Terms of Reference

Investment Committee - Terms of Reference

Purpose and Role

The Investment Committee is a sub-committee of the Executive Management Committee.  It forms a critical part of our corporate governance. Its role is to ensure that DFID investments represent good value for money for UK taxpayers and that clear systems exist to take strategic financial decisions on the basis of evidence. It will do this through looking at strategic investment decisions and resource allocation, at the balance of the investment portfolio in aggregate, and at the adequacy and implementation of investment appraisal systems. The scope of the Investment Committee covers all DFID programme investments, whether multilateral, bilateral, or global public goods. It will not look at DFID's administration costs.  Specifically, it will:

1.  Advise the Executive Management Committee / Ministers on strategic investment choices and resource allocation priorities, ensuring that our mix of investments is aligned with our strategic vision. Indicative actions include:

• Considering the bilateral – multilateral investment mix with respect to overall system effectiveness – including looking for example at bilateral funds invested through the multilateral system
• On the overall mix of investments, reviewing the marginal effectiveness of funds invested in bilateral programmes, multilateral programmes and global public goods
• Carrying out an annual review of the Resource Allocation Model and decision tree with respect to country allocations; exploring the need for a Resource Allocation Model with respect to multilateral allocations.
• Commissioning portfolio-wide measures of investment in country and sector (by any channel) and considering whether these meet our overall priorities
• Ensure DFID meets terms of CSR settlement in terms of allocation and expenditure decisions

2.  Provide assurance to the Executive Management Committee / Ministers that our programmes represent good value for money. Indicative actions include:

• Where additional scrutiny and assurance is required or where there are significant organisational implications, the Committee retains the option of taking referral of a limited (no more than 8-10 per year) number of individual investment decisions, multilateral or large bilateral.
• Commissioning an annual review of effectiveness data on multilaterals and comparing that with our multilateral investment portfolio.
• Commissioning analysis of sectoral VfM issues across countries – looking for example at comparative costs of delivering ARVs or increasing school enrolment in different countries.
• Commissioning work to look at risk across the DFID portfolio; consider whether risk profile looks appropriate with respect to returns; follow up on specific areas of high risk.
• Reviewing a sample of output to purpose reviews of bilateral programmes to assess whether investments are delivering returns envisaged at appraisal and how these compare with broader evidence on returns for similar investments.

3.  Ensure DFID’s investment appraisal procedures and practice are fit for purpose and champion the use of evidence and quantification of outputs. Indicative actions include:

• Reviewing DFID's investment appraisal guidelines and procedures, considering an annual report of compliance with these and recommending revisions or actions to strengthen compliance.
• Taking oversight of on-going work on VfM assessment and providing direction on the appropriate use of cost benefit analysis, risk analysis and other tools given the nature of the departments work.
• Taking oversight of arrangements for Delegated Authority

In carrying out these duties, the committee will ensure that in its investment decisions, DFID is applying the best available knowledge – from evaluation and research material and elsewhere – on how to maximise value for money in reducing poverty. It will commission further analytical work as necessary to enable it to fulfil its role.

Composition

Members:

• DG Corporate Performance (Chair)
• DG Regional Programmes
• DG International
• DG Policy
• Director Finance and Corporate Performance Division (Vice Chair)
• Chief Economist
• Doreen Langston – MB Non-executive director
• Two non-execs to be appointed directly

With:

• Head of Evaluation as permanent observer
• Chair of Independent Advisory Committee on Development Impact to have open invitation to attend as observer.

If a member is unavailable for a particular meeting, attendance will be restricted to designated alternates as for other similar DFID committees.

Frequency

The Committee will meet four to six times a year. The agenda also provides for two separate occasions for responses to be supplied by web-based media. 

Reporting

The Committee will provide an annual report to the Executive Management Committee as part of the annual assurance cycle. The report will cover the three broad areas of activity: alignment of investment choices with strategic vision; value for money; and DFID's investment appraisal systems.

Secretariat

Secretariat function will be provided by FCPD, Corporate Planning and Performance Group.