Fact Sheet

November 15, 2011 | www.mcc.gov

On the Cutting Edge of Aid Effectiveness

A Primer: Lessons Learned from 

the Millennium Challenge Corporation

Since its creation in 2004, the U.S. Government’s 

Millennium Challenge Corporation (MCC) has 

been advancing and accelerating the conversation on aid effectiveness. Building both on the 

2005 Paris Declaration on Aid Effectiveness and 

the 2008 Accra Agenda for Action, the 2011 High 

Level Forum on Aid Effectiveness in Busan, Korea 

provides an important opportunity to push the 

dialogue further on the effective delivery of foreign 

assistance. MCC’s approach to development effectiveness stems from country-driven strategies to 

reform policies and build stronger institutions that 

propel a comprehensive continuum of results from 

initial inputs through to impacts.

Effective development assistance is built on 

five principles:

1. Ownership: for aid recipients to design and 

implement their own national development 

strategies with their parliaments and electorates;

2. Alignment: for donors to support 

these strategies;

3. Harmonization: for donors to work to streamline their efforts in-country;

4. Results: for development policies to be directed 

to achieving clear goals and for progress toward 

those goals to be monitored; and

“Through the MCC, the US 

has shown that it can deliver 

development co-operation that 

is in line with the principles 

on effective aid. In particular, 

ownership, predictability, untying, 

unearmarked funding, and a 

strong emphasis on results are 

key characteristics of MCC’s 

approach. MCC also provides 

an incentive model that supports 

partner countries in their reform: it 

allocates aid based on a country’s 

policy performance, employing 

objective indicators to determine a 

country’s eligibility for funding.”

—OECD Development Assistance 

Committee (DAC) Peer Review 2011
On the Cutting Edge of Aid Effectiveness | November 15, 2011 2

5. Mutual Accountability: for donors and recipients alike to be jointly responsible for achieving 

these goals.

Effective donor-recipient relationships practice these principles to deliver lasting impact. For MCC’s partnerships with poor but well-governed countries, these principles translate into the pursuit of effectiveness 

and efficiency, particularly as they relate to delivering results, realizing country-led development toward 

mutual accountability and maximizing transparency. Results, country ownership and transparency are key 

to Busan’s agenda and to how MCC operates.

Focus on Delivering Results

The U.S. Government is committed to seeing 

results in practice, not just in principle. Across 

its entire investment portfolio, MCC’s results 

exist along a continuum that can be measured, 

collected and reported throughout the lifecycle 

of projects, from start to finish and beyond. This 

is what defines MCC’s innovative approach to 

projecting, tracking, evaluating, and transparently 

communicating program results and impacts. This 

means focusing on development outcomes, rather 

than just inputs and outputs. This means adopting 

results frameworks, platforms and tools to assess 

performance. This means achieving lasting impact 

on eradicating poverty that reflects the tailored, homegrown priorities, policies and programs outlined 

by partner countries themselves as the main managers of their development. MCC results exist along a 

continuum—from policy and institutional changes countries make to become eligible for MCC funding, 

to interim outputs and outcomes as programs mature, to post-program increases in incomes. MCC tracks 

interim indicators, such as number of farmers trained, hectares planted with high-value crops, kilometers 

of road constructed, or land titles granted, because these are the ultimate drivers of income gains.

A focus on results also means acknowledging that results are not always going to bring good news. 

Projects may sometimes fall short of their intended aims. MCC’s commitment to transparency means 

making all results—both positive and negative—public and to learn from them to improve performance 

and inform better development projects in the future.

Want to learn more about MCC’s commitment to results? Visit http://www.mcc.gov/documents/reports/

paper-2011001052001-principles-results.pdf.

Focus on Country-owned Solutions

Development investments are more effective and sustainable when they reflect countries’ own priorities and strengthen governments’ accountability to their citizens. This is the starting point for MCC’s 

approach to country ownership. To MCC, however, country ownership is more than this. Country 

“MCC places great emphasis 

on measuring results, 

planning to track not only outputs, 

but also outcomes and impacts 

across its programmes.”

—OECD Development Assistance 

Committee (DAC) Peer Review 2011
On the Cutting Edge of Aid Effectiveness | November 15, 2011 3

ownership is embodied in partnership. MCC’s 

partner countries exercise ownership when, in close 

consultation with citizens and civil society, governments take the lead in setting priorities for MCC 

investments and implementing MCC-funded programs. This means that governments are accountable to domestic stakeholders for both making 

decisions and achieving results. This partnership 

takes place within the framework of MCC’s focused 

mandate; is consistent with MCC’s standards for 

accountability, transparency and impact; and draws 

on MCC’s support and guidance.

The MCC model explicitly builds in the authorities 

and approaches necessary to support strong and 

mutually accountable partnerships. These include:

 Selectivity: partnering with poor countries that 

have a proven track record in good governance 

and policies that support economic growth and 

effective use of development assistance;

 Focused mandate: supporting poverty reduction through economic growth;

 Flexibility: working in sectors that matter most for countries’ growth and poverty reduction and supporting investments that are priorities for partner country governments, citizens, civil society, and the 

private sector;

 Aid predictability: providing predictable funding through MCC’s authority to commit five years of 

funding up front;

 Mutual transparency: providing partner country governments and citizens information on what 

MCC is doing by publishing economic analyses that inform investment decisions, five-year budgets, 

expected results, data on ongoing program progress, and findings of independent impact evaluations 

as programs complete, while expecting transparency from partners as well that empowers citizens to 

hold governments and donors accountable for how development resources are used and what results 

they achieve.

Want to learn more about MCC’s commitment to country ownership? Visit http://www.mcc.gov/documents/reports/paper-2011001093801-principles-country-ownership.pdf

Focus on Transparency

MCC operates at the forefront of transparency for effective aid delivery. MCC’s public website, www.

mcc.gov, provides access to spreadsheets that show economic rates of return calculations, performance 

indicator tracking tables and impact evaluation summaries for MCC-funded projects. Data on beneficiary 

analyses are also available. MCC posts copies of all signed compact grant agreements, quarterly status 

“While most US agencies align their 

programmes with national priorities, 

the process of matching US priorities 

with local strategies can be very time 

consuming and complex. 

MCC has been leading the way: its 

compacts are jointly developed and 

signed with the partner government, 

and projects are recorded on the 

partner country’s budget.”

—OECD Development Assistance 

Committee (DAC) Peer Review 2011
On the Cutting Edge of Aid Effectiveness | November 15, 2011 4

reports on worldwide programs, information on 

program-related procurement opportunities, 

and copies of reports and notices provided to the 

U.S. Congress.

MCC is currently evaluating ways to further 

improve the usability of its publicly-available 

information. It is among the first government 

agencies, joining the U.S. Department of State and 

the U.S. Agency for International Development, to 

make its data available on the Foreign Assistance 

Dashboard, www.foreignassistance.gov. As a concrete way to promote transparency, the Dashboard 

provides a view into U.S. Government foreign assistance funds, including those from MCC, and enables users to conveniently and comprehensively examine, 

research and track aid investments in a standard and easy-to-understand format.

2011-002-0663-01

“MCC is a leader in the US 

Administration on results and 

transparency.”

—OECD Development 

Assistance Committee (DAC) 

Peer Review 2011