Tied Aid is given under the condition that part or all of it must be used to purchase or services goods from the country providing the aid or with conditions attached. Tied aid therefore often prevents recipient countries from receiving good value for money for services, goods, or works.
A trade barrier is a government-imposed restraint on the flow of international goods or services. The most common barrier to trade is a tariff—a tax on imports.
Transparency is characterized by visibility or accessibility of information especially concerning business or aid practices.
The United Nations is an international organization founded in 1945. It is currently made up of 193 Member States out of 195 countries. The United Nations is an intergovernmental organization tasked to promote international cooperation and to create and maintain international order.
UN agencies are specialized agencies that are autonomous organizations working with the United Nations and each other through the coordinating machinery of the United Nations Economic and Social Council at the intergovernmental level, and through the Chief Executives Board for coordination (CEB) at the inter-secretariat level. Specialized agencies may or may not have been originally created by the United Nations, but they are incorporated into the United Nations System. At present the UN has in total 15 specialized agencies that carry out various functions on behalf of the UN. These are: Food and Agriculture Organization (FAO), International Civil Aviation Organization (ICAO), International Fund for Agricultural Development (IFAD), International Labour Organization (ILO), International Maritime Organization (IMO), International Monetary Fund (IMF), International Telecommunication Union (ITU), United Nations Educational, Scientific and Cultural Organization (UNESCO), United Nations Industrial Development Organization (UNIDO), Universal Postal Union (UPU), World Bank Group (WBG), World Health Organization (WHO), World Intellectual Property Organization (WIPO), World Meteorological Organization (WMO), World Tourism Organization (UNWTO)
Utility is a term used by economists to describe the measurement of "useful-ness" that a consumer obtains from any good. Utility can be seen as a measure of how much one values a particular good. This depends entirely on the preferences of that individual, rather than some external, or universal measure.
The World Bank is an international financial institution that comprises of two institutions: the International Bank for Reconstruction and Development (IBRD), and the International Development Association (IDA). The World Bank's (the IBRD and IDA's) activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation and rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, and electricity), large industrial construction projects, and governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the country's economy as a whole. The World Bank is a component of the World Bank Group.