Value for money (VfM) is about using resources in a way that produces strong results relative to cost and constraints. It does not simply mean choosing the cheapest option.
Current UK government grant guidance defines value for money as the optimal use of resources to achieve intended outcomes. FCDO humanitarian guidance has also described VfM in terms of economy, efficiency and effectiveness, while stressing that cheapest is not always best.
Three useful VfM questions
- Economy: Are inputs purchased at a reasonable cost and quality?
- Efficiency: Are resources converted into outputs with minimal waste?
- Effectiveness: Are those outputs likely to produce the intended outcomes?
What reviewers may look for
- Realistic unit costs.
- Evidence behind major budget assumptions.
- Use of existing systems or infrastructure where appropriate.
- Reasonable staffing ratios.
- Balance between reach and quality.
- Monitoring that can test whether the delivery model is working.
Do not confuse low cost with value
A cheap intervention that fails to produce the intended result is poor value. Conversely, a higher-cost intervention may represent better value if it produces substantially better outcomes, reaches a harder-to-serve population or reduces future costs.
Use evidence for major cost claims
If you claim your model is more cost-effective, explain the comparison. Use historical costs, market quotations, unit-cost benchmarks, pilot data or other credible evidence where available.
Use the Grant Budget Sanity Checker to identify weak or inconsistent budget assumptions.
Frequently Asked Questions
Does value for money mean the lowest budget?
No. It is about the best use of resources to achieve the intended outcomes.
Should we calculate cost per beneficiary?
It can be useful, but only if it is a meaningful measure for the intervention.
Can quality be part of VfM?
Yes. Cost should not be considered independently of quality and effectiveness.
Should VfM be monitored after award?
Yes where the donor requires it or where it is important to project management.
Can volunteer time improve value for money?
Potentially, but it should not be treated as free capacity without considering supervision, quality and sustainability.
Conclusion
A credible value-for-money case explains how the project will turn resources into quality results efficiently. It is stronger when supported by real cost assumptions, realistic delivery choices and measurable outcomes.
Sources and further reading
- UK Government: Grant business case development and value for money
- FCDO/DFID: Humanitarian Response Funding Guidance
Put this guide into practice
Free resource: The Hidden Formula Funders Love. Use this free guide to apply the article’s advice to your next funding decision or application.
Optional paid resource: Nonprofit Grant Proposal Templates. Proposal, concept note, budget, logframe, M&E and donor-document starting points. Review the product details and current price before purchasing.
