TOC and Resource Allocation

Let’s assume that you are hired by an NGO, which designs an IT education program for underprivileged people in Cambodia. We can assume that those who receive IT education will have a better chance in finding a nice job, getting well paid, sending their kids to school, and thus, enjoying higher quality of life. Let’s also assume that your NGO has persuaded KOICA (Korea International Cooperation Agency), a donor institution similar to DFID or USAID, to financially support your program, say, with 100,000 USD.

To implement this program, you need inputs such as software and hardware (e.g., pc, printer, computer lab). As for activities, you need to consider curriculum, syllabi, instructors, recruiting, scheduling, assessment, and ex-post support.

As for outputs, you promise that you would offer 4 rounds of programs per year, yielding 25 trainees per program.

If you are evaluated by the output, what will you do when you have 10,000 USD unused around the end of November? If you don’t use up the remaining money by the end of December, you should return it back to KOICA. Not Great? What are you gonna do? Given that you are evaluated based on your output, you may want to operate one more round of the program with the unused budget, yielding extra 25 trainees. Then you will end up with 125 trainees in total through 5 rounds by the end of the year, meaning that you achieve 25% higher than your original goal (100 trainees through 4 rounds). KOICA will be impressed and may give you extended support next year. Great.

However, when you check the 125 trainees, you may realize that only 25 are employed. That is 20% Can you justify your tax money spending of 100,000 USD in this case? Maybe not. What if you are evaluated based on the outcome, e.g., quantity and quality of jobs? In terms of job quantity, the number of jobs or the ratio of being employed within 2 months after completing the program can be considered. In terms of job quality, wage level, duration of employment, employee’s job satisfaction, and employer’s satisfaction can be checked. If this is the case, you don’t want to spend your money on fruitless operation. Instead, you may want to identify the weakness of the program.

Let’s say that you find your program-related activities are all good, except the ex-post events. Then you may want to use 10,000 USD to offer ex-post events such as jobfairs or internships so that potential employers and your trainees can interact with each other. Let’s assume that such strategies work well, and your job placement record is improved, say, 70%. This is great. KOICA or other funders would be quite satisfied. However, when you interview the trainees’ family members a few months later, you may realize that their quality of life has not been improved. It turns out that many of the trainees who get the job does not spend money for their family.

Rather, they use money for drinking and gambling, not for sending their kids to school. Then what’s the point? Can you justify the tax money spent through your program?

From the beginning you wanted to make a positive change in the lives of local people: do you see such changes?

Thus, outcome is important, but it is still not enough. In this situation, if you have the 10,000 USD left in your pocket, what will you do? Maybe you can work with other NGO/NPOs which offer programs for rehabilitation or personal finance education. The point here is- you should check whether your intended impact or positive social change is occurring as you expected. If not, you should examine why and figure out how to fix it. In so doing, TOC provides a useful framework, helping you better allocate your limited resources and make a meaningful social changes.