Aid Modalities ~ Annex 1 | Table 5

CONTESTABLE FUND

A pool of available funds allocated via a contestable mechanism involving agreed systems for establishing eligibility, assessment against criteria, reporting, monitoring and evaluation. This can be partner led, NZAID led, or jointly managed

Aid modality characteristics

General

· Fund establishment requires a clear and comprehensive framework covering: eligibility, selection criteria, processes for receiving, reviewing and approving applications, reporting, monitoring and evaluation

· Framework generally agreed with key stakeholder agencies

· These processes may be managed within NZAID or via a shared process

Relationships and governance

· Varies according to location and design

· NZAID negotiates fund framework with stakeholders with varying degrees of leadership

· Should involve policy dialogue around fund governance and design

· Require clear, transparent, comprehensive guidelines covering eligibility, selection, implementation, and accountability.

· Guidelines must provide clarity on the partnership and relationship between applicants and NZAID. In the case of the Koha-PICD and HAF funds for NZ NGOs, the relevant Handbooks have been agreed between NZAID and the NZ NGO community so already represent a clear and transparent relationship agreement

· It may be appropriate in bilateral partner countries, for the existence of such windows to be recorded and agreed as part of overarching ODA arrangements.

Design and accountabilities

· Requires rigorous assessment to determine appropriateness of a contestable fund approach

· NZAID and stakeholders have a key role in designing the contestable fund framework

· Organisations submitting proposals which are responsible for ensuring a quality design (one which meets the criteria) of their submissions, with quality assurance played by the selection process.

· Successful agency will be accountable to NZAID under the terms of the Contestable Fund Guidelines and as specifically laid out in any funding arrangement

Advantages

Risks

· Can allows for transparent processes for committee-based partner and project selection against pre-defined criteria

· Can provide for equality of treatment, merit based, and value for money assessments

· can devolve selection processes and management and allow support for many initiatives without direct NZAID oversight

· Can foster strong stakeholder ownership of the fund and its policies

· Likely to have more limited flexibility than bilateral programme funding

· Projects funded can be less visible to NZAID

· Can tend to “project-ise” the work of recipients

· May still involve lots of small back-end grant funding arrangements

When to use:

· Where there are many potential agencies with the capacity and interest to receive the funding and deliver appropriate activities

· Where a strongly open, equitable, and transparent process is particularly desirable

· Where NZAID has worked with key stakeholders to design and agree a comprehensive framework covering: purpose, eligibility, selection criteria, processes for receiving, reviewing and approving applications, reporting, monitoring and evaluation

· Where selection and review processes are robust and rigorous

· Where NZAID or the modality design has the capacity to monitor and support the organisations who gain funding under the activity.