Guest post by Doug Hadden, FreeBalance

Is transparency a threat to the development status quo or an opportunity to break through the “dead aid” narrative?

The problem with transparency is that it usually refers to the other guy. Politicians want governments to be transparent. Donors want beneficiaries to be transparent.

Transparency is a threatening concept. It opens up the organizational kimono to scrutiny. And, sometimes unfair levels of scrutiny, where a single gaff can become the defining narrative in the minds of the public.

This means that aid transparency can seem dangerous to International Financial Institutions (IFIs) who are expected to support the International Aid Transparency Initiative (IATI). We need to understand this context before we condemn donors for not fully supporting transparency standards. We should not be surprised that there is a wide divergence in aid transparency commitments according to Publish What You Fund analysis. Aid transparency is fundamentally political – for larger donors, including major NGOs, it’s not about technology.

From a Culture of Expertise to Multidisciplinary Insight

IFI staff is made up of subject matter experts, many of whom have deep on-site knowledge in their chosen domain. Development is a complex undertaking. Aid transparency can enable those without sufficient understanding to opine. These opinions can be politicized and result in unfortunate changes in IFI policy, particularly in bilateral donor institutions.

Yet, one aspect of complex domains like development, is an overly narrow focus. The key to achieving optimal development results may come from analysis from another domain, or an amateur or a domain expert from a different region. This is perhaps why the World Bank, on the forefront of aid transparency, is reorganizing to achieve global insight from regional lessons learned. Aid data can tap the wisdom of crowds – or the wisdom of big data – to improve development effectiveness.

From Broadcast to Social Engagement

Institutions traditionally operate “out of network” by broadcasting messages through traditional and social media. These messages undergo significant scrutiny, particularly in the public sector. The Canadian federal government, for example, requires a 12 step approval process for official tweets. Social media and open aid data plunges IFIs into operating within existing social networks.

Organizations lose the ability to control the message in social networks. Authenticity becomes critical. Message sanitization often has the opposite effect. What is the incentive for donors to lose the control of the message?

For one thing, donors have lost control of the message. The public in many developed countries seem to believe that foreign aid spending is rampant. Aid transparency could dis-intermediate the media that is intent on sensationalizing foreign aid failures.

Aid Transparency Arms Race?

Aid transparency has become politicized (in a good way). Thanks to the Publish What You Fund Aid Transparency Index and the efforts of civil society, many donors have realized the political benefits of publishing to IATI standards. Aid transparency equates to aid credibility.

There are many observers who believe that donor aid, as currently provided, reduces development and growth. Economist Dambisa Moyo, for example, calls this “Dead Aid”. The important point about aid skepticism, in my opinion, is that foreign aid doesn’t always work as expected. And, the triumphs broadcast by some donors are resplendent in hyperbole.

It’s high time for a change. To a more advanced understanding of aid. To leverage data and analysis to determine what works in what context. This is becoming a matter of survival for aid organizations whether international IFIs, government bilateral donors or NGOs – proof of aid effectiveness.

Doug Hadden is the Vice President of Products for FreeBalance,  a global provider of Government Resource Planning (GRP) systems. Follow him @freebalance.