The modern development assistance has its roots in 1948, when U.S. assisted Europe and Japan to rebuild after the Second World War. Since then the official development assistance has come a long way, from the focus in market based mechanisms in the 80s, funding challenges in the 90s, and the all-embracing Millennium Development Goals in 2000.

Development assistance is about big money. The Index of Global Philanthropy and Remittances 2010 estimates that private philanthropy in the U.S. reached over $37 billion dollars, over $10 billion more than the U.S. official development assistance, in 2008. No one really knows the global private flows, but the estimates range from 15-20% to 35% of the total aid.

During the decades of aid, the ecosystem of development actors has diversified from the fairly straightforward model of money flowing directly from rich governments to poor governments, and indirectly through multilateral institutions acting as middlemen, to complicated system with a myriad of heterogeneous actors. Over the last two decades, the number of non-governmental organizations (NGOs) has mushroomed: in 2004 it was estimated that there were over 45,000 NGOs in Africa, with the global number totaling over 320,000. Not only has the number of actors risen, but they are also increasingly fragmented; the same time when the number of aid projects has increased, the average project size has shrunk.

Private actors in development assistance are diverse. They range from informal initiatives, such as the 29-years old Canadian traveling in Bangladesh and raising money through video blogging to foundations set by multimillionaire philanthropists, and projects run by university groups, religious entities and non-governmental organizations. Since mid-1980s, especially the role of NGOs has become increasingly prominent. The skepticism towards governance in developing countries and aspirations to strengthen civil society have made channeling official development funding through NGOs an attractive option. About 13% of the official Finnish development assistance is given through NGOs.

Despite the huge increase in projects and actors, there’s a heavy debate going on whether the aid actually is making any difference. Even the engineering students might have heard of probably the most famous address in the discussion, the Zambian economist Dambisa Moyo’s Dead Aid: Why Aid is Not Working and How There is Another Way for Africa (A really good book! I recommend!). The official donors have responded to the critique with series of high caliber meetings on the efficiency of the development assistance, in Rome 2003, Paris 2005 and Accra in 2008, and initiated global mechanisms to increase the efficiency.

The problems arousing from the upswing of actors and fragmentation are increasingly associated with a greater need for coordination. While official donors are increasingly taking actions to coordinate their efforts, private actors are still often absent from these attempts. In the meantime, without proper coordination, certain causes or countries receive massive efforts, while others are excluded. The consequences are duplication, overlap and waste of limited resources.

I am especially interested in the private aid, since that’s the “wild west”. The people-to-people nature of private development assistance, and its richness in innovation, diversity and agility challenge the practices from the traditional development donors. However, the new variety among the actors, differences in their structures, internal processes, objectives and forms of legitimacy, is inundating the aid field with a challenge of managing this anarchy.

Would there be anything in the world of knowledge management worth applying to this chaos?

Thesis page count: 7!

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