20 Oct 2016

Fairtrade’s Value for Money Approach Highlighted in New NGO Report

Fairtrade’s Value for Money approach is featured in a new report highlighting the need to get maximum bang per buck when it comes to investment in development and humanitarian aid.

Csm 1610 VFM report cover d0db122e84
Cover image of the VFM report

The report results from a learning initiative set up via the Programme Partnership Arrangements (PPAs) between the UK’s Department for International Development and various NGOs. Assessing and Managing Value for Money: Lessons for NGOs presents an overview of a new analytical framework for approaching VFM.

The report, written by Mango with contributions from leading NGOs including Fairtrade International and its member organization Fairtrade Foundation, was recently published by BOND, the UK international NGO network. It examines the tools, leadership, knowledge, skills and behaviour needed to integrate Value for Money (VFM) into working practices.

This approach focusses on achieving maximum impact for each investment made by the development and humanitarian sector. NGOs involved in the PPAs set up a learning group to share best practice in this area. The report presents the experience and learnings gathered by members of the group – serving as a guideline for organizations wanting to replicate the approach in their work.

The report highlights the diverse perceptions of what ‘value’ is and notes that a successful VFM approach must first define this. Before the approach can be adopted, it also needs to be informed by the context in which the organization operates. For the concept of value for money to be embedded across an organization it needs to be structurally and culturally integrated into the organization’s processes and embraced at leadership and operational levels.

Fairtrade is implementing a VFM approach to assess our interventions against a clear cost-benefit framework. In recent years, Fairtrade has invested considerable resources in improving its monitoring, evaluation and learning (MEL) system including the systematization, dissemination and discussion of learning arising from monitoring and evaluation processes. This allows the organization to truly understand what works, what doesn’t and what changes are needed to improve impact.

Fairtrade has made important progress with the development of a learning platform. The platform organizes findings and recommendations from monitoring and evaluation of the organization’s work against the goals of Fairtrade’s Theory of Change. Content from the platform is designed to guide Fairtrade staff globally by highlighting key challenges and areas for improvement.

Fairtrade has also developed a tool to perform an ‘Options Analysis’ that shows how the assessment of costs, benefits and risks at key decision points in organizational management can help to secure value for money. The tool allows staff to make an objective comparison between different suppliers, when significant expenditure will be incurred, in order to achieve the maximum value for money.

Fairtrade found that the key to building understanding and implementing the VFM approach is to keep everyone informed, providing regular updates and bringing everyone involved along as the process develops. Adopting a VFM approach enables Fairtrade to make better choices in the coordination of resources so that Fairtrade producers benefit from more effective, efficient, economic and inclusive use of our resources.

Read the summary report (PDF) | Download the full report (PDF)