world bank document€¦ · lp a p ers -paper no. 052 toward environmentally and socially...

E N V IR-0 N M E N TD E P A R T M EN T

lP A P ERS - Paper No. 052TOWARD ENVIRONMENTALLY AND SOCIALLY SUSTAINABLE DEVELOPMENT

PARtTICIPATION SERIES.

NGO EInnvolvement inWWorld Bank -FinancedSocial Fu,nds:.

Lesson Learne

Carmeni Malena

May 1997

Enviroinmentally Sustainiable Development The World Bank

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Environment Department Papers-Participation Series

001 Participation in Education Nat J. CollettaGillian Perkins

002 Participation in Water &Sanitation Gabrielle Watson*N. Vijay Jagannathan

003 Participation in Irrigation Ruth Meinzen-DickRichard Reidinger

- Andrew Manzardo

004 Participation in So.cial Funds Mary Schmidt.Alexandre Marc

006 Participation in Country Economic Dan R. Aronsonand Sector Work Ellen Tynan

007 Designing Community Based Deepa NarayanDevelopment

020 Participation in Andrew NortonPoverty Assessments Thomas Stephens

021 Participation and Indigeious Peoples Shelton H. DavisLars T. Soeftestad

031 Participation Through -Tom CarrollIntermediary NGOs Mary Schmidt

Tony Bebbington

, .049 . Participation in Forest Ajit BanerjeeManagement and Conservation Gabriel Campbell

Maria Concepcion J. CruzShelton H. DavisAugusta Molnar

050 Toward STD/AIDS Awareness and Ernest MassiahPrevention in Plateau State, Nigeria:Findingsfrem a Participatory Rural Appraisal

Copies are available from the World Bank's Environment Department, Social Policy & Resettlement Division.

L~ Social Policy and Resettlement Division

NGO ][nvolvement inWVorld Bank-FinancedSocial Funds:Lessons Learned

Carmen Malena

May 1997

Papers in this series are not formal publications of the World Bank. They are circulated to encourage thought and dis-cussion. The use and citation of this paper should take this into account. The views expressed are those of the authorsand should not be attributed to the World Bank.

Abstract

The purpose of this paper is to review the paper identifies key issues and outlinesinvolvement of nongovernmental organiza- lessons learned. It concludes that NGOtions (NGOs) in World Bank-financed social involvement can bring important potentialfunds (SFs). The paper is intended for Bank benefits to the achievement of social fundstaff, social fund staff, borrowing govern- goals and makes a number of recommenda-ments and NGOs who collaborate or seek to tions for improved collaboration with NGOs.collaborate in social fund activities. The

Contents

Acknowledgments (iii)

Executive Summary 1

1. Introduction 9

Social Funds 10NGOs and CBOs 11

2. NGO Involvement in Social Funds 13

Potential Benefits and Risks of NGO Involvement in Social Funds 13NGO Roles in the Design and Imp]Lementation of the Social Funds 14NGO Roles in the Preparation and Implementation of Subprojects 21Estimated Current Levels of NGO :[nvolvement in Social Funds 26

3. Key Issues and Lessons Learned 29

State-NGO Relations 29Assessing NGOs 31NGO Selection Criteria 32NGO Capacity-Building 33NGOs and Targeting the Poorest 34Community Participation 35Promoting Partnerships 39Legal Issues 39

4. NGO Criticisms and Concerns 41

General Concerns 41Specific Issues 44

- ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~i

5. Recommendations for Improved NGO Involvement in Social Funds 48

Recommendations for Social Funds 48Recommendations for NGOs 49

Notes 51

Bibliography 54

Annexes 59

I. Summary Information on NGO Involvement in SelectedWorld Bank-Financed Social Funds 59

II. Sample Checklist for Assessment of Local Level Organizations(Armenia Social Investment Fund) 61

III. Sample Project Implementation Manual for Use by Communities -Extracts (Zambia Social Recovery Project) 62

IV. Sample Gender Action Plan(Eritrean Community Development Fund) 67

V. Sample Implementation Agreement Betweena Social Fund and Beneficiary Commnunity(Eritrean Community Development Fund) 69

VI. Sample Financing Agreement Between a Government and NGO 72

VII. Sample Bidding Documents (Gambia Public Works and CapacityBuilding Project and the Ethiopian Social Rehabilitation Fund) 76

VIII. Sample Works Contract (Ethiopia Social Rehabilitation Fund) 81

ii

Acknowledgments

This report was prepared by Carmen Mary Schmidt, Julie van Domelen, andMalena under the supervision of John D. Mark Woodward for their conmments andClark, Senior NGO Specialist of the World assistance. From outside the Bank, valu-Bank's, NGO Group, (located in the Social able input was received from Jeff Brown,Policy Division of the Environment De- Wedex Ilungu, Gustavo Irias, Carlospartment). Detailed comments from Sarah Lacayo, Raul Lema, Joshua Lichtenstein,Adam, Soniya Carvalho and Najma Jose Maria Montabes, Diego Penaherrera,Siddiqi are gratefully acknowledged. The John Ruthrauff, Peter Sollis, and Michelauthor would also like to thank Jacob Voyer. The author thankfully acknowl-Bregman, Christopher Chamberlain, Alan edges Ivy-Maria Tompkins and MaryDock, Laura Frigenti, Gita Gopal, Nandini McRae for editing and wordprocessingGunewardena, Alexandre Marc, Mario this document.Marroquin, John Newman, Nigel Roberts,

iii

Executive SummcLry

The purpose of this paper is to review the itself, but rather because of the potentialinvolvement of nongovernmental organiza- benefits that NGO involvement can bring totions (NGOs) in World Bank-financed social the achievement of social fund goals, suchfunds (SFs), to outline lessons learned imd as sustainable, demand-led developmentto make recommendations for improved and enhancing the active participation ofcollaboration with NGOs. The paper is poor communities.intended for Bank staff, social fund staff,borrowing governments and NGOs who Potential forms of NGO involvementcollaborate or seek to collaborate in social include:fund activities. * seeking advice/ assistance from NGOs

For the World Bank and borrowing govern- during the design of the social fund;ments, social funds represent an innovative * NGO participation in SF governancemodel for financing small-scale, demand- structures (e.g., representation on thedriven and participatory development board);projects. For NGOs and community-based * NGO administration of a pilot phase;organizations (CBOs), social funds repre-sent one of the most promising mecha-- * contracting NGOs to provide training/nisms for accessing World Bank funds in technical assistance to SF staff, commu-order to support community level develop- nities and/ or implementing agencies;ment activities.

* NGOs involvement in the appraisal,

The quality and skills of individual NCOs supervision, or monitoring of the SF;varies greatly and not all NGOs are appro- * NGOs transmitting information topriate candidates for participation in social communities (either formally or infor-funds. Those NGOs with suitable skills and mally);experience (such as ties to local commimi- a NGOs submitting subproject proposalsties, technical expertise and participatory (Or sisting c unitiesi preparndevelopment skills), however, can play a (or assistng commumhes in preparmgnumber of important roles both during the and submitting subproject proposals);design and implementation of the social * NGOs as subproject implementors orfund itself and in the preparation, imple- financial intermediaries, and;mentation and evaluation of subprojectsfinanced by the fund. NGO participation in * NGOS co-financing subprojects orsocial funds is not sought as an end in supporting complementary activities.

Participation Series 1

NGO Involvement in WB-Financed Social Funds

NGO involvement in social funds can * assisting communities in the prepara-potentially serve to: tion of subproject proposals;

* promote pluralism (by enlarging the * facilitating subprojects that are highlypool of eligible subproject applicants dependent upon active communityand implementors); participation;

* provide alternative perspectives on * providing skills and services that arepolicy issues (for example, through lacking in the public and for-profit,NGO representation on the board); private sector (particularly in the fields

* contribute local knowledge (NGOs with of human resource development, basic

close community ties may be able to needs and micro-credit);provide valuable information on local * addressing issues related to subprojectconditions and community needs, in sustainability (for example, by promot-particular, during the design of the ing community participation and/orsubproject menu); helping to ensure adequate provisions

* improve project design (NGOs with for staffing, equipment and long-termrelevant operational experience can maintenance).

provide useful tips on targeting strate- Some of the key risks associated with NGOgic subprojects, selection criteria, coor-dination among local actors, monitoringmechanisms, etc.); * limited NGO capacity;

m extend project reach to poor and iso- * diversity in the levels of legitimacy andlated communities (in particular those competence of individual organizations;which lie beyond the scope of govern- weak or difficult NGO-State relations;ment programs and/or require assis-tance preparing subproject proposals); * the challenge of identifying and assess-

* enhance community participation ing NGOs with relevant skills and(through processes of NGO intermedia- experience (for example, those withtion, social mobilization and participa- participatory skills and links with poortory project planning and implementa- communities).tion), and; The extent of NGO involvement in indi-

* contribute to subproject sustainability vidual social funds varies greatly. It is(as a result of improved community estimated that, on average, NGOs sponsorparticipation or by supporting subse- or implement between 15 and 20 percent ofquent activities which complement or total SF-financed subprojects, and thatreinforce the SF-financed subprojects). approximately fifteen percent of total social

fund disbursements are channeled throughNGOs have demonstrated specific com- NGOs. It is further estimated that NGOsparative strengths in: play an informal role (such as assisting

* working with particularly poor and/or communities in identifying needs andremote communities; preparing subproject proposals) in as many

as 45 to 50 percent of subprojects. These

2 Environrnent Department Papers

Executive Summary

informal roles are rarely officially recorded, sector and/or are open to working withhowever, and NGOs normally receive no NGOs. The Bank can also play an impor-financial compensation from the SF for the tant role in working with government on anassistance they provide to communities in ongoing basis to foster better understand-an informal capacity. ing of NGO roles and to create greater

space for NGO activities and NGO-govern-The level of NGO involvement in a given ment collaboration.social fund is dependent upon a number of"supply-side" and demand-side" factors During the preparation of a social fund, it isincluding the capacity and skills of the important to begin with a realistic assess-NGO sector, the nature of NGO-state ment of existing NGO skills, experience andrelations, and the policies and procedures capacity. Some factors that should be takenof the social fund itself (in particular, ty,pes into account in selecting individual NGOof eligible subprojects, emphasis on com- partners include:munity participation and the availability offunding for preinvestment activities). hcredibity -acceptable to both stake-Based on current evidence, it is not possible holders and govepment, legally consti-to ascertain whether "supply-side" or tuted, politcally neutral;demand-side" factors play a greater role in * representativity -community ties,determining levels of NGO involvement. accountable to members/beneficiaries,The situation varies from country to coun- gender equality;try and, in almost all cases, a variety offactors are at play. The evidence does, m governance-sound internal manage-however, suggest that: (i) SF expectations ment, transparency, financial account-regarding NGO roles do not always corre- ability, efficiency;spond with NGOs' own perceived roles and * competence -relevant skills and experi-comparative advantages; and (ii) a nurrLber ence, proven track record; and,of characteristics of SFs can be identified(both at the level of policy and procedure) * instittional capacityi-sufficient scalethat may serve to limit NGO involvement of operatons, facilites, and equipment.

or lead to an underutilization of existing It is important to point out, however, that

selection criteria must be based on the

Where NGO-state relations are difficult, specific NGO roles envisaged. For ex-NGO wariness to become involved in a ample, the characteristics of NGOs chosensocial fund can be reduced through: earlIy to serve on the social fund board will differNGO involvement in the design of the from those of an NGO selected to imple-social fund; ensuring autonomy and trans- ment a subproject. These distinctions areparency in the operation of the social fund; discussed further in section III.C.guarding against political patronage in theselection/approval of subprojects; assur- Soclal funds have a potentially importantances that there will be no government role to play in contributing to the institu-interference in internal NGO affairs; and, onal development and capacity-buildingby recruiting social fund managers and. of NGOs. This can be achieved, for ex-staff that have experience in the NGO ample, by providing direct training to



NGOs, devoting a portion of the core social ensure community acceptance or awarenessfund budget to capacity-building activities, of the subproject. In situations wherecreating a "training" or "institutional community-level organization is strong, fairdevelopment" category of subprojects, and effective, the need for NGO intermedia-allowing a percentage of individual sub- tion may be less important. Not all com-project budgets to go towards capacity- munity-level organizations are representa-building purposes or by promoting partner- tive or democratic, however, and specialships between larger, stronger NGOs and measures may be necessary in order tosmaller, weaker ones. Social funds can also ensure the effective participation of poor orplay a role in disseminating information marginalized groups (including women,about successful NGO projects, thereby the landless, ethnic and religious minori-increasing levels of public and government ties, etc.).awareness and improving possibilities forreplication. Experience has shown that successful and

sustainable subprojects are frequentlyPromoting active community participation dependent not on any one actor but ratherin subproject preparation, implementation on the coordinated effort of a number ofand maintenance remains a key challenge actors. It is not always easy, however, tofor social funds. Although social funds are establish operational partnerships and tocommonly described as "demand-driven" coordinate relations between multipleand "participatory," there is growing actors. When selecting operational part-evidence that SFs may be less successful in ners, social funds should consider thepromoting community-level participation specific skills and comparative advantagesthan was previously believed. A recent of different types of organizations (e.g.,review of the BanKs SF portfolio, for ex- CBOs, NGOs, local government, privateample, found that only about one-third of sector firms), seek to promote "partner-SFs identify community development as a ships" among organizations with comple-project objective or invest in the capacity- mentary attributes and encourage coordina-building of community-level groups. tion among the full range of actors respon-(World Bank, March 1997). Although NGO sible for project sustainability.involvement does not, in and of itself,ensure participation and although not all Although NGOs have been broadly sup-NGOs are participatory, experience sug- portive of social funds as a mechanism forgests that given certain prerequisites (care- channeling multilateral resources to com-ful selection of NGO partners, appropriate munity-level development projects, they

pro-participation" policies and proce- have raised certain concerns and criticisms -dures), NGOs can potentially play an both, at a general level regarding the basicimportant role in promoting effective concept and impact of social funds, and oncommunity participation in SF-financed more specific issues, in particular, regard-activities. ing obstacles to effective NGO involvement

in social funds (including insufficientExperience has shown that merely requir- mechanisms for dialogue between SFs anding subproject proposals to be submitted by NGOs; lack of funding for preinvestmentcommunities does not guarantee commu- activities; bureaucratic procedures andnity participation, nor does it necessarily delays; and, a lack of emphasis on income-

4 Environment Department Papers

Executive Summary

generating and "process-oriented" sub- example, as a consultant to the SF, aprojects). board representative or a subproject

sponsor) wiIL obviously require veryA review of the strengths and weaknesses different sets of skilLs, capacity andof various aspects of social funds (both with experience.and without NGO involvement) suggests Assess NGO training/capacity-buildingthat strong and diverse NGO involvementcan help social funds become more effective S an sidw in which theinstruments of poverty aleviation. In order SF mlght assst addressg these (forexample, through an "institutionalto achieve improved NGO collaboration in development" subproject category orsocial funds, the report makes the following core training events).recommendations.

* Share all relevant project documenta-Recommendations for Social Funds. tion and consult with NGOs during

X Establish clear policies and guidelines project design.concerning community participation in * Devise a strategy for communicationsocial fund-financed subprojects. with NGOs (including, for example,

• Establish clear policies and guidelines information-sharing sessions, theconcmingNGOnvovemen idissemination of a SF newsletter, the

conceiafngNd estabLishment of a "public informationsocial fund. center', mechanisms for systematic

* Early on during project design, conduct consultations on both operational andan NGO sector assessment in order to broader issues).(i) identify those NGOs that have links * Consider establshing a joint SF-NGOwith poor communities, expertise in working group on operational issues.participatory development and aproven track record in relevant sectors; * Include NGO representatives in SF(ii) assess the overall potential for NGO study tours. (In Sri Lanka, for example,involvement in the social fund and; (iii) NGOs participated in visits to otheridentify NGO capacity-building needs. Asian social funds).(This assessment can be carried out * Include NGO representatives on thethrough interviews, field visits, benefi- board of the SF.ciary assessments, or in coordinationwith an umbrella organization.) * Use a pilot phase to test NGO capacity,

* Based on social fund goals and the evaluate operational procedures, etc.findings of the NGO sector assessment, * Make efforts to demonstrate to govern-identify and elaborate potential roles ment officials the value/benefits offor NGOs throughout the project cycle. involving NGOs (particularly in situa-

* Once potential roles for NGOs have tions where there is no history ofbeen identified, establish selection government-NGO collaboration).criteria specific to each role. It is essen- * Establish an NGO database and usetial that selection criteria are task-, computerized management informationspecific, since different NGO roles (for systems to keep NGO-specific statistics



(in order to facilitate monitoring). tory approaches to development.

* Offer technical seminars to participat- * Organize training for social fund staffing NGOs on the preparation of sub- on community participation, socialproject proposals, procurement proce- mobilization, working with NGOs, etc.dures, etc. * Ask NGOs to organize field visits,

* Develop appropriate, simplified docu- orientations for senior social fund staff.ments and implementation manuals.

*Consider secondments or staff ex-* Adapt procurement and disbursement changes between social fund and

procedures to facilitate NGO/commu- NGOs.

nityv involvement. * Consider the appointmnent of an NGO

* Where appropriate, make provisions liaison officer or the identification offor advance payments and altemative one staff member as the official NGOarrangements for NGOs and communi- contact. (Where NGOs play a multitudeties who are unable to secure bank of different roles, it may be preferableguarantees. to place emphasis on sensitizing all SF

staff to NGO-related issues rather than* T ake steps to ensure timely and effi-aponignectctern)

cient subproject processing mecha-nisms. In particular, aim to avoid * Assess overall NGO performance on andelays in subproject approvals and ongoing basis throughout the life of thedisbursements. project cycle and share these findings

with the NGO community, World Bank,* Assess (in collaboration with NGOs) n te rjc tkhles

realistic resource requirements forensuring effective community participa- Recommendations for NGOs (and/or NGOtion/ social mobilization. umbrella organizations)

* Where appropriate, support the fund- * Elect representatives or form a commit-ing of preinvestment costs (related to tee to ensure regular communicationsubproject preparation). with the social fund.

* Early on, establish (in collaboration Establsh contact with relevant gover-with NGOs) a methodology for system- ment and Bank staff early on andatic evaluation of NGO performance become involved in the design of the(through subproject evaluations, benefi- social fund (decisions such as whichciary assessments, etc.). activities will be included on the menu

• Encourage NGOs, CBOs, local govern- of eligible subprojects, for example, arements, private sector firms, and others key).to form operational partnerships. a Assist the social fund in identifying

* Recruit staff who have worked in the potential NGO partners with relevantNGO sector or who understand and are skills and experience.

respected by NGOs. * Learn as much as possible about the

* Recruit staff with expertise in participa- project as a whole (overall goals, appli-


Executive Summary

cation procedures, selection criteria, * Before taking on operational responsi-etc.) and not only NGO-specific issues. bilities, ensure your organization has all

* Bring problems and concerns to the the required capacity and skills. If not,immediate attention of social fund consider choosing a partner with(and/or government or Bank staff. complementary skills.Suggest solutions and request a spe!Cific * Before becoming involved in the socialtime-frame for the resolution of prob- fund, consider potential implicationslems. for your organization's current portfo-

* Request relevant project documents ho, priorities and goals, political au-and propose mechanisms for ongoing tonomy and community ties. Weighinformation-sharing. potential benefits and risks.

c Share experiences and lessons learned * Establish clear policies and guidelineswith other NGOs involved with the concerning community participation insocial fund or working in similar sec- social fund-financed subprojects (intors. collaboration with the government/

social fund).


1. Introduction

NGO involvement in Bank-financed One of the most important and promisingprojects has increased significantly in recent mechanisms for World Bank-government-years. While the credibility and competence NGO collaboration are the numerous socialof individual NGOs varies greatly and not fund-type projects financed by the Worldall NGOs possess knowledge and skills Bank. Since supporting the (now well-relevant to the Bank's work, experience has known) Bolivia Emergency Social Fund inshown that collaboration with NGOs 1986, the World Bank has channeled over(particularly those with direct community $1.3 billion to more than 30 social funds inties and expertise in participatory develop- Latin America, Africa, Asia and, morement) can contribute to the quality, recently, Eastern Europe. Social funds aresustainability and effectiveness of Bank- designed as rapid, demand-driven fundingfinanced projects.' The Bank acknowledges mechanisms which channel resources tothe potential benefits of working with community-level development projectsNGOs and actively promotes increased according to a set of predetermined selec-NGO input into project identification, tion criteria. They do not implementdesign, implementation, monitoring and projects themselves, but finance subprojectsevaluation. 2 As the Bank places growing proposed by other public, private andemphasis on "demand-led" and "participa- voluntary (formal and informal) organiza-tory" development, the particularly valu- tions.able role that NGOs can play as intermedi-aries between the Bank and its ultimate Given that they are demand-driven, pro-"beneficiaries," helping to ensure that poor vide funding in the form of grants (aspeople themselves play an active role in opposed to loans) and finance small-scaleshaping and implementing development projects in many of those sectors in whichprojects, becomes increasingly important. NGOs are most active (e.g., health, educa-As a result, the Bank aims, in particular, to tion, sanitation, micro-credit), social fundsexpand its relations with those NGOs that represent one of the most accessible formswork directly with poor communities or of World Bank financing for NGOs. At thethat represent the interests and views of same time, because social funds are depen-poor people. As the Bank gains more dent upon other actors to design andexperience in working with NGOs, it seeks implement the subprojects they finance,to extract lessons from these interactions because they target poor communitiesand to apply this leaming in order to (which often lie beyond the scope of gov-facilitate and enhance future collaboration. emient services) and because they seek to



promote active community participation, Bank-financed social funds. ThroughoutNGOs (particularly those that work directly the paper, a number of "boxes" providewith communities and have expertise in specific examples and case-studies. Sum-small-scale participatory projects) are mary information on NGO involvement innatural and valuable partners of social selected social funds as well as examples offunds. In addition to "using" NGOs in the NGO-related project documents, contractsimplementation of SF-financed activities, a and selection criteria are included in thenumber of the more recent social funds annexes.recognize the intrinsic value of a stronglocal NGO sector and seek to support the Social Funds 5

development and capacity-building ofNGOs as an explicit project aim. While the specific objectives of individual

SFs vary, social funds typically aim to:The purpose of this paper is to examinesocial funds as an example of World Bank- * mitigate the social costs of structuralgoverment-NGO collaboration, to assess adjustment reforms or respond tocurrent levels of NGO involvement and to emergencies such as natural disastersseek lessons learned based on experience to or wars;date. The paper is based on a desk reviewof Bank and non-Bank documents regard- p rove the living conditions o f pooring approximately 20 social funds.3 In ieople through the speedy provision ofaddition, the paper reflects the findings of basic economic and social services and/two recent workshops which brought or;together NGO, social fund, government * promote decentralized service deliveryand World Bank representatives to discuss by building local capacity and support-issues related to NGO involvement in social ing local (governmental and nongov-funds.4 Numerous NGO, social fund and ernmental) organizations that areBank staff also generously contributed responsive to local needs (Carvalho,information through interviews and per- 1994).sonal communications.

As mentioned above, SFs neither designThis first section of the paper provides a nor implement individual subprojectsgeneral introduction and some brief back- themselves. Instead, they provide fundingground information about social funds and to a potentially wide range of partnerNGOs. Section two outlines the various organizations (including community-basedpotential roles that NGOs can play in social organizations, NGOs, religious organiza-funds, the benefits and risks of such in- tions, private sector firms, local, regionalvolvement and the actual extent of NGO and central government agencies, etc.) on ainvolvement in Bank-financed social funds demand-driven basis. Key roles under-to date. Section three identifies a number of taken by the SF itself include promotionalkey issues and lessons learned, while activities (informing communities andsection four outlines some of the principal potential operational partners about thecriticisms and concerns voiced by NGOs. SF); designing the subproject menu (identi-Finally, section five provides recommenda- fying and defining which types of activitiestions for improved NGO involvement in will be eligible for funding); appraising


Introduction

subproject proposals for funding (based on income communities. Communities arepredefined selection criteria); and supervis- normally expected to participate actively ining the implementation of subprojects and project implementation and maintenancemonitoring their effectiveness. and to share a portion of project costs.

Social funds typically finance small-scale Particular strengths associated with socialactivities in the sectors of: funds include: rapid disbursement, flexibil-

* health (e.g., construction and rehabilita- ity in responding to demand from a largetion of healhfcihiesandrovnumber of sectors and implementing

etionohalth faciles and .printof agents, comnmunity participation and thedistribution of resources to the poor. Some

* education (e.g., construction and reha- identified weaknesses of social fundsbilitation of schools and provision of include trade-offs between demand-teaching supplies); drivenness and targeting the poorest, trade-

• water and sanitation (e.g., construction offs between rapid implementation andand rehabilitation of water supply capacity-building and limited capacity tofacilities, sold waste disposal); address fundamental issues of poverty

reduction and social development. 7* basic needs;

3 social programs; NGOs and CBOs

• micro-credit/micro and small enter- The term NGO embraces a myriad of

prise development; different types of organizations. At itsX roads, and; broadest, it refers to any group or institu-

* irrigation. tion that is independent from governmentand has value-based (humanitarian orcooperative) as opposed to profit-orientedSocial funds are typically set up as autono- pe ) pp p

mous institutions (either as an independent goals. For the purposes of this paper, agovernment institution that reports directly distinction is made between NGOs (inter-to the President or Prime Minister or, in mediary organizahons created to servesome cases, as a private nongovernmental others) and community-based organiza-institution) 6 The autonomy of social funds tions or CBOs (formal or informal localis considered essential in order to avoid associations formed to serve the interest of

eand to faciltate fast and their own members or community). Asefficient procurement and disbursement discussed below, both NGOs and CBOsprocedures. Sucial funds normally recruit have important potential roles to play instaff from the private sector and are exempt social funds. Because social funds financestf fro the prvt setradaeeep community-level developm!ent projects,from public sector salary caps. Most social l p

there is by definition some form of interac-

management systems aimed at ensuriing tion with a CBO (whether pre-existing orspeed, and efficiency and ongoing access to created iTn the relation to the subprojectup to date operational data. All social itself) in almost every case. One key role offunds operat datare. AR media- NGOs in SFs is to support CBOs or tofnisms plandi pioerity toarojtmectsinl- directly assist "communities" in organizingisms, and gSve priority to projects i low-



to prepare and implement subprojects. general strengths and weaknesses com-The legitimacy and quality of individual monly associated with the NGO sector atNGOs varies greatly, as do their particular large (Clark, 1991):development mandates and areas of exper-tise. For example, among NGOs working Strengthsin the development field, a distinction can * Direct community links and proximitybe made between operational NGOs - to target populationswhose primary purpose is to design andimplement development projects; and * Field-based development expertseadvocacy NGOs - who concentrate their * Flexibility and innovationefforts at the policy level.8 Among opera-tional NGOs, some organizations empha- r a ksize and excel in participatory approaches * Emphasis on sustainability(working directly with communities and * Cost-effectiveness.stressing local capacity-building), whileothers function in a more traditional service Weaknessesdelivery mode (based on particular techni-cal skllHs or sectoral expertise). While Lemphasis is usually placed on the role of skillsNGOs as promoters of community partici- * Limited institutional capacitypation, there are a wide variety of potentialroles that NGOs (with different skills andareas of expertise) can play in SFs. Given * Susceptibility to donor-driven agendasthe enormous diversity that exists among e Limited coverage and small-scaleindividual NGOs, it is extremely difficult to interventionsmake generalizations about the sector as awhole. The following, however, are some * Isolation/lack of coordination


2. NGO Involvemnent in Social Funds

Potential Benefits and Risks of NGO Box 1Involvement in Social Funds Benefits of NGO Involvement in the

Honduras Social Investment FundNot all NGOs are effective development "The benefits to the Honduras Social Investmentpractitioners, nor legitimate representatives Fund of NGO participation are several, namely:of the poor. In some countries only a NGO-executed subprojects mobilize moreminority of existing NGOs may have technical and financial resources than subprojectsrelevant skills, capacity and experience. executed by private contractors; the governmentExperience has shown, however, that can expand social service delivery by contractingcollaboration with such NGOs can bring NGOs, whereas private contractors do notprovide such services; NGOs support theimportant potential benefits, during both normative and supervisory role of the state; thethe design and implementation of social costs of NGO-executed subprojects are lowerfunds. Box 1 summarizes some of the than those of private contractors; NGOs imple-identified benefits of NGO participation in ment subprojects more efficiently and effectively

than the traditional public sector; and NGOs helpgenerate more employment in the productivesector. For NGOs, the benefits of participating in

During social fund preparation, NGCs the social find are employment opportunitiesengaged in policy research and socio- generated by the new source of financing,economic advocacy activities can some- expansion of NGO activities and substantialeconomic activities can some- ~institutional strengthening."times provide valuable alternative perspec-tives on issues regarding poverty reduction Source: Vandever Webb et. al., 1995, p. 8.and social development strategies. NGOsthat work directly with poor communitiescan be a valuable source of first-hand in the preparation and implementation ofinformation about the needs and priorities SF-financed subprojects can promoteof target populations (for example, provid- pluralism (by enlarging the pool of poten-ing useful input during the design of the tial project applicants and implementors).subproject menu). Including NGO repre- NGOs can also promote community partici-sentatives in consultations, planning activi- pation (through social mobilization andties and decision-making processes cam participatory development techniques),help to strengthen civil society support for contribute specialized skills lacking in thethe social fund (in addition to government public and private for-profit sectors (e.g.,and private sector support). expertise in the delivery of micro-credit and

alternative financial services for the poor),At the operational level, NGO involvement extend project reach (e.g., by assisting very



Box 2 The specific benefits that NGO involvementLimited NGO Involvement can bring to a SF depend largely upon the

in Senegal's AGETIP nature of collaboration, the specific roleswhich NGOs are requested/allowed to play

"In Senegal, NGOs have been excluded from the and the stage at which NGO involvement isAGETIP which has increased their opposition to sought. The following section describes athe govermnent and its programs. While the

AGETP prgramhas eensuccssfu fro ~nvariety of the different roles that NGOs canAGETIP program has been successful from anefficiency and transparency viewpoint, it has potentially play both during the design andbeen far less successful at reaching the most implementation of the social fund itself andmarginalized groups. The AGETIP works in the preparation and implementation ofprimarily through local governments, which areall part of the governing party (the opposition S uboycotted the 1990 municipal elections in protest these roles is provided in Box 3.against purported fraud in the 1988 nationalelections). It has limited contact with NGOs. As NGO Roles in the Design anda result, it is resented by many groups whoperceive the program to be "of the system" Implementation of the Social Funddespite the transparent nature of its operations.By relying solely on government-linked organi- Box 3zations for project proposals, the AGETIP has A Summary of potentiallimited its ability to reach out to groups and NGO Roles in Social Fundsactors traditionally marginalized from statepolicy benefits." Design & Implementation of the Social Fund

Source: Marc,1995, pp. 35-36. * Consulting with NGOs during design

* Hiring NGOs as consultants* NGO participation in SF governance struc-

poor communities in preparing subproject turesproposals) and enhance subproject * NGO cofinancingsustainability (by promoting participatory * NGO administration of a pilot phaseapproaches or by supporting subsequent * Contracting NGOs during the implementationactivities which complement or reinforce of the SF (to provide training/ technicalthe SF-financed intervention).' Box 2 assistance to SF staff, to undertake subprojectprovides an example of some of the poten- appraisal, supervision, monitoring, etc.)tial disadvantages of failing to involve * Independent NGO studies/evaluationsNGOs. Preparation and Implementation of

SF-Financed SubprojectsSome of the key risks associated with NGO - Communication/information-sharinginvolvement in social funds include: limited activities (formal or informal)NGO capacity; diversity in the levels of - Subproject applicant (or "requesting agency")legitimacy and competence of individual * Assisting communities in preparing sub-organizations; weak or difficult NGO-State project proposals (formally or informally)relations, and, the challenge of identifying * Implementing agencyand assessing NGOs with relevant skills * Financial intermediaryand experience (for example, those with * Subproject cofinancing/financing comple-participatory skills and links with poor mentary projectscommunities). These issues and others are * Training/technical assistance to communitiesdiscussed in section III of the paper. and/or implementing agencies


NGO Involvement in Social Funds

Consulting with NGOs during design ensure that the sector is well-informed

In recent years, the World Bank has placed about the social fund, helps to build broad-increased emphasis on broad-based stake- based support for the project and improvesholder consultation during the identifica- the chances for effective NGO involvementtion and design of the projects and pro- during implementation.' 0 The final reportgrams it supports. Such consultation is from a 1990 workshop on Poverty Allevia-particularly important in the case of social tion, Basic Social Services and Social Fundsfunds given their demand-driven nature in Central America, states that "local com-and the fact that they depend upon the munities and NGOs should from theactive involvement of a wide number of beginning be associated with the planningdifferent actors (to prepare and submit and setting up of social funds ... as thisproposals, implement subprojects, ens-ure improves the structure of the social fundsongoing maintenance, etc.). and enables them to get into action quickly

and efficiently" (World Bank, 1990, p. 24).

NGOs can serve as important sources of Consultation with NGOs can take manyinformation concerning local-level priorities different forms. It might involve, forand needs during the design of a social example, meeting informally with one orfund. NGOs that are engaged at the com- more NGOs to seek advice on a specificmunity level can frequently provide first- issue, calling a more formal meeting/hand information about existing social workshop to share information and seekconditions, levels of community organ iza- feedback from the NGO community attion and realistic estimates of absorptive large, circulating draft project documents tocapacity. Based on their own operational NGOs for their comment and/or establish-experience, NGOs can often provide tips on ing a joint "NGO Committee" to ensureidentifying quality contracting at the local ongoing consultation and dialogue. Box 4level, working through local banking describes steps taken to consult with NGOssystems, coordinating with local govern- during the preparation of the Jamaica Socialment and other community-based orgetni- Investment Fund.zations, targeting specific groups (thepoorest, women, female-headed house- Broad-based consultation with NGOs inholds, etc.), and monitoring small-scale early stages does pose certain risks. Forprojects in difficult environments. They can example, the process may take time andoffer advice as to what has and hasn't there is no guarantee that consensus will beworked in the past and what types of achieved, particularly in situations whereactivities stand to have the strongest pov- NGOs and the govemment hold highlyerty reduction impact. This type of input divergent views or where there is no his-can be particularly helpful in identifying tory of NGO-State collaboration. In Guate-and prioritizing categories of eligible sub- mala, for example, attempts to involveprojects, establishing selection criteria and NGOs in consultations during the design ofdefining operational procedures. In Mada- the SF proved extremely complex and time-gascar, for example, NGOs provided useful consuming (PACT, 1990). Box 5 describesinput during the preparation of the social some difficulties encountered in Ecuador,fund Operational Manual. for example. The exercise may prove

counterproductive if NGOs do not seeConsultation with NGOs also serves to concrete results from their input. In coun-



Box 4Consulting with NGOs in Jamaica

The Jamaica Social Investment Fund (SIF) was approved by the Board of the World Bank inOctober 1996. From the earliest stages, the project team recognized the importance of a transpar-ent and participatory approach and sought mechanisms to ensure the active involvement ofCBOs and NGOs, as well as the government and private sector. To this end, a workshop onSocial Investment Funds and NGO Participation was held in Kingston in December 1995 (fi-nanced in part by a grant from the Fund for Innovative Approaches to Human and Social Devel-opment). This workshop was attended by representatives from 36 Jamaican NGOs and CBOs,the Managing Director (designate) and members of the JSIF Project Preparation ManagementUnit as well as World Bank project staff and resource persons. SF and NGO representatives fromfour other countries (Bolivia, Nicaragua, Zambia and Guyana) were invited as resource people toshare their experiences concerning NGO involvement in SFs.

The objectives of the workshop were to inform the Jamaican NGO/CBO community about theupcoming social fund; learn from previous experiences of NGO involvement in SFs in othercountries, and; consult with the Jamaican NGO/CBO community regarding their participation inthe design and implementation of the JSIF. The workshop was purposefully held early on in theproject cycle in order to allow NGOs the opportunity to influence the preparation process.Principal themes of discussion included: potential roles for NGOs/CBOs in the design andimplementation of the JSIF; mechanisms for ensuring effective community participation insubprojects; the comparative advantages and capacity-building needs of the NGO/CBO commu-nity, and; mechanisms for ensuring the sustainability of JSIF subprojects. Recommendationsresulting from the workshop included the creation of an NGO/CBO advisory committee toensure continued dialogue with the JSIF, the development of a comprehensive communicationstrategy, provisions for the JSIF to support strategic technical assistance to NGOs/CBOs andother community groups and NGO/CBO involvement in the definition of criteria to ensure thesustainability of subprojects.

tries where the NGO community is highly what type of input is being sought,politicized or lacks cohesion, it may be what is and is not negotiable, what todifficult to identify legitimate intermediar- expect and not to expect, etc.ies and to avoid exacerbating tensions and In addition to one-off meetings/work-divisions between different NGO "fac- . . . .tions." NGOs may also have their own shops, consider establishing a jointNGO/SF committee to ensure system-agendas that do not necessarily reflect atic and ongoing consultation.community priorities.

* Allow sufficient time. Achieving

Recommendations agreement among a wide range of

If consultations involve only a limited stakeholders may take time, but can

number of NGOs, ensure mechanisms bring inportant benefits in the long-to keep the broader NGO community run.informed of key developments and * Consider engaging an NGO as a peerdecisions. reviewer of the social fund.

o Be clear and up-front with NGOs as to * Ensure that other key stakeholders


NGO Involvemrent in Social Funds

(e.g., communities, local govemments, indicators. In Cambodia, for example, aprivate sector firms) are also consulted. locally-based international NGO was

contracted to establish eligibility criteria forHiring NGOs as consultants water and well projects. This NGO was

Individual NGOs have frequently been chosen due to its combined technical exper-contracted to provide specific services tise and excellent understanding of localduring the design of a social fund. These conditions. NGO staff were hired as con-might involve: conducting community sultants to prepare the Burundi social fundneeds studies, household surveys, poverty which reportedly went a long way towardsassessments and other targeting exercises, creating support for the fund among theor assisting in the development of sub- NGO community and facilitating collabora-project selection criteria or evaluation tion with NGOs during implementation.

Box 5Consulting with NGOs during Social Fund Design:

Difficulties Encountered in Ecuador

In 1989, the World Bank and the government of Ecuador began to discuss the creation of asocial fund. From the outset NGO invo]Lvement was perceived as an important element. Al-though a significant number of NGOs were active in Ecuador at the time, the majority of thesewere young and small and there was little coordination among the sector as a whole. As a result,the World Bank undertook efforts to support the institutional development of NGOs during thepreparation of the social fund in order to promote effective NGO participation once the fundbecame operational. This included a series of seminars on strategic planning techniques aimed athelping NGOs better coordinate among themselves, establish long-term goals and enhance theirdialogue with the government. Although many NGOs were initially suspicious of goverrnentand hesitant to become involved, in the end, an NGO working group on participation in thesocial fuind was formed. The Bank also commissioned a local intermediary NGO to undertake anassessment of the NGO sector and provided funding for a trilateral government-NGO-Bankseminar to discuss potential NGO roles in the SF and appropriate operational arrangements.

Prior to the finalization of the social fund, however, a change in government occurred and, asa result, a number of changes were made to the SF which generated resentment and confusion onthe part of NGOs. Expectations had been raised and many NGOs were disappointed and disillu-sioned with the final design of the SF. Project staff point out that NGOs and the social fund didnot share a common understanding of thie purpose of consultations. The social fund was mostinterested in technical inputs from NGOs (assistance in developing evaluation criteria, for ex-ample) while NGOs were mainly seeking to promote procedures and subproject categories thatwould facilitate their participation. In the end, neither group's expectations were satisfied.Although a significant number of "technically-oriented" NGOs have since participated in the SF,the involvement of those more "process-oriented" NGOs that participated in earlier discussionshas been limited. These NGOs attribute their lack of involvement, in part, to the SF's focus on"infrastructure" projects and the fact that no reimbursement is available for project preparationcosts. It is interesting to note that although CBOs were not involved in the process of social funddesign (neither by social fund staff nor by NGOs) they have been active participants in subprojectimplementation.



NGOs can be cost-effective as consultants tation on the board of the social fundand often possess local language skills and (specifically in those cases where NGOs arevaluable knowledge of local conditions. In expected to play an important role) in ordersome cases, NGOs may have specific skills to ensure broad stakeholder views andor experience (e.g., participatory research promote strong social fund-NGO relations.methods, understanding of indigenous Potential risks include government reluc-technologies) not found in the public or tance to include NGOs, differences andprivate for-profit sectors. The competence divisions among NGOs, the possible risk ofand quality of individual NGOs varies creating diverging views and increasedgreatly however. Not all NGOs are profes- conflict among board members, the risk ofsional or participatory and many local NGOs seeking to promote their own self-NGOs may have limited capacity and be interests (as opposed to those of poorunable to take on large-scale responsibili- communities) and the difficulty of identify-ties. ing an appropriate NGO representative

(especially in cases where NGOs are di-Recommendations vided into political or ideological camps or

e When hiring an NGO as a consultant where the sector is dominated by a fewfollow the rules and procedures out- powerful politicized or partisan personali-lined in Guidelines: Use of Consultants ties). Special care should be taken to ensureby World Bank Borrowers and by the a democratic and transparent process inWorld Bank as Executing Agency selecting NGO representatives to the board.(Washington: World Bank, 1981). Ideally, NGOs should be allowed to elect or

nominate their own representatives (where* Carefully assess potential NGO part- possible through existing NGO associations

ners to ensure suitability, relevant skills or umbrella organizations).and experience (e.g., technical exper-tise, local knowledge, community ties, The majority of those social funds reviewedparticipatory skills and adequate capac- have NGO representatives on their board,ity). Tips on assessing NGO capacity and a smaller number have named NGOsare outlined in section III.B. to subproject selection committees. While

* Establish clear selection criteria and these experiences have generally beenensure maximum transparency in judged favorably by both social funds andselecting NGO consultants. NGOs, in a few cases NGOs have com-

plained that their presence on the socialTake recauionsto gurd aginstfund board iS merely symbolic and that

potential conflict of interest (such as thy bare d fromcetin acti tiesengaing n NO todeveop elecion they are excluded from certain activities

engaging an NGO to develop selection and decision-making procedures. In other

criteria thater may. wish toapplyforcases, NGOs have not been invited to sit onfunds later on). the board but rather to "advise" the board.

NGO participation in social.und In the case of Sri Lanka, for example, anNgoveartci stion iuso NGO Advisory Committee was established.

NGOs felt, however, that they lacked realMost Bank staff, SF staff and NGO repre- authority and influence in this capacity andsentatives interviewed felt that it is impor- have since been granted representation ontant and beneficial to have NGO represen- the board of the fund.



Recommendations NGO administration of a pilot phase

* Work through NGO umbrella orgeniza- A growing number of more recent socialtions (where they exist) in identifying funds have employed a pilot phase in orderNGO representatives. to identify obstacles and test operational

.Be aware of and sensitive to existiig mechanisms and procedures. Particularlydivisions among NGOs (or groups of in situations where the social fund office is

NGOs) and avoid exacerbating these. not yet fully in place, NGOs can play animportant role in designing, supervising,

* Where feasible (where a sufficient level implementing and evaluating pilot sub-of coordination amongst NGOs exists) projects. In the case of the Armenia socialconsider allowing NGOs to elect or fund, an international NGO with localnominate their own representative(s) to linkages, was selected to administer thethe board. This may reduce the danger pilot phase. It has since continued toof the SF being perceived as selecting undertake capacity-building activities with"favorites" and can serve to promote local NGOs in parallel with the main phasemore effective representation and of the project. See Box 6. In the case of theinformation-sharing among the broader proposed Palestinian NGO Project, an NGONGO community. (or group of NGOs) will be selected

* Take steps to ensure that the board through a process of international competi-enjoys maximum political autonomy. tive bidding to manage the entire fund. See

Box 7..Ensure that NGO representatives are

granted the same status as other board Contracting NGOs during themembers. implementation of the socialfund

* Take precautions to guard against In a number of countries, social funds havepotential conflict of interest (such as contracted NGOs to appraise, superviseinvolving an executing NGO in project and monitor subprojects or to provideapproval). training and/or technical assistance to

social fund staff. Khadiagala (1995) pointsNGO cofinancing out that subproject supervision is often aMost social funds mobilize support from a weak link in social fund operations due tonumber of multilateral and bilateral donors. limited staff resources. Sub-contractingIn some cases, larger international NGC)s such responsibilities to qualified NGOs canhave participated as cofinanciers. In Bo- allow social funds to ensure adequatelivia, for example, Save the Children dc- supervision while controlling administra-nated funds to the Emergency Social Fund. tive costs. In Egypt, for example, the socialIn the case of Honduras, the head of the fund successfully bundles together sets ofsocial fund traveled to Washington to seek projects and contracts out their supervisionfinancial support from the international to NGOs (Khadiagala, 1995, p. 19). Box 8NGO community. Such participation, describes various responsibilities contractedalthough rare, can serve to strengthen the out to international NGOs in Guinea. InBank's (and borrowing governments') other cases, NGOs have been contracted byrelations with international NGOs and to social funds to monitor subproject imple-promote donor coordination and mutual mentation, undertake participatory evalua-learning. tions of subproject impact or train social



Box 6An NGO as an Administrator of a

Pilot Phase in Armenia

I The Armenia Social Investment Fund (one of a limited number of World Bank "ParticipationI Flagship" projects) began operations in February 1996. The preparation of the ASIF included ai pilot phase, jointly administered by the Armenia Assembly of America (AAA) and a small govern-

mental unit. The AAA is a Washington-based NGO which supports development projects inArmenia and promotes public understanding and awareness of Armenian issues in the U.S. Thepilot phase, during which 13 pilot subprojects were implemented, proved extremely useful intesting methods and procedures to encourage community and small contractors participation. Thepilot flagged potential problems and provided information about local capacity and needs. Be-cause of lack of credibility of city councils and local governments (still operating in a very topdown fashion inherited from the Soviet Union) and "high levels of learned dependency anddistrust of Government" among the local population, it was decided during the pilot that sub-projects should be managed by subproject committees directly chosen by the beneficiaries andworki-ng in collaboration with local governments. The pilot also helped in developing procurementprocedures that would promote the participation of comnmunities and small contractors and servedto test different mechanisms for community financial contribution. Based on these and otherfindings, project staff were able to foresee problems, obstacles and opportunities and modify theidesign of the social fund accordingly. At the time it was implementing the pilot phase, the AAAiwas also the designated coordinating body of NGOs which helped in providing information aboutthe ASIF to the NGO community. The AAA representative in Yerevan is now a Board member ofLhe ASI'F which helps in ensuring continuity between the pilot and the main phase of the project.

fund staff in such techniques. Although Recommendationson-ily a ii-mited number of NGOs may be * Ensure clear terms of reference forable to fulfill these functions, and careful contracted NGOs.assessment is required, NGOs' oftenunique combination of technical and "so- * Ensure a thorough assessment of NGOcial" skills (e.g., the ability to work with capacity, track record, financial/mana-grassroots organizations, to interact effec- gerial skills, etc. (tips on assessingLively with local communities and to pro- NGOs are outlined in section III.B.).mote social mobilization) can make them * Make provisions for regular communi-particularly well-suited for such tasks."1 In cation and close coordination withsuch cases, NGOs are obviously not se- NGOs contracted to perform key sociallected on the basis of "political representat- fund functions.ivity" (as in the case of namning a candidateto the board) nor as civil society "stakehold- Independent NGO studieslevaluationsers" 'as may be the case in consulting with+GOs during design) but simply on the NGOs have carried out a number of inde-basis of the specific skills, capacities and pendent studies concerning the effective-expertise that they possess and the com- ness and impact of Bank-financed socialVetitive advantages they offer over other funds, some of which are described in Boxpotential contractors. 9. Although these studies are sometimespotential contractors. critical of social fund operations and their



Box 7 NGO Roles in the Preparation andPalestinian NGO Project Implementation of Subprojects

This project, currently under preparation, is Communication/Information-sharingexpected to become operational in FY97. The activitiesproject design resembles that of a social fund,however, the project is unique in that it would NGOs can play an important role m ensur-be financed using IBRD surplus and net ing that communities are well informedincome. Project funds will not pass through about social fund operations. In mostgovernment channels and will not be repaicl. cases, this "promotional" role is undertakenAlthough the Palestinian Authority has been informally, by NGOs sharing informationclosely consulted during design, has included about social fund operations with thethe project in its list of core priorities and will communities with which they work. Al-sit on the project's Governance Committee though no statistics are available concern-(along with donors, NGOs and other repre- ing the extent to which NGOs are respon-sentatives), its role in the project is secondary. sible for informing communities about SFIt will neither receive project funds norparticipate directly in project implementation. oportunties, there is eneral agreementThe project, which will channel grants to that NGOs have made a significant contri-NGOs for poverty reduction activities, will be bution in this area in a number of countries.managed by an NGO, selected through a The role of NGOs in spreading news aboutprocess of international competitive bidding. social fund activities can be particularlyThe managing NGO (or NGOs) will be beneficial when they are in contact withresponsible for managing the fund and otherwise isolated, poorly informed com-approving and monitoring grants. The munities. There is, however, a risk ofGovernance Committee, made up of NGO, NGOs disseminating inaccurate informa-donor, goverrnent and other representatives tion and/or raising undue expectations aswill establish policy, oversee the project and to what types of activities are eligible forseek to ensure coordination and complement- social fund support. In some cases, NGOsarity with other goverment and donor-sponsored activities. may also be concentrated in urban areas

and not necessarily have a presence inthose communities that are poorest or most

impact, they can be a source of valuable remote.feedback, thoughtful analysis and construc-tive advice. In recent years, a growing Recommendatonsnumber of country and regional-level * In order to avoid misinformation,consultations have provided opportunities ensure that NGOs have up-to-date andfor NGOs to share their views and findings accurate information about the SF (forwith social fund and Bank staff. A descrip- example, by disseminating a SF facttion of one such workshop held recently in sheet or newsletter, holding informa-Honduras is included in Box 10. Plans are tion workshops, speaking at NGO-currently underway to hold a global work- organized events, etc.).shop on the subject of social funds (involv- Seek advice from local NGOs on theing a broad range of donors, government most effective ways to disseminateofficials, SF staff and NGOs) at the World information directly to communitiesBank in the spring of 1997. (e.g., popular radio programs, village



Box 8 Box 9Contracting International NGOs NGO Assessments of Social Funds

as Intermediaries in GuineaIn recent years, NGOs have devoted consid-

Initially Guinea's Socio-Economic Develop- erable time and effort to evaluating andment Program was conceived as a fast commenting on social funds. For example, indisbursing SF along the lines of the Bolivian April 1995, FICONG (a network of Latinmodel. In the first 18 months of operation, American NGOs supported by the Worldho,wever, only four subprojects were Bank's Economic Development Institute)approved, largely due to the weak capacity devoted a special issue of its journal, Pobrezaof local NGOs and CBOs and their limited Urbana y Desarollo, to the subject of socialability to prepare acceptable project propos- funds in Latin America. NGO members ofals. As a result, the Guinean fund aban- the NGO-World Bank Committee (the officialdoned the initial idea of a fast-disbursing forum for Bank-NGO dialogue) have recentlyoperation and focused on a slower process identified social funds as a subject of priorityof improving the quality of project subnis- interest and have sponsored independentsions and seeking ways to build NGO evaluations of social funds in Chile, Guate-capacity. At the same time, the social fund mala, Honduras, Peru and Sri Lanka. Theitself lacked the capacity to provide ad- Center for Democratic Education (a Washing-equate assistance in the preparation of ton-based NGO) and CIDECA (Consejo desubproject proposals and to ensure timely Investigaciones para el Desarrollo deapproval. (On average, there was a delay of Centroamerica) have recently conductednine months between subproject application studies on social funds in El Salvador andand approval, and delays of up to 20 Guatemala respectively. In February 1996 themonths before project implementation). In Protestant Association for Cooperation inorder to achieve faster, more flexible and Development (EZE) in Germany organizedefficient project preparation and approval, an international symposium to discussthe social fund introduced a system of structural adjustment policy and SFs in Latincontracting out certain responsibilities to a America (with a focus on Honduras). Alimited number of international NGOs (the number of key issues raised by these NGOstwo most important being the Adventist and others are described in Part IV. Refer-Development and Relief Agency, ADRA, ences for these various studies are includedand the Centre Canadien d'Etudes et de in the bibliography.Cooperation Internationale, CECI). A"standing offer" for a given amount wasestablished with these organizations ($1 Mworth of subprojects in the case of CECI, for meetings, strategic locations for placingexample) who then acted as intermediaries posters and handing out brochures,in identifying communities, providing etc.).support and assistance in subproject prepa- Where appropriate, consider contract-ration and approval as well as ensuringongoing maintenance and supervision (in ing NGOs to take formal responsibilitycollaboration with communities). Interme- for aspects of social fund promotion.diary NGOs could claim approximately 12%of total subproject cost for these services. Subproject applicantOver 50% of total subproject funds were (or "requesting agency")disbursed in this manner. As a general rule, in order to promote

Source: Voyer, 1995 maximum "beneficiary ownership," it is



Box 10Regional Seminar on NGO Involvement in Central American Social Funds

In November 1995, a seminar on the subject of "NGO Involvement in Central American SocialFunds" was held in Roatan, Honduras. The seminar was attended by Honduran governmentofficials, staff members from social funds in Honduras, Nicaragua, Guatemala, El Salvador andPanama, NGO leaders from each of those five countries (as well as from Costa Rica and Belize)and representatives from the World Bank, IDB, KfW and Ruta Social.

Topics of discussion included:* mechanisms for improved SF-NGO collaboration.* potential roles for NGOs in the SF project cycle and NGO partnerships with other organiza-

tions (e.g., local government, private sector firms).* the role of NGOs and the SF in promoting effective community participation and local

capacity-building.* recommendations for improving the sustainability of SF-financed projects.

In order to improve SF-NGO Collaboration, it was recommended that:* subproject sustainability is. depende:nt upon effective community participation and ensuring

adequate measures for ongoing maintenance and support.* more emphasis should be placed on social impact assessments.* in order to achieve genuine commrunity participation, there is a need for a clearer under-

standing of the concept of "participation" as well as more resources and better tools topromote and measure participation throughout the project cycle.

The Seminar concluded:* SFs should maintain an NGO databaLse.

* joint SF-NGO committees should be created at the country level.

* in-country seminars and workshops for SFs and NGOs (on operational issues and broaderquestions such as participation, poverty reduction, etc.) should be organized on an ongoingbasis.

desirable that subproject proposals be tion) involve more than one community,submitted by beneficiaries themselves or by other actors such as NGOs, local govern-that level of organization in closest proxim- ments and private sector firms may playity to ultimate users/beneficiaries. A the role of subproject applicant-normallynumber of social funds only allow commu- on the condition that they provide evidencenity-based organizations (CBOs) or cornmu- of community endorsement and involve-nities themselves to submit subproject ment.proposals. Where communities (or CB0s)lack the capacity, however, to prepare amd In such cases, social funds can be an impor-submit proposals, or where subprojects tant source of financing for local NGOs,(such as credit programs or road construc- allowing them to broaden and diversify



their funding base, expand their experience, firms. (For more on NGOs and communityimprove the quality of their interventions participation, see section III.F.).and increase their level of interaction andinfluence with government. The involve- Recommendationsment of NGOs as subproject applicants * Regardless of the applicant, all sub-offers a number of potential benefits to the project proposals should require evi-SF. Allowing NGOs to apply for subproject dence of community participation andfunding can promote pluralism by expand- endorsement (prior to approval).ing the pool of potential applicants and * Where a number of different actors areensuring that funds are not continually egible subproject applicants, take into

channeled to a small number of pohitically consideration that the same procedures,connected contractors. In some sectors,NGOs may be the only existing institutions criteria, communication strategies, etc.with required skills and experience. In the may not work equally well with each

case f Honuras,for eample NGOsweredifferent group (e.g., the informationcase of Honduras, for example, NGOs were and technical assistance needs of CBOs,virtually the only organizations with exper- NGOs and private sector firms aretise in microenterprise development.NGOs carried out 80% of urban informal likely to differ).sector credit projects and 90% of rural credit * Offer training to NGOs (and otherprograms. Without their participation, the potential applicants) on SF procedures,social fund would have been unable to how to prepare subproject proposals,undertake these programs. etc.

9 Assess the comparative strengths andEvidence also suggests that NGO involve- weaknesses of different types of sub-ment as subproject applicants may, in some project applicants (e.g., communities,cases, contribute to improved targeting, NGOs, local government, privatecommunity participation and project sector) and try to promote complemen-sustainability. While NGOs are not always tary forms of collaboration and partner-present in the poorest regions of a country, ship.it is sometimes the case that they do havelinks with poor or isolated communities Assisting communities in preparing sub-that lie outside the scope of government project proposals (formally or informally)structures and services. In the case of Probably the most significant contributionBolivia, for example, social fund staff that NGOs currently make to social funds isindicate that "the main reason for the the assistance they provide to communitiesinvolvement of NGOs within the scope of (both formally or informally) in preparingSF's work was to reach areas where the and submitting subproject proposals.State had no presence." (Lema, 1995) Under some social funds, NGOs thatAlthough the evidence is mixed, experience support communities in preparing andhas also shown that, generally speaking, implementing subprojects may be formallyNGO applicants are more likely to empha- recognized as subproject "sponsors" andsize community participation and invest may be eligible to claim some percentage ofmore effort towards ensuring the long-term total project cost to cover their time andsustainability of subprojects than for expenses. In most cases, however, NGOsexample the private sector, or for-profit

24 Environrment Department Papers


provide assistance to communities on an agencies, the social fund should foreseeinformal basis - meaning that they receive potential difficulties and make appro-no payment for these services and the social priate provisions (such as ensuringfund may not even be aware of their in- timely disbursements and advancevolvement. Such intervention on the part payments).of NGOs can be particularly important in NGOs, CBOs (and other potentialthe case of very poor communities that lack implementing agencies) are frequentlythe required capacity and skllHs to prepare a unfamiliar with Bank procurementproposal on their own and, in situations procedures. In order to address thiswhere social funds lack the necessary staff, problem, social funds should considerto be able to provide such support. (Issues organizing workshops (for NGOs andrelated to the current lack of funding for other potential supplementing agen-these "preinvestment activities" are dis- cies) on the Bank's procurement proce-cussed in section IV. B.) dures and make provisions for ongoing

Recommendation access to technical assistance as re-quired. In addition, social funds should

NGOs often face serious resource con- use simplified procurement instructionsstraints and the time and energy they and bidding documents and ensure thatinvest in assisting communities to prepare these are made available in localsocial fund proposals (even as formal languages.sponsors) is often borne at their own cost.Where this is a common practice, social Financial intermediaryfunds should consider mechanisms for In Panama, for example, NGOs' principalcompensating NGOs for these services. official participation in social fund-financed

subprojects has been as subproject "adrmin-ImplementingAgency istrators." In this role, NGOs act as a

When NGOs act as subproject applicant, financial intermediary on behalf of thethey normally also undertake the role of community. Deposits are made into theimplementing agency. Similarly, other NGO's bank account and the NGO in turnsubproject applicants (such as commuaities handles payments to contractors executingor municipalities) may contract an NGO to the work. For these services, the NGOfulfill this role. Common responsibilities of receives a payment of 3% of the projectthe implementing agency include: collect- budget (or up to 10% if their role involvesing the community contribution; tendering providing technical assistance). NGOsand evaluating bids; contracting and niak- have acted as "administrators" in approxi-ing payments to the subproject contractor, mately 20% of SF projects. While NGOssupplier and supervisor; monitoring have expressed interest in playing a greaterprogress and; reporting problems to the SF. role in subproject design and execution, the

SF questions NGOs' technical capacity toRecommendations execute (mainly infrastructure) projects

* NGOs frequently have very limited and, for the moment, NGO involvementcapital reserves and may have difficulty remains largely limited to a role of financialin securing bank guarantees. Where intermediation.NGOs are acting as implementing



Subproject cofinancingl activities such as the fostering of newcomplementary projects attitudes, conflict resolution, developing

In some cases NGOs have supplemented problem solving techniques, etc. In suchsocial fund financing with resources from circumstances, requiring a mix of "social"their own budget when carrying out com- and operational skills, NGOs may havemunity-level projects. They have also certain comparative advantages over othersometimes chosen to undertake indepen- more technically-oriented private sectordent complementary projects in communi- contractors.ties receiving social fund funding (forexample, supporting the capacity-building Recommendationsof CBOs, funding equipment or delivering * Use a pilot phase to identify key train-services which complement SF-financed ing/technical assistance needs ofinfrastructure subprojects). Such actions potential subproject applicants andcan help to enhance the integration and implementors.sustainability of social fund-financed * Take into account the skills mix, com-subprojects. parative advantages and local accept-

ITrainingltechnical assistance to communi- ability of various organizations inties and/or implementing agencies selecting trainers/providers of technical

assistance.NGOs are sometimes contracted by thesocial fund to train or provide technical - Consider including an "institutionalassistance to communities (and/or imple- development" or "capacity-building"menting agencies) to enhance subproject category on the subproject menu.implementation or maintenance. The Fond Estimated Current Levels ofd'Appui au D6veloppement Communau- Involvement Level ftaire in Comores, for example, contracted NGO Involvement in Social Fundsan international NGO (Center CanadianandintEduational NCO Cooperonteranadiana) The extent of NGO involvement in indi-d'Education et Coop6ration International) vidual social funds varies greatly. Someto coordinate technical assistance to com-munities. The success of the Armenian basic information about the level of NGOsocial fund pilot phase was attributed in involvement in a selected number of Bank-part to the significant amount of support financed social funds is included in Annexand technical assistance provided by the I. These figures are based on statisticaladministrating NGO (Armenian Assembly information from social fund reports,of America) to contractors and implement- operational files or, in some cases, estimatesing agencies. As the capacity of the social by social fund staff. Because the specificfund to provide individualized technical nature of NGO collaboration varies andassistance during the main phase of the social fund records do not always containproject will be more limited, one of the NGO-specific information, it is very diffi-recommendations of the pilot phase was to cult to compare levels of NGO involvementsubcontract these "technical assistance" in different social funds or to provide anroles to NGOs. It was pointed out that the estimate of overall NGO collaboration.type of technical assistance required is not Bearing in mind these limitations, thesimply task-oriented, but may involve following are some general findings regard-



ing the level of NGO involvement in social implementing agency, financial inter-funds to date. mediary, etc.) exact levels of disburse-

ments to NGOs are difficult to deter-* A majority of social funds have in- mine.

volved at least some level of consulta-tionwithNGOsdurig deign hase. *By far the most common role played by

tion with NGOs during design phases. NGOs is to assist communities (orIn approximately one third of the social community-based organizations) in thefunds reviewed, this consultation could design and implementation of sub-be described as significant (i.e., ongoing projects. In some cases, NGOs areconsultation with a considerable num- formally recognized as subprojectber of NGOs resulting in some identifi- fsponsors" and may claim a certain

able impact). percentage (usually between 5-15%) of

* A majority of the social funds reviewed total project costs to cover their ex-have NGO representatives (in a few penses and services. Much morecases nominated, but more commonly frequently, however, NGOs provideappointed) on their board. assistance to communities on an infor-

* It is estimated that, on average, NGOs mal basis and, therefore, receive nosponsor or implement between 15 and official recognition or financial compen-20% of total subprojects (the remainder sation for these services. It is estimatedbeing sponsored or implemented b{ that NGOs provide some form ofcomrnmunity groups, local governments informal assistance in as many as 45-or private sector firms). Levels of NGO 50% of social fund-financed subprojects.involvement vary enormously among * As would be expected, NGO involve-individual social funds, however, ment is highest in the sectors of health,ranging from near zero (in the case of education, community developmentthose social funds that require sub- and micro-credit. It is lowest in eco-project proposals be submitted by nomic infrastructure and public workscommunity members or local govern- projects.ment) to close to 100% (in the case ofthose funds that classify all non-state NGOs have demonstrated specific com-actors including CBOs, existing or parative strengths in: (i) working withcreated, as NGOs). particularly poor and/or remote communi-

* It can be estimated that, on average, ties "where the added expense (of extraapproximately fifteen percent of total transport costs, time and energy) cuts intosocial fund disbursements are chan- the profit margins of for-profit businesses"neled through NGOs (the remainder (Parish, 1996; Lema 1995); (ii) facilitatingbeing channeled directly to communi- subprojects that are highly dependent uponties or through public or private for- active community participation; (iii) provid-profit intermediaries). Again, the ing skills and services that are lacking innumbers vary greatly among individual the public and for-profit, private sectorsocial funds, ranging from near zero to (particularly in the fields of human resourceclose to 100 percent. Due to the wile development, basic needs and micro-variety of different roles played by credit), and; (iv) addressing issues relatedNGOs (e.g., subproject applicant, to subproject sustainability (e.g., by pro-



moting community participation and by Based on current evidence, it is impossiblefocusing more attention on provisions for to ascertain whether "supply-side" orstaffing, equipment and long-term mainte- "demand-side" factors play a greater role innance). (Presidencia de la Republica del determining levels of NGO involvement.Ecuador, 1996.) The situation varies from country to coun-

try and, in almost all cases, a variety ofThe level of NGO involvement in a given factors are at play. The evidence does,social fund is dependent upon a number of however, suggest that: (i) SF expectationsdifferent "supply-side" and demand-side" regarding NGO roles (focusing, for ex-factors. As a result, it is impossible to ample, on service delivery and technicaldictate any "ideal" level of NGO involve- input) do not always correspond withment in social funds generally. In situa- NGOs' own perceived roles and compara-tions where community-level organization tive advantages (e.g., collaborating with theis strong (such as Eritrea, for example) the fund as "development partners" andjustification or need for NGO intermedia- concentrating on community participation),tion may be limited. In other countries, and; (ii) a number of characteristics of SFswhere the need is strong, NGO involve- can be identified (both at the level of policyment may be restricted due to poor NGO- and procedures) that serve to limit NGOstate relations or weak NGO capacity and involvement or lead to an underutilizationskills. Finally, characteristics of the fund of existing NGO capacity. Some key issuesitself (including the objectives of the SF, the regarding NGO involvement in socialtypes of activities financed and appropriate funds, including operational obstacles andpolicies and procedures to facilitate NGO recommendations for overcoming these, areinvolvement) play an important role in discussed in the following sections.determining the extent of NGO involve-ment.


3. Key Issues and Lessons Learned

State-NGO Relations consultations between NGOs and thegovernment during the preparation of the

A key factor influencing NGO involvement social fund proved conflictual and, in bothin a social fund is the nature of relations cases, led to significant project delays.between NGOs and the State. State-NGO Social fund staff should be sensitive to therelations vary enormously from country to danger of creating or exacerbating divisionscountry and from government to govern- among NGOs. For example, care should bement. In some cases, government and taken not to work exclusively with "pro-NGOs may share similar goals and work; government" NGOs while marginalisingclosely with one another. In other situa- more radical (or critical) NGOs, who maytions, however, relations between NGOs have valuable skills or alternative perspec-and the State may be characterized by tives to offer.indifference, distrust, suspicion or outrighthostility. Generally speaking, the initial Establishing a healthy working relationshipdecision to establish a social fund is depen- with NGOs may prove more difficult indent upon at least a minimal level of will- situations where the political situation isingness on the part of government to work highly polarized. Low levels of NGOwith communities and NGOs (and vice involvement in the Nicaragua social fund,versa)."2 for example, may in part be attributable to

the fact that a majority of NGOs were moreIn some cases, social funds have served to closely associated to the previousimprove relations or to stimulate dialogue Sandinista government than the country'sbetween government, donors and NGOs, current regime. One Nicaraguan NGOwho previously had little contact with one representative has observed that "there isanother. In Bolivia, for example, the intro- mutual distrust between the governmentduction of the Emergency Social Fund, in and NGOs, and the SF has not generatedconjunction with encouragement from spaces for dialogue and