Top Five Aid Myths Busted

By Archie Law, CEO of ActionAid Australia.

With the current discussion going on about the proposed cuts to the Australian overseas aid budget, there are plenty of misconceptions and downright falsehoods being bandied about. Here are a few of the most common myths about overseas aid – busted.

 

1. “If we keep giving people money they will never learn to look after themselves.”

Not all aid is created equal. The kind of aid that helps support dramatic decreases in aid dependence is what ActionAid calls Real Aid – that’s aid which empowers poor people to realise their rights. It might do this directly by supporting smallholder farmers or building schools, or indirectly by helping to create better tax systems and governance.

Real Aid is accountable, transparent, and gets the most out of every dollar spent. It supports developing countries to make their own decisions.

Real Aid is actually making poor countries less aid dependent. For example, 14 of the 30 most aid-dependent countries in the year 2000 had reduced their dependence on aid (the percentage of government spending that comes from foreign aid) by more than 20% by 2009.

 

2. “We can’t afford to give money away to people overseas when we have poor people in Australia. Charity begins at home.”

It’s not a case of ‘either or’. The Australian Government spends over $125 billion a year on welfare compared to $4.5 billion on overseas development. Only $1 in every $30 spent on charity is spent overseas.

Australia is the 14th richest country in the world. And yet the currently amount spent on aid represents only 35c in every $100 of our national income, well below average compared to other developed countries.

 

3.Aid doesn’t work. Look how much we’ve already spent and people are still poor and dying of diseases and starvation. What’s the point?”

Not true. Arguing that because aid is found in countries that are poor, it must be the cause of low growth, is like arguing that fire engines cause fires because they can be found at the scenes of burning houses. Real Aid that genuinely targets poverty is very effective.

Real Aid has contributed to halving the number of people in poverty since 1990 and reduced the number of children who die needlessly by 10,000 a day. A DAY.

But despite this huge impact, the world spends less money on Real Aid than it does on video games (see Real Aid – 3, Reuters Online June 2011). Puts the whole thing in perspective, doesn’t it?

 

4. “Aid is wasted on corrupt regimes. Look how much money all those African politicians earn!”

Aid FIGHTS corruption. Real Aid, which empowers poor and excluded people to stand up for their rights, has been used successfully to combat corruption by investing in independent auditing, free media, community accountability, and parliamentary structures.

Aid also empowers poor countries to increase tax revenues from their wealthier citizens, boosting the amount of money earned to be spent on vital services that help the poor. And speaking of corruption, developing countries lose more money due to tax-dodging by global corporations than they receive in foreign aid every year (see Death and Taxes, Christian Aid, 2008)

 

5. “Aid money is wasted by NGOs who spend it all on administration, not helping the poor.”

A little administration goes a long way. NGOs on average spend less than 20% of the money they receive on administration, and independent assessments have found that spending less than this actually increases the likelihood that donations will be ineffective. Would you buy a car because 90% of your dollar went to building it, and only 10% towards designing and testing it?

Money spent to run programs efficiently makes sure aid is effective for the people it’s supposed to be helping. That’s a sound investment in quality control, not money wasted.

 

Archie Law is currently the Chief Executive Officer at ActionAid Australia (formerly Austcare). Archie has worked in conflict affected environments throughout Asia, the Middle East and Africa. Prior to joining ActionAid, Archie worked for the United Nations Development Program in South Africa and the UN’s Peacekeeping Operations in New York.

*This is a crosspost with ActionAid Australia’s original blog post here.

 

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15 thoughts on “Top Five Aid Myths Busted”

  1. Can you explain why we give $570,000,000 to Indonesia when they spend way more than us on their military? Why do we give aid to any country that puts their military budget before the people? WE ALSO GIVE AID TO CHINA.

  2. What rubbish, a lot of claims but no sources quoted. I’ve seen where aid in Cambodia goes, it is spent on Lexus’s and other flash cars. Go to Phnom Penh and see for yourselves. Foreign aid supports the regimes who spend it on military equipment to control the masses, we have no control how Government Aid is spent we only pay it to keep the UN happy.

  3. Re #1 it would be great if more of our aid was like this.

    Unfortunately “Real Aid” to local NGOs and the like is a very small percentage — most is bucketed into the bureaucracies of corrupt foreign governments through budgetary assistance and the like. The result? The Cambodian Government (for example) only contributes to 20-30% of its own education and health budgets, the rest comes from international aid (and worse still, the government sometimes underspends by the amount equal to its own contribution, so it effectively spends nothing on its own health and education). The situation in other countries is worse. The amount of GDP spent on health is still less than Australia or most western countries. When you see some of the most corrupt governments in the world flush with money, driving Rolls Royces you have to wonder where all this aid cash ends up.

    Of course this breeds dependency and feeds corruption (since you’re rewarding corrupt governments with more cash)! Worse, aid keeps wicked governments in place by giving them roads and hospitals to pose next to during election time (never mind that these were built by foreign taxpayers). It gives bad leaders a sense of legitimacy. They say at election time “Look at all the money that donors trust us with, of course we’re a good government”.

    AusAID could probably do without its millionaire consultants, Australian-sourced furniture, business class travel and per diem perks too. They’re asking the rest of us to go without something to help the poor, maybe they can do the same themselves.

    African politicians do earn too much! Kenyan parliamentarians are the highest paid in the world. Perhaps if they were unable to depend on foreign aid this would have to change, and they would be forced to tax these multinational companies, since they’d need the money.

    The figures you’ve quoted in #3 are true, it’s just nobody has any idea to what extent aid is actually responsible for that, and to what extent globalisation and trade in China and SE Asia is.

    I agree with some of what you’ve said but it’s just not black and white. Some aid works miracles and is a great investment. Some hurts the poor by distorting local markets, rewarding and enabling corruption, creating dependency and perpetuating bad governments. Instead of just campaigning for “more aid” let’s have “more Real Aid”.

  4. Great post, thank you. I couldn’t agree more regarding overheads.

    Rick, you are mistaken. Bostwana receives aid from Western Donors. $157US million alone in 2010 (source aidflows.org). There is an interesting academic debate about why Botswana has done comparatively well in terms of economic development (with the likely answer being a mix of: a higher degree of ethno-linguistic homogeneity than its SSA neighbours, an enlightened leader at the right time, and relatively robust institutions) but it still receives aid, so the absence of aid is clearly not the cause of its success.

    Terence

    1. And, just to build on Terence’s reply, there was an interesting briefing note published by ODI recently. It demonstrates that the majority of the world’s poor live in Very Low or Low Aid Countries (LAC) and have for at least the past two decades. This includes India, China, Nigeria, Indonesia, the Philippines, Pakistan and Bangladesh.

      “If aid has helped in the past, might it not help in the future? In other words, should we reconsider whether passing an arbitrary per capita income target should be such a critical factor in aid allocation decisions?”

  5. In the case of Africa, I’m wondering why the country that does not take foreign aid (Botswana) is doing better than the countries that do? Real aid or not, bilateral or multilateral, any form of assistance does perpetuate dependency. I think we should let these countries develop on their own terms, in their own times, what’s the rush? Unless of course the answer is that we want to mark our territories strategically? It’s all a sham to be honest, only Africans can save Africa, it wouldn’t hurt.

  6. With point 2, though the Australian government spends over 125 billion/year on welfare, what is Australia doing about their own poor, the Aborigines people, there’s rampant alcoholism and illiteracy among those that ‘transitioned’ badly into the ‘australian’ way of life, it may be time to reach out and stop picking one poor population abroad that might not even want your help in the first place over your own.

  7. One concern. Sometimes people who give aid, even “real aid” feel they’ve done their share. They may fail to get involved in changing policies that create the situations that are then aided. Might it not be more effective — and more just — to call for people to take action to change policies in their own countries instead of calling for an increase in aid?

  8. Thanks for the comments everyone. Here are the original footnotes from the blog post, with sources:

    1 Real Aid ? 3, ActionAid International Sep 2011. http://www.actionaid.org/sites/files/actionaid/real_aid_3.pdf

    2 OECD ?statistics from A to Z?. http://www.oecd.org/document/0,3746,en_2649_201185_46462759_1_1_1_1,00.html

    3 21st Century Aid, Oxfam International, May 2010. http://www.oxfam.org/sites/www.oxfam.org/files/bp-137-21st-century-aid.pdf

    4 UNICEF 10 September 2009. http://www.unicef.org/media/media_51087.html

    5 Real Aid ? 3, Reuters Online June 2011

    6 Death and Taxes, Christian Aid, 2008

    7 The Life You Can Save, Peter Singer, 2009

    8 GiveWell blog, January 2007. http://blog.givewell.org/2007/01/16/which-of-these-boasts-is-not-like-the-others/

  9. I love this! There are so many people out there that don’t support charities due to all the myths spurned by pessimists. Walking by on the other side and hiding behind ignorance of the sector isn’t a very humanistic approach. Better to do something than nothing! Unfortunately we wouldn’t be able to achieve a lot of the successes we do if we worked as volunteers. To run and fund projects requires a certain skill set and length of full time commitment. Fundraising, community engagement and project implementation can’t happen on good will and fresh air!

  10. Thank you for this post. We’ve been having discussions within our office about how we want to move our messaging away from discussing overhead as an indication of “success.” Quick question though: do you have any sources for this claim? ” and independent assessments have found that spending less than this actually increases the likelihood that donations will be ineffective.”

  11. Great stuff Archie. On point 4, I think this one of my favourite ActionAid campaigns – getting those who dodge tax to be accountable. The fraud point is incredibly misrepresented in the Australian media, with headlines such as “millions lost in AUSAid foreign aid scam” (doesn’t sound too much like fair and balanced reporting to me), when the reality is that from 2004 to 2010, aid money lost to fraud amounted to just $3.4 million out of a total spend of $20 billion.

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