Designing In-Country Managed Funds

~ Section B | NZAID Operating Principles

NZAID recognises that human rights are at the core of all development policy and practice. Human rights and equitable and sustainable development are interdependent and mutually reinforcing. They are acknowledged as universal, indivisible and inalienable and apply to all people. Nowhere is this more important than at the community level, where there is a direct interface between individuals, communities and human rights.

Some Funds may specifically focus on the protection and promotion of human rights as in the case of the Indonesia Human Rights Facility. For other funds, support for human rights can include specific activities such as community-level human rights education or advocacy or as an important cross cutting element in designing, implementing and managing funds.

Direct funding of NGOs may allow donors to work in areas where other bilateral assistance may not otherwise be possible. Examples include human rights advocacy or work in geographic areas where conflict is a major risk.

Strategic approach to poverty elimination

There may be scope to enhance the impact of the intervention in poverty by narrowing and clearly defining sector of geographic eligibility.

One approach is to focus resources and efforts on important sectors, themes (such as gender equity) or within geographic regions. More targeted activities with disadvantaged communities may be desirable.

There is more scope to address the underlying factors that constrain development, if a more focussed sectoral approach is adopted.

A focus on specific sectors or themes could include:

sustainable livelihoods
environment
clean water supplies
peace building, or
human rights

In some countries, concentrating efforts in identified geographic regions can considerably enhance effectiveness. Geographic focusing has been successful in countries like Indonesia, where greater impact has been obtained by concentrating efforts on the eastern islands. For others, the size of the country, the features of New Zealand’s programme or the nature of the bilateral relationship means that the best returns can be obtained by taking a broader, more flexible national approach. Smaller Pacific countries are likely to be in this category.

Geographic focusing can often mean that Posts are in a better position to know that development needs of communities can build on past efforts and can foster then development of partnerships formed with local administrations and civil society.

Sustainability

Sustainability is a cornerstone principle of good development practice. When designing Funds, planners need to consider the manner in which the fund will impact upon:

The potential for activities to continue after funds have been expended.
The impact activities will have on resources (natural, consumable, human).
Approaches that encourage means of meeting on-going recurrent costs and the impact of core budget funding.
The degree to which communities and groups organise to become more self-sufficient and self-reliant, as well as building ownership of activities.
Project outcomes and provisions for maintenance and repair of equipment (computers, vehicles), or the avoidance of highly specialised assistance that is dependent upon external technical support.

Approaches which encourage dependency or a cargo cult mentality or which strain absorptive capacity or are inappropriate interventions should be avoided.

Community and NGO ownership of the development process is also a key factor in ensuring sustainability. There is a greater potential for success when development initiatives are locally initiated and driven. New and untried developments especially have a high risk of failure. Where NGOs, local communities and beneficiaries are highly engaged, as demonstrated in their participation, commitment and contribution, there is greater potential for ensuring success even through the difficult times.

Sustainability will be enhanced by designing Funds which:

encourage clarity and agreement between NZAID, stakeholders and beneficiaries on what constitutes sustainable outcomes and how they might be measured or evaluated
ensure that stakeholders (communities, businesses, government) have a strong commitment and involvement
provide for capacity building and institution strengthening
replicate proven approaches, lessons learned, and good practices
encourage partnership approaches, and
have identified exit strategies

Equity

NZAID is committed to achieving equitable development among women and men, boys and girls. Many of New Zealand’s development partner countries exhibit severe inequities within and between communities. These can be based on:

Gender
Ethnicity
Class/caste
Religion
Wealth/poverty
Ownership of resources, or
Traditional inheritance of property or position.

In seeking to redress inequity, designers of Funds may specifically focus on identified target groups or sections of society, or build assistance into broader mechanisms as components. While Funds may specifically target particular groups, in other case issues like the participation of all sections of society and the impact of project activities on them should be carefully considered.

It is important and good development practice to pursue equity to the extent possible. However, care should be taken to ensure that a balanced approach is adopted. Focusing efforts solely on the most disadvantaged may in fact make their position worse.

Established power groups (e.g. landowners) may feel threatened by advocacy efforts as the status of the disadvantaged (e.g. seasonal land-less workers) is improved.
Promoting social change such as improving the position of women and youth in villages in conservative societies where community power structures are well entrenches, can destabilise traditional community of household governance structures.
Assisting refugees may cause resentment among surrounding populations whose situation stagnates or falls behind, relative to those being assisted.

Careful planning will help mitigate such adverse reactions.

Partnerships

NZAID seeks to build partnerships with government, national and international NGOs, and other civil society organisations, the private sector and donors.

Sound partnerships are based on mutual respect and knowledge, trust, consultation on strategies and capacity building. They support and maintain the integrity and independence of the organisation and do not detract from its identity, objectives, and activities.

Participation

NZAID’s policies seek to ensure that activities are as fully participatory and people centred as possible. Ideally, the design, management and implementation of a small grants scheme of Fund should involve consultation with and the involvement of stakeholders and sector representatives.

A Fund might, for example, encourage a fair and balanced representation from community or ethnic groups, gender representatives, geographical areas, civil society and/or government agencies on the decision-making committee. Participatory approaches however, need to be balanced against the possible loss of effectiveness and additional cost and time in areas like coordination, availability and consistency of participating decision-makers and the unevenness of expertise and experience involved.

At the project/activity level, evidence to identify the extent of participation could be built into systems. Fund Administrators should be conscious of the potential to exclude marginalised groups. On occasion, a more concerted effort needs to be directed at specific communities and greater efforts made in areas like awareness of opportunities. The participation of marginalised or disadvantaged groups should not be discouraged by overly complicated documentation and proposal submission requirements.

Some good participation practices might include:

Being clear about what NZAID’s role and level of participation should be and helping partners understand what is a realistic level of participation given the level of Post’s resources.
Seeking opportunities to facilitate local ownership and involvement. Delegate where appropriate and consider strategies to build partnership capacities while refocusing NZAID’s efforts on ensuring outcomes and impact.
Enhancing NZAID’s participation particularly by seconded staff through a better understanding and appreciation of protocols, local customs and traditions

Coordination

Coordination is important to enhance effectiveness. This includes coordination between government plans and strategies and those of donors, coordination between donors and coordination with beneficiaries.

The objectives of Funds should be clearly bedded within the general framework of partner government policies and plans. Most partner governments list community and private sector development as priority areas for development efforts. Aligning within such a framework ensures that donor efforts are maximised and coordinated with often more significant government efforts. On occasion, it is necessary to focus more strongly outside the government framework, especially when there is poor national governance. State sponsored or tolerated inequities or discrimination may mean that development cooperation is better delivered through civil society or the private sector.

Among donors, coordination may mean the sharing of information about potential beneficiary organisations, joint capacity building efforts, a common understanding about the best approaches to be adopted in a particular country or situation or common documentation. A useful mechanism can be regular informal gatherings of donors. This approach is already working well in several countries. On occasion, one donor may delegate operation of a Fund to another or there may be a common Fund to which a number of donors contribute and share or delegate management/administration. Such approaches could be possible in places where New Zealand has a small presence in comparison to other donors, but where assistance is still desirable.

Access

No donor can hope to reach all of the poor. This is the responsibility of government. Donors must therefore decide which beneficiaries they will support both in terms of which categories of the poor or disadvantaged effort should be directed to and then which actual interventions are most appropriate. If there are barriers to access, strategies need to be developed to overcome the barriers.

In determining the level of access, designers need to consider:

equity and participation
the target groups and the objectives of the scheme, and
the cost effectiveness of measures proposed

Accountability

While financial accountability is important, donors now recognise that the use made of money is also of equal importance. The outputs and outcomes achieved are a critical measure of how well the monies have been used. In order for this to be effective, outcome targets or expectations need to be established during the planning phases and there is considerable value in Fund managers ensuring that these things are identified in proposals.

The proper use of official monies is central to accountability. It needs to be demonstrated that monies have been properly handled and spent in a transparent and open manner. The existence of appropriate systems and procedures needs to be demonstrated. As a bare minimum, Funds need to ensure the provision of adequate reporting and the certification of acquittals of expenditure as a condition of grant payment.

If it is learned that funds have been spent for purposes other than that for which they were approved, or have been misused or stolen, then immediate action must be taken. NZAID in Wellington must be briefed and instructions sought as to how to proceed. Where funds have been stolen, the local Police should be informed and a complaint laid.

Where the problem is such that continued work with the recipient is inadvisable unspent funds and reimbursement of misused funds must be recovered wherever possible.

If recovery is not practicable/possible you should document why this is the case, and seek direction from NZAID Wellington.

If further payments are to be made to the organisation you are to ensure that the recipient’s systems and procedures are adequate to prevent recurrences of the problem before approving any further payments.

Where it is important that NZAID work with a particular recipient, but the problem occurred because of weak systems or controls, you could work with them to improve these areas and implement a system of more frequent detailed acquittal reporting before approving further expenditure or making further grants.

Relationships with NGOs

New Zealand’s Strategic Policy Framework for relations between NZAID and New Zealand NGOs contain Relationship Principles (see Annex A) that also apply to relationships with in-country NGOs.

The associated NZAID Guidelines for Relationships with New Zealand NGOs have a section on in-country NGOs (see Annex B) that is also relevant.

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