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«Social Funds and Reaching Proceedings from an international workshop organized by the Poor The World Bank and Experiences and AFRICATIP La Red Social de ...»

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• Moreover, social funds have re-established functional links between the state and the beneficiary communities, returning credibility to the public sector and introducing a culture of contractual commitments, transparency, and accountability in the management of public resources.

• Cost recovery and user fee policies, often the result of painful sector reform processes, may be disregarded by the social funds’ goals of rapid service delivery, and lessons learned in the implementation of sector projects may not be always incorporated in the design of subprojects.

• The insufficient operation and maintenance of subprojects, especially of social and economic infrastructure, jeopardizes the long-term benefits of these investments. The ability of line agencies, municipalities, and communities to take over and continue subprojects has so far been limited.

Major Recommendations for the Future Role of Social Funds This consensus on the achievements and weaknesses of social funds was based, among other things, on the differences between social funds that are created and operate within an emergency context and those that are governed by developmental objectives. Regional and cultural contexts also account for the diverse challenges, constraints, and opportunities that each program faces. Recognition of diversity was assumed as the basis for the collective agreement on future directions.

6 Overview The format of the global consultation process at the workshop did not call for the development of recommendations to be formally endorsed by the participants before the end of the event. Rather, the conclusions and recommendations of the working groups and of the plenary sessions were summarized by the session leaders and by the chairpersons, based on the consensus obtained.

Throughout these summaries, as well as in the presentations of the World Bank and InterAmerican Development Bank studies and in the ten original papers, three major recommendations for the future of social funds emerged that policymakers, practitioners, and social funds

stakeholders seem to agree:

1. Social funds should seek a better integration and more definite role within national macroeconomic policies and strategies for the reduction of structural poverty.

2. Social funds should pay more attention to developing sustainable communities and local organizations and to building their capacities.

3. Social funds should systematically mainstream their innovations, operating principles, and techniques throughout the public sector.

Each of these recommendations has been articulated from different angles and with different emphasis according to regional or constituency perspectives, but they seem to suggest the general direction of the next generation of social funds and concrete recommendations for activities that could be introduced in the work-program of the existing ones. The following ideas are more detailed and were drawn from various sources and presentations to articulate the

three main recommendations:

1. Social funds should seek a better integration and more definite role within national macreconomic policies and strategies for the reduction of structural poverty.

• Social funds can play an active role in obtaining political commitment to the incorporation of social equity objectives in macroeconomic growth policies and at the same time dispel unjustified expectations about the effect of social funds on structural poverty.

• Social funds should not duplicate or overlap other national initiatives but serve as a specific instrument in the arsenal of social safety net programs that reach out to isolated regions, ethnically or socially excluded communities, and marginalized groups.

• Representatives of a key social fund stakeholder group, namely, the poor themselves, should be consulted systematically by the management of funds to ensure that the program’s priorities are shared, as well as the ownership and participation of beneficiary communities.

• The institutional location of social funds within the public sector should better address the issues of coordination with line ministries, of integrating sector policies, and of making social fund financing more sustainable and an integral part of public spending.

• Municipalities that have the mandate and the capacity should assume the funding and responsibilities from social funds for subproject identification and implementation, limiting the fund’s role to contract managers and to supporting linkages with community groups. In turn, municipalities should allocate resources to sustainable operation and maintenance of infrastructure and services.

2. Social funds should pay more attention to developing sustainable communities and local organizations and to building their capacities.

• To enable socially isolated communities to establish functional and productive links with both public and private sectors, social funds should work with more flexible menus that respond to community needs as they evolve over time.

Main Outcomes and Recommendations 7

• Social funds should promote projects for sustainable local economic development;

these will include the organization and nurturing of microenterprises, skills training to facilitate access to the labor market, and access to credit for productive initiatives.





• Social funds should support the development of social capital through the involvement of NGOs in the design, not only in the implementation, of subprojects, the training of community-based organizations, and facilitating the open selection of subprojects based on the needs of women.

• The promotion of sustainable provision of basic services to the poor should be supported beyond capital investments with capacity building in operation and maintenance. This training will be targeted at user groups, local contractors, and municipal technical and administrative staff.

3. Social funds should mainstream their innovations, operating principles, and techniques systematically throughout the public sector.

• In those regions and countries where social funds have a track record of accomplishments, social funds should present their management approaches and innovations routinely to national policymakers and promote them with the legislative and the executive branches.

• Social funds should help introduce community participation, responsiveness to demand, and the use of willingness-to-pay indicators to all public social sector programs and innovative procedures—social communication and outreach, management information systems, and delegated contract key line ministries.

• In their dialogue with international development agencies, social funds should promote the adoption of participatory development policies and strategies, to be discussed and negotiated with national governments as the basis for financial assistance.

Specific Recommendations from the Ten Parallel Sessions The following condensed summaries of recommendations were made by the working groups after analyzing and debating the ten following topics and after extensive discussions about the papers written and presented by selected social funds practitioners.

Social Funds: From Responses to Emergency and Crisis to Development

• Social funds’ objectives need to be redefined within the national poverty reduction strategy and integrated with sectoral policies. Their investments should concentrate on the neediest regions and communities.

• While support at the highest political levels is necessary, funds can be protected from political interference by a stringently defined mandate and beneficiary selection criteria.

• Funds should consider retraining their personnel in capacity building within communities and NGOs. They should obtain staff specialized in social sciences who can be effective within the new mandate in community participation.

• The quality of projects needs to be sustained. Indicators need to be defined for participatory processes, institutional development, and improved quality of life in target communities, so that reliable evaluations can be conducted.

Financial Resources Mobilization for Social Funds

• Credit programs should be an element of social funds to facilitate the creation of a revolving pool of resources.

8 Overview

• As social funds mature, they should try to mobilize resources from local institutions and donors and eventually to borrow from commercial sources.

• Social funds should raise additional resources through financial participation of the community, which can supplement public investments in rural areas significantly.

• The mandate of social funds should be flexible, so that they may eventually transfer to line ministries or to local governments the activities that are their ultimate institutional responsibility, while retaining those that do not belong to other institutions.

• Their organization should be parallel to that of the government, so that their activities can be in line with the policies and plans of ministries and sector agencies.

Role of NGOs in Design, Management, and Implementation of Social Funds

• Social fund programs need to be integrated into a national public investment for longterm poverty reduction, making use of NGO participation and civil society consultations, as in those countries where NGOs help prepare country assistance strategies.

• The World Bank should study the role of social funds in macroeconomic policies.

• Donor agencies should negotiate with national governments the roles of NGOs and civil society in the management, design, implementation, monitoring, and evaluation of social funds and formally inscribe these roles in project documents and contractual agreements.

• Social funds should allocate specific budgets for the participation of community-based groups in their activities, parallel to but separate from the financing of NGO interventions.

• Capacity-building activities should become a full-fledged component of the social fund menu, instead of being merely part of administrative overhead costs.

Decentralization, Local Governments, and Social Funds

• Local governments should avoid replicating centralized decisionmaking processes and ensure that investment decisions are participatory and taken at the lowest appropriate level. Furthermore, local governments should ensure the principles of subsidiarity, transparency, and accountability in the use of their resources.

• Local governments must strengthen and diversify their financial resource bases through better revenue collection, as well as through the identification of local sources of revenue and the increase of national transfers.

• Social funds should enhance coordination of efficient local social investment, and should work closely with municipalities to ensure the sustainability of projects.

• Where decentralization is in place, social funds should foster the creation of municipal funds for local social and economic development, assist municipalities in obtaining access to external sources of funds, and transfer their expertise in identifying locally needed subprojects.

Social Funds, Private Sector Development, and Microenterprises

• Social funds should reinforce the accountability of public sector management through the delegated implementation of projects by medium and small private operators.

• This approach has so far been applied to public works and construction contracts, but it should be extended to other sectors, such as rural development, natural resources management, and trade.

• The competitiveness of medium and small private operators should be supported through microfinancing programs, managed by social funds working through national financial institutions.

Main Outcomes and Recommendations 9

• Training programs for small operators should be developed and implemented to improve their professional skills as well as their overall management capacities.

Designing Components of Social Funds: Sectors, Themes, and Access

• The choice between a project menu that defines the initiatives that can be financed and one that defines only those that are excluded should be based on the local characteristics of poverty and the scope and role of the social fund within the government’s overall poverty reduction strategy.

• Participatory research should define the social context of support, and communities should be organized, trained, and sensitized before needs are identified.

• A study to evaluate the impact of institutional, capacity-building, and participatory processes should be undertaken to delineate tradeoffs between investments for physical infrastructure and investments for building social capital.

• A consultative process that provides continuous and vigilant feedback and involves key stakeholders at national, regional, and local levels should be established, and clear criteria and procedures for facilitating the access of marginalized social groups should be provided.

The Monitoring and Evaluation of Social Funds

• Monitoring is the basis of evaluation, and both should be conceived as an integral part of the project cycle, so that learning can take place as events unfold.

• The most important audience of the evaluations are the beneficiaries themselves. Participatory evaluation should be promoted, so that communities can be involved through rapid appraisal techniques.

• Evaluations should focus on the effectiveness of social funds in improving the quality of life in participating communities. They should be clear and focused with modest and realistic objectives, so that they provide answers to questions.

• Coordination on evaluations is needed among donors and line ministries so they can exchange and share the learning that comes from evaluations and avoid costly duplications. Regional networks can provide opportunities to agree on common evaluation methodologies.

• The dissemination of evaluation findings among policymakers deserves considerable attention.

Sustainability of Subprojects, Maintenance, and Operations

• A sound project design, adapted to local conditions and based on simple technologies that facilitate beneficiary involvement should always be chosen and beneficiaries should be involved in the selection.

• Technical and administrative competencies for operations and maintenance should be provided to users and local agencies through training and should be accompanied by the necessary funds.

• Long-term financial resource mobilization for operations and maintenance is related to expanding the financial resource bases of municipalities and district administrations;

reforms of sector policies and administrative processes need to be supported by the government and by all donors.

• Infrastructure should be managed like a business, not a bureaucracy, by introducing competition and giving users and other stakeholders a strong voice and real responsibility.

10 Overview Appraisal and Environmental Assessment of Social Funds Subprojects

• Environmental concerns in development projects are connected directly to poverty reduction goals. Social funds should strive for more environmental awareness across the public sector and strengthen their linkages with environmental agencies.

• Social funds should actively promote environmental subprojects related to the sustainable use and conservation of natural resources; they have a strong link to improving the role of women in development.

• Environmental assessment procedures should be simple and practical, and a handbook for this specific purpose should be developed and adapted to regional contexts.

• Regional workshops and the use of the Internet can facilitate the exchange of relevant experiences on environmental issues among social funds and their networks across countries and regions.

Information Systems, Outreach, and Communication of Social Funds



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