Global Development Alliances: Building on Twenty Years of Co-creating and Delivering Development Results
The private sector is a powerful force in driving economic growth, creating jobs, and boosting opportunities that improve the lives of people and communities worldwide. USAID has partnered with companies and investors to solve some of the world’s toughest challenges since its founding in 1960.
Launched in 2001, the Global Development Alliance (GDA) was created as a public-private partnership model where USAID and the private sector work together to develop and implement market-based approaches to solve development challenges. Activities under a GDA leverage and apply partners’ respective assets and expertise to advance core business interests, facilitate private sector-led development, and drive sustained results. By working together under this approach, USAID and private sector partners share the risks, responsibilities, and rewards of the partnership.
To date, USAID has leveraged GDAs to forge partnerships with hundreds, if not thousands, of private sector partners, mobilizing financial, human, and technological resources to reach a scale that USAID as a donor could not have achieved alone. Worldwide, GDA partnerships have strengthened supply chain quality and reliability; expanded access to new customer bases and markets; reduced operating costs; improved workforce productivity; increased access to qualified and skilled talent; and strengthened relationships with key stakeholders.
Unlocking Enterprise-Driven Solutions through Co-creation
To accelerate scaling collaboration with the private sector, USAID issues a GDA Annual Program Statement (APS), which is a standing invitation for prospective private sector partners to work hand-in-hand with USAID and other interested organizations to build high-impact partnerships that deliver business and development results in a sustainable manner. Learn how USAID and private sector partners have used the GDA APS to co-create and implement market-based approaches in their development work.
This GDA APS provides a structure and co-creation process for USAID and private sector partners to align interests and figure out the most effective way to work together to unlock enterprise-driven development solutions in emerging markets.
A strong working relationship between USAID and the private sector is the defining and core characteristic of the GDA APS. The co-creation and partnering opportunity gives USAID and partners sufficient flexibility to test and pilot market-based solutions that foster business success and drive development impact.
Read about how the Tsiro Alliance in Madagascar was co-created by USAID and partners to improve the livelihoods of Malagasy cacao and spice farmers while preserving forests by helping farmers to adopt sustainable cultivation methods and follow an environmental plan that promotes biodiversity.
Enhanced Flexibility Through the APS
A GDA is just one of myriad ways USAID engages with the private sector to help shape solutions that achieve a sustained impact. The USAID Private Sector Engagement Policy, published in late-2018, sets an ambitious vision to transform how the Agency works and delivers development results by institutionalizing PSE as a core tenet of its operating model. This commitment to working with the private sector has set the stage for scaling collaboration with the private sector using all of the tools and flexibilities available to USAID Missions, Bureaus, and Independent Operating Units.
USAID is adapting its systems, processes, and procedures to well-position the Agency to scale engagement with the private sector in all sectors and geographies. Globally, USAID Missions are scaling partnerships with the private sector and fostering innovative PSE programming and approaches that are tailored to the context where they work. Through Annual Program Statements, USAID Missions, Bureaus, and Independent Offices can take advantage of tools that provide more flexibility in engaging the private sector, as the GDA APS has demonstrated.
Focusing on Outcomes Through Fixed Amount Awards
Fixed amount awards have been increasingly adopted by many development practitioners, including USAID staff leveraging the GDA APS. A fixed amount award is an existing assistance instrument (can be a grant or a cooperative agreement) where USAID makes payments only after recipients achieve pre-negotiated milestones. While fixed amount awards typically require more work up front, such as co-creating the scope, pricing, and verification method for the milestones, administrative burdens later are reduced because individual costs don’t need to be tracked and justified, allowing partners to focus on driving results. Under the current GDA APS, many GDA alliances involve USAID funding via fixed amount awards as the preferred grant instrument. With these awards, USAID has the flexibility to focus more on development outcomes than inputs.
Because FAAs are grants, they can conceivably be designed in creative ways to attract other sources of capital such as: recoverable grants that act as a form of bridge funding for start-up social enterprises, first-loss protection for impact investment funds as either subordinated capital or as a “sidecar” facility, or as part of a pay-for-results structure to make outcome payments in a social or development impact “bond” structure. Oftentimes, however, a direct fixed amount award between USAID and the service provider can achieve the same objectives in lieu of a more complex impact bond structure, all without the need for an upfront funder, intermediary, or independent evaluator. There is also maximum flexibility for alliance partners to make changes to the original plan of action for stronger development results.
Innovating to Expand USAID’s Partnering Scope
Over the last twenty years, USAID’s approach to partnering with the private sector has continuously evolved. By co-creating new approaches with partners, USAID has broadened partnering opportunities, and helped shape and influence the delivery of key development objectives. The CrossBoundary GDA structure — a fund manager with private investors — provided a valuable model for a number of GDAs developed after 2013. This model sought to build in greater flexibilities on how USAID could leverage existing processes (such as the GDA APS), design new processes, or revise USAID policy (e.g., the Agency’s treatment of program-funded income), to de-risk investments so that public sector donors and private investors will fund the projects that drive systemic reforms. This change furthered the Agency's PSE policy by encouraging USAID’s work with for-profit, commercial entities to develop more market-driven approaches to advance the Agency's development objectives.
Direct to Award: Streamlining Grant Making
USAID Missions can strip through the red tape that is often a barrier in more complex partnering models by taking advantage of flexibilities offered under annual program statements. For instance, the GDA APS states that if the co-creation process is productive and fruitful: “USAID may request a full application from an appropriate partner in a proposed GDA or proceed directly to award.” Co-creation discussions can be used as the forum through which USAID and partners gather the information needed to move forward with designing, structuring, and negotiating an award, thereby eliminating the need for a standard formal Notice of Funding Opportunity/Request for Assistance (NOFO/RFA).
Direct to Award Approach
Building on practices used under the GDA APS, numerous USAID Missions are opting to develop and issue their own annual program statements that tailor solicitations to their context and experiment with different concept submission and review processes aimed at maximizing efficiency and speed of the process.
For example, USAID/Peru used a simplified process that widened the net to include more new and local partners and invited two-page concept notes. Since the concepts were brief, it enabled staff to quickly review concepts, and consider proceeding to the co-design phase. The Mission brought prospective partners together and clarified that negotiations could end at any time or result in the development of an award. The Mission did not require a formal resubmission of a final Program Description which could add a substantial period of time to getting the award signed as the concept paper and subsequent co-creation sufficed. “For us it makes no sense to request a full application when it will basically be a repeat of the same things that were discussed and agreed upon during co-creation,” stated Andre-Guy Soh, Agreement Officer for USAID/Peru. Learn more about the USAID/Peru solicitation.
Way Forward: Making the most of collaboration opportunities
USAID’s GDAs provide businesses with opportunities to achieve core business interests and advance a company’s corporate social responsibility mission. The GDA model and the GDA Annual Program Statement are some of the Agency’s most important building blocks for enterprise-driven development. However, there is room to grow in building high-impact partnerships that solve critical business and development challenges.
Partnering is complex, but is essential to foster business success and drive development progress in emerging markets. GDA and the GDA APS have helped to broaden USAID’s existing flexibilities and tools. The good news is that setting up GDA partnering models or using the GDA APS are not required for tapping into these flexibilities: Any Mission, Bureau, or Independent Office can co-create development approaches with the same flexibility by using the characteristics of annual program statements to provide private sector engagement and co-creation opportunities tailored to local context.
USAID must scale up the good practices and tools for staff to make partnering between USAID and the private sector easier. USAID’s new PSE Modernization Initiative aims to transform how USAID harnesses the power of the private sector by creating built-for-purpose systems and tools for more effective and sustainable development.
Co-creation with the private sector can take many forms, ranging from a series of phone calls with a prospective partner to a structured, facilitated series of workshops with many partners.
A Global Development Alliance (GDA) is one way USAID works with the private sector to implement market-based solutions to key development challenges.
Click here to access examples of how USAID has engaged in co-creating development solutions with the private sector.