A Penny for Your Thoughts: Comparing the costing approaches led by USAID’s Center for Education, The Brookings Institution, and the IRC

• In Event: Making Cents: How tools and methods are helping the sector conduct cost analysis

Proposal

As the demand for aid continues to rise, the levels of funding are not keeping pace. This mismatch between demand and funding introduces the need for cost analysis. To assist in the critical choices of how best to spend scarce resources, cost analysis is used to assess which activities have the greatest value for money. Large organizations often had the upper hand in providing these findings to donors as they have the staffing expertise to conduct the calculations. This puts small organizations at a disadvantage. Recently, however, a variety of costing tools and guides have been created which offer small organizations the opportunity to conduct cost analyses on their own projects thereby generating evidence on their reach and impact with an eye on costs. This presentation begins with a landscape review of 7 costing tools and templates and 6 costing guides available to the early childhood development community. The research assessed the differences in each tool or guide’s purpose, costing approach, type of analysis, questions the tool can answer, and platform (e.g., Excel, web-based, etc.). This valuable overview will help analysts and organizations determine which tool or guide might best fit their cost analysis needs.

Next, this presentation turns to share the findings from a comparative cost analysis using data from a literacy pilot in Kenya. With support from SALT Analytics, a nonprofit used USAID’s approach to estimate the cost of implementing the pilot (cost-economy), the cost per parent served (cost-efficiency), and the cost-effectiveness of the intervention (cost-effectiveness analysis). This organization is ideal to test these different approaches for three reasons. First, USAID’s approach has been used primarily in large activities and a small organization can provide their perspective on the ease of use. Second, the pilot is only a few months long so results can be generated quickly to provide immediate feedback to the sector. Finally, the organization has experience in cost analysis having helped pilot C3 for the Brookings Institution. Therefore, they can provide some deeper insights between USAID’s method and C3.SALT Analytics then ran the same pilot cost data through the Brookings Institution’s Childhood Cost Calculator (C3) and IRC’s Dioptra to assess the differences in findings between the three cost approaches.

This analysis does not determine if one costing approach or tool is more “accurate” than the others. Instead, the primary objective of this research is to show how the similarities and differences in processes and calculations can lead to differences in findings. Additionally, this research provides a wider view of the differences between the three approaches including methodological foundations, costing methods, types of data captured, types of data used, methodological steps, comparability of findings, ease of use, data security, and use of data by USAID, the Brookings Institution, and IRC. This presentation has a strong methodological focus, and it is rooted in how small organizations perceive these tools and the advantages and challenges of using them.

Authors

• Christine Harris-Van Keuren, Salt Analytics

• BETHLEHEM GIRMA MAMO, ECDAN