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Development & social funds have become increasingly popular
instruments for many donor organisations to deliver safety nets. Funds
originated as a response to the shocks that accompanied structural
adjustment programmes and economic crisis in the 1990’s.
Since then, the instrument has grown and evolved rapidly. Over time,
emphasis has shifted from emergency relief to more general
development-oriented programmes and projects, and objectives have
shifted from short term to longer term, focusing on facilitating
“community driven development”. At present, social funds exist in over
50 countries world wide: in Latin America and the Caribbean, in at
least 24 countries in Sub-Saharan Africa and about a dozen in Eastern
Europe and Central Asia.
Social Funds are extremely diverse. There is a large variation in the
kinds of activities that they can undertake or facilitate. The World
Bank look at funds as “quasi-financial intermediaries that channel
resources according to pre-determined eligibility criteria, to small
projects for poor and vulnerable groups, and implemented by public or
private agencies...” (Portfolio review by the World Bank Quality
Assurance Group, 1998).
Though a variety of institutional models can be used, usually social
funds are established as separate from traditional government line
ministries. Intended to take quick, effective and targeted action,
social funds typically use procedures that are not standard to
government and other regulations. Originated as an instrument for
poverty alleviation, social funds are based on a conception of direct
funding of poverty-reducing activities by local actors (local
governments, community groups, local entrepreneurs). They are meant to
support the poorest and the most vulnerable while promoting objectives
such as participation and decentralisation.
The success of social funds is often dependent upon:
- Sensitivity of the funding design to politics based on an
understanding that they are part of national and local level politics.
Development of parallel structures can be temporarily important, but
these structures must serve in the long term to have effects on
governance outside local funds (strengthening local governance,
influencing pro-poor politics, etc.).
- Participation is optimised and balanced throughout all
stages of planning, implementation and monitoring. It should be seen as
an end itself, not just as a means to efficiency in project
implementation.
- Incorporation of a long term view of organisational and
financial capacities: what is the local level capable of contributing?
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