Designing In-Country Managed Funds
Section A | Introduction to In-Country Administered Grant Funds
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Overview
These guidelines have been written following the review of New Zealand’s In-Country Administered Grant Funding Schemes (Bilateral In-Country Administered Funding Mechanisms Review), in March 2004.
In-Country Administered Grant Funds are a mechanism commonly used by NZAID to address and support community-based, civil society small-scale private sector and targeted public sector development.
Cross cutting issues such as the environment or gender can be a focus. Typical activities supported might be in the areas of livelihood, microcredit, non-formal education and training.
Description of an In-Country Administered Grant Funds
What is an In-country Administered Fund?
The key elements are:
- managed by the Post or by local organisations or committees operating with different degrees of autonomy from the donor
- managed close to, and are responsive to, target beneficiaries
- informed by local conditions, and
- are able to respond quickly to unmet needs
Types of Funds
In-Country Administered Grant Funds can take many forms, including:
- Direct grants - typically of 1-3 year’s duration for a range of activities
- Matching grants - require partners to provide a certain proportion of contribution
- Loans - commonly provided for micro-credit / micro-enterprise activities
- Reimbursement - can be used where there are accountability issues amongst recipients
- Technical advice
- Capacity building - may involve training and enhancement of an organisation’s functions
NZAID Funds
A variety of Funds have been developed by NZAID as one means of addressing poverty elimination. These include Small Project Funds (SPFs), Special Purpose Funds (addressing particular sectoral concerns), Private Sector Funds, and Head of Mission Funds (HOMF’s).
Advantages of using Funds for poverty elimination
There are some common findings about how appropriate In-Country Administered Grant Funds are in addressing poverty and meeting small-scale needs.
Some of the advantages include:
- Providing donors with a direct way of responding to poverty, beyond support provided through government
- Responding to a multiplicity of needs, flexibly and rapidly
- A responsive mechanism promoting demand-driven development
- Promoting and modelling participatory development
- Promoting local ownership
- Engaging effectively with local government and leveraging additional funds
- Role in pre and post-conflict context
- Supporting innovation
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Visibility and gaining of local knowledge by the donor
Potential pitfalls with Funds
There are a few potential pitfalls, which can render In-Country Administered Grant Funds ineffective. They can include:
- Poor beneficiary targeting
- Inadequate community and institutional capacity
- Inadequate participation of beneficiaries
- Creating parallel structures by bypassing Government
- Inadvertent shaping of civil society, business or government
- Dependence on external funding support weakening sustainability
- Lack of accountability within civil society organisations
- Need for intensive management
- Overly complex procedures
- Lack of linkages to wider context
In-Country support required
There is a growing recognition among donors and partner organisation that merely funding the activities of organisations will not result in sustainable poverty elimination. Support also needs to be given to building the capacity and capability of implementing organisation.
Specific assistance may be provided, e.g. in the areas of:
- internal management systems,
- training or staff development, and
- monitoring and evaluation skills