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EXECUTIVE SUMMARY - POLICY GUIDANCE - DEVELOPMENT RATIONALE / THE NGO COMMUNITY AND SUSTAINABLE DEVELOPMENT - PARAMETERS/DEFINITIONS - POLICY ISSUES - RELATIONSHIP TO MISSION PROGRAMMING - LINKAGES TO SMALL BUSINESS AND LOCAL GOVERNANCE - NGO EMPOWERMENT AND SEQUENCING OF ACTIVITIES - PROGRAM DESCRIPTION - FOSTERING A NGO ENABLING ENVIRONMENT - SUPPORTING A FLOURISHING LOCAL NGO COMMUNITY - MEASURING SUCCESS - VEHICLES FOR PROVIDING USAID ASSISTANCE - NEW MANAGEMENT VEHICLES

NPI CORE REPORT

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Executive Summary

Local participation in civil society is one of the essential driving forces of sustainable development.

Local decisionmaking directly reflects the political and social interests of private citizens as well as the economic goals and choices of producers and consumers.

Local decisionmaking at the "grassroots" and at intermediate levels of political and economic organization is less encumbered by bureaucracy and excessive regulation.

As a result, local participation stimulates initiative, innovation, entrepre-neurship, rapid technology transfer, and adaptability to the development process.

The New Partnerships Initiative (NPI) seeks to support the capacity of local actors to participate in the development process. Nongovernmental organizations (NGOs) together with small businesses and local governments, comprise the core components of effective local capacity.

USAID will pursue programs which foster at all levels of government an "enabling environment" favorable to NGO empowerment and which directly bolster the capacity of local NGOs. The Agency will utilize intermediaries, especially U.S. PVOs, to carry out much of the work to strengthen local NGOs.

USAID's goal is to create a large, diverse community of local NGOs capable of promoting sustainable development. Each country is different; the nature and roles of NGOs will differ significantly from country to country. Still, NGOs are everywhere a potentially critical vehicle for articulating collective interests and for ensuring citizen participation in the development process. In countries where the linkages between local NGOs, small business, and local government are strong and where there appears to be sustainable progress toward democracy and free-enterprise, NPI can set the stage for graduation from USAID assistance.

NPI will support local capacity building by helping to create and sustain an extensive network of "partnership" relationships involving:

• USAID and U.S. PVOs and NGOs, including those with which the Agency traditionally has not worked, such as organizations with little or no international experience;
• U.S. PVOs and NGOs and local NGOs, at times also including other donors such as the World Bank or UNDP;
• USAID field missions and local NGOs; and
• Host country governments at all levels.

There are many mechanisms available to USAID to bring about these partnerships. In adopting NPI, the Agency will be relying more heavily on the judgment and expertise of its PVO and NGO partners. Hence, USAID will make greater use of grant mechanisms. PVO and NGO partners will be integrally involved in developing program activities and have greater input into Agency planning and decisionmaking processes.

The NGO empowerment component of NPI will be broadly applicable in nearly all USAID-assisted countries. Missions will be expected to develop programs designed to strengthen the capacity of local NGOs, taking into account the vicissitudes of local political, economic and social conditions. USAID/W will support this effort with expertise and help in partnering local NGOs with U.S. organizations.

This paper was prepared in close consultation with individual members of the U.S. PVO and NGO community. It also reflects the views of select local NGOs and USAID mission staff.

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I. Policy Guidance

A. Development Rationale

The NGO Community and Sustainable Development

At all levels of development, a flourishing NGO community is essential to effective and efficient civil society. In the poorest countries, individuals pool their labor and modest financial resources to sustain more complex economic activity. In more developed countries, the organizational structures of NGOs become more formal, and participation broadens and deepens. Associations of NGOs may even form. Frequently, people working together for their economic interests will also seek out the support of government.

In the process of sustainable development, an effective and efficient civil society is as important as effective and efficient markets. Civil society organizes political participation just as markets organize economic participation in the society. Like markets, civil society conditions social behavior and helps allocate resources. In short, civil society plays the same sort of functional role in sustainable development that markets do.

In effect, both civil society and markets are essential "gears" in the sustainable development process. Like markets, civil society can function more or less effectively depending on government policies, the cultural values of the society, and levels of technology and infrastructure. Over time, like markets, civil society feeds back and can bring about changes in policies, values and technology.

Sustainable development is most likely to occur where both civil society and markets are free and open to broad-based participation. The goal of the NGO empowerment component of NPI is creation of a large, diverse community of local nongovernmental organizations capable of promoting sustainable development.

In addition to the impact a vigorous NGO community can have as a provider of services and in direct economic activity, John Clark of the World Bank has pointed out the NGO community can:

• Encourage official aid agencies and government ministries to adopt successful approaches developed in the NGO community;
• Serve as a conduit for new technology and practices;
• Educate the public as to their rights and entitlements under government programs;
• Attune official programs to public needs by acting as a conduit for public opinion and local experience;
• Provide efficient operational collaboration with government agencies and aid donors;
• Influence development policies of national and international institutions, including support for decentralization and municipal reforms; and
• Help national and local governments and donors fashion a more effective development strategy through strengthening institutions, staff training and improving management capacity.

Based on a growing body of analysis on local NGOs, it appears USAID can expect the following sorts of results from its efforts to empower NGOs and to support growth in the size and diversity of the NGO community:

• Where there is a high level of interaction among NGOs, local government and small business, it appears the climate is most favorable for poverty reduction and effective action on other social priorities, though cause and effect may be difficult to sep arate.
• Where the NGO community is not only sizeable but also where it interacts with local government and small business, it is able to achieve a significant multiplier effect on its own efforts.
• Studies of decentralization and land reform programs in a range of countries have demonstrated that the active involvement of local NGOs is a key factor in influencing the degree to which benefits reach poorer citizens.
• World Bank experience, drawn from a survey of 25 Bank-financed projects, indicates a strong correlation between project success and the participation of grassroots organizations.
• NGOs with technical capacity and a good track record can offer more effective and efficient ways of delivering services and achieving project outcomes.

B. Parameters/Definitions

Nongovernmental Organization (NGOs)

For purposes of NPI, an NGO will be defined broadly to include a wide range of local organizations in countries which are recipients of U.S. foreign assistance. For purposes of the NGO Empowerment component of NPI, the focus will be on organizations which contribute directly to development, whether or not they are legal entities. (This focus will exclude assis-tance to organizations whose sole purpose is advancement of religious, ethnic or purely cultural objectives.) For NPI purposes, the term NGO will include:

• Organizations which deliver services such as those which provide training for improved child survival or credit programs for microenterprise;
• Organizations which advocate for specific development objectives such as access to family planning services or improved infrastructure or liberalized tax laws for small business;
• Organizations which advocate for policy reforms such as environmental safeguards;
• Organizations which analyze development problems such as poverty or environmental degradation and organize national and local debates and education programs on these issues;
• Organizations which are formed for direct production or for processing and marketing such as agricultural cooperative societies and village credit associations; and
• Organizations which represent the common interests of other organizations or individuals such as chambers of commerce, trade unions and human rights groups.

Partnerships

NPI encourages development of a wide network of relationships involving local NGOs. The most comprehensive expression of the initiative would have multiple partnerships formed among local NGOs, local small businesses and local governments--working in some cases with international counterparts. With a view toward that, USAID will seek to foster multiple combinations of partnerships, including:

• USAID and U.S. PVO/NGO partnerships, drawing not only on those PVOs with which the Agency has traditionally worked but also on organizations which previously have not worked internationally or have not worked with USAID. U.S. organizations which have domestic grassroots constituencies can help find useful development approaches being used in U.S. localities;
• U.S. PVOs/NGOs and local NGOs, perhaps including other donors such as the World Bank or UNDP. In several countries, the Bank has played a central role in bringing together the government and NGOs in development policy and strategy discussions;
• USAID field missions and local NGOs; and
• Developing country governments at all levels.

Capacity Development

Ultimately, NGOs should be capable of pursuing their development objectives without the need to resort to foreign assistance resources, whether from USAID, from an international PVO, or elsewhere. In many developing countries, attainment of this goal of independence from foreign assis-tance will take time but will remain an important USAID objective. There are several factors which appear necessary for an NGO to become self-sustaining:

• The organization must be pursuing objectives which the members feel strongly are important and achievable. In most cases, this means the organization must start from the volition of its members;
• The process of pursuing development objectives and dealing with attendant real world problems is the single most important method of developing NGO capacity. This fits well with the likely requirement that USAID will need to use its resources to pur suesectoral objectives in areas such as family planning, child survival, microenterprise and agricultural productivity;
• Management training can be useful in organizations which are already strongly motivated to achieve their development objectives, but must be tailored to the local environment and address needs which the local organization sees as important. Learning- by-doing is frequently an important part of successful management training programs;
• It is virtually impossible to overcome a hostile environment if the NGO's goal is pursuit of sustainable development objectives.

USAID needs to accept that formation and development of NGOs will be a very volatile process. Many organizations will come and go. The process of NGO formation and development will vary greatly from country to country and even within regions of individual countries. This is good to the extent NGOs express the economic, political and social interests of the people. However, it also means there is a real risk of squandering scarce foreign assistance resources. USAID will do best if it concentrates on the enabling environment, uses knowledgeable partners from the U.S. PVO/NGO community, and concentrates on local NGOs with demonstrated commitment to achieving their own development objectives.

C. Policy Issues

NPI, especially the component on NGO empowerment, is footed in extensive new USAID policy on both participation and the Agency's close relationship with PVOs/NGOs. These policies will continue to provide a broad framework to guide development and implementation of the initiative. In addition, the following specific policies should be promulgated:

• Religious NGOs. USAID may offer direct support to local NGOs which are affiliated with religious institutions or which have sectarian memberships so long as the purpose of the work which USAID supports is clearly developmental. USAID will not permit direct support to such NGOs if the primary purpose of their work is simple religious affiliation or proselytizing.
• Ethnic and Cultural NGOs. Similarly, USAID will support ethnic and cultural NGOs whose work is clearly developmental.
• Political NGOs. Empowerment itself suggests political activity. USAID will support NGOs which advocate change which is clearly developmental, including NGOs which attempt to influence government policies and priorities. USAID will not suppor t purely partisan NGOs nor NGOs whose sole purpose is to control governments.
• Profit-making NGOs. USAID will support NGOs which enter into profit making activities, whether the profit is to be distributed to members or invested in development activities. In fact, some means of generating revenue is likely to be critica l to sustainability of an NGO. In most developing countries, some form of developmental activity which generates revenue is likely to be a more reliable source of income than either voluntary contributions from individuals or donations from governments o r the international community.
• Priority to WID. The process of creating, strengthening and empowering local NGOs presents a powerful opportunity to change and advance the role of women in developing countries. This is especially true for profit-making NGOs, since they prov ide an opportunity for women to generate and control income. USAID will give priority to programs which involve women in the local NGO movement.

• Priority to Local NGOs. The purpose of the NPI is development of local capacity. There will be many ways to accomplish this. However, there is a risk that resources will be siphoned off by intermediaries and in the payment of excessive overh ead. USAID will give priority to programs which assure that the resources reach and directly benefit local NGOs. In programs involving U.S. PVOs and those involving delivery of services, priority will be given to partnerships with and capacity developme nt of local NGOs.
• Regional NGOs Recognizing they present possible political problems, USAID believes regional NGOs have real potential for advancing development objectives. USAID will support such NGOs, where appropriate.

D. Relationship to Mission Ongoing Plans and Programs

Most USAID missions have in place activities which utilize U.S. PVOs and local NGOs in the delivery of services. Most USAID missions have recognized the important role which NGOs can play in sustainable development, particularly in the process of democratization. Thus, there is a sense in which the NGO empower-ment component of NPI is a broadening and deepening of what USAID is already doing.

However, there are three important areas where missions will be asked to "do things differently" as NPI is adopted. As these changes are made, and the broadening and deepening of ongoing activities takes place, NPI will help transform USAID's field programs and the way the Agency does business.

• (1) Most missions have not yet involved PVOs and NGOs as active participants in the formulation of their strategic plans. The new USAID-U.S. PVO Partnership calls for such involvement and so do the reengineering principles USAID is now adopting. Ove r the next few years, all missions will need to revisit their plans, drawing on the skills and experience of USAID's partners, to ensure strategic objectives reflect new Agency policies and procedures.

• (2) While many missions have utilized PVOs and NGOs in program implementation, few have focused on development of local capacity. As NPI is adopted throughout the Agency, missions will be expected to establish strategic objectives and to design and i mplement programs so that enhancement of local NGO capacity is included as an explicit goal.

• (3) Missions will be expected in all appropriate projects to involve PVOs and NGOs as full partners in the project cycle, i.e. design, consultation with beneficiaries, monitoring/evaluation, and all aspects of implementation.

E. Linkages to Small Business and to Local Governance

The NGO empowerment objectives of NPI are closely linked to the other components of the initiative--Small Business and Local Governance. As a practical matter, development of local capacity in both these areas will involve assistance to and through NGOs with specialized interests.

In the case of small business, chambers of commerce, trade associations, and other NGOs will be logical choices for USAID assistance and capacity development. In turn, these NGOs will help field missions in assessing and reforming the enabling environment for growth of small business.

Similarly, in the case of democratic local governance, participation and advocacy will frequently be expressed through NGOs. These NGOs can have powerful influence on local and national governments--in some cases resulting in fractious relations. USAID missions will need to have an excellent understanding of relations between various levels of government and NGOs as they engage in policy dialogue, especially in the area of democratic governance.

In nearly all USAID countries, most NGOs will be working in areas not directly related to either small business or democratic local governance. In a real sense, these NGOs can be viewed as forerunners to greater activity in these areas. Many NGOs working in directly productive activities such as agricultural production and marketing will eventually spin off or otherwise contribute to the formation of small businesses. And in a real sense, the participatory nature of NGOs advances democratic principles and helps influence the decisions of local governments, even when political advocacy is not the explicit mission of the NGOs.

F. NGO Empowerment and Sequencing of Activities

NGO empowerment is an important USAID objective in all countries, even the poorest. Even where it is not possible to support small business or democratic local governance, it will be important for field missions to support NGO empower-ment. This is especially true when one considers the broad definition of NGO which is adopted by this paper and by NPI.

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II. Program Description

There are two essential objectives to any program for NGO empowerment: a supportive enabling environment and a flourishing community of NGOs.

A. Fostering an Enabling Environment for NGO Empowerment

A pluralistic environment with a government sympathetic to increased public participation is of fundamental importance for effective NGO service provision and for NGO participation in national development policy formation. Many NGOs currently seek legal and regulatory conditions that provide greater political and economic freedom. USAID and other donors can help to create an enabling environment by working with host country national and local governments and/or by strengthening NGOs which can then influence government decisionmakers. They can also assist this process by facilitating, where possible, cooperation and collaboration between governments and local NGOs.

Foreign donors cannot (and should not) give to the host country an enabling environment that fosters NGO growth and participation in national life. The trans-fer of institutional structures and organizational forms from one society to another has repeatedly failed to achieve anticipated results, often because the aims of such actions were those of the donors rather than the recipients. Reforms which improve the NGO enabling environment must be endogenous if they are to be effective and sustainable. There are no immediately applicable models that cover the full range of historical, social, and political variables that must be taken into account in the formulation of an effective policy framework for each country and for the different actors within it.

Governments, national NGOs, and other types of private organizations must work together to define the character of the legal and regulatory environment in a given country. Collaboration on identifying constraints and defining opportunities to eliminate them is itself a process that can synergize and strengthen the relationship between governments and private organizations. Participation in the process of legal and regulatory reform has other multiplier effects. It can build the analytical capacities of the individual organizations involved and provides practical experience for future dialogue.

Notwithstanding the necessity of each country working out the details of its own enabling environment given its unique set of circumstances, past experiences have shown there are a number of critical factors and processes which promote or hinder NGO formation, operation, growth, and effectiveness across various national settings. Donors such as USAID can play an important role by sharing with host country actors information on what has/not worked and why/not in other situations. This section of the paper identifies some of the factors necessary for an effective NGO enabling environment and recommends some mechanisms which donors might follow to assist forming a supportive legal and regulatory framework.

Legal Environment

Fundamental Law/Freedom of Association. An essential condition for the emergence and development of effective NGOs and a dynamic civil society is a legal framework that guarantees free association and assembly. These freedoms are already fundamental components of many liberal constitutions in countries in all regions of the world. But problems often arise in the application or administration of the laws (see section on regulatory environment). A lack of clarity and precision can leave legislation open to interpretation by those charged with administering laws at a variety of levels. Whatever the application, however, the right to free association, including the formation of NGOs, is one of the pillarson which society's entire legal and regulatory structure rests.

Tax Law. The tax status of nongovernmental organizations can be critically important for their ability to grow and to take on new roles and responsibilities. Charitable behavior and voluntary activities are encouraged when NGOs have tax exempt status and when people are allowed to deduct contributions from their own taxes. Philanthropic traditions and voluntary participation vary from society to society, however, and thus it is not clear that favorable tax laws alone will stimulate behavior change. Still, clear and equitable tax laws are needed in many countries before authentic empowerment of local NGOs can take place. For those NGOs involved in directly productive activities, for example in agricultural production and marketing, it is essential that the tax code provide positive economic incentives. Local NGOs should have the same or more favorable tax status as international NGOs.

Freedom of the Press. NGOs and other civil society organizations are much more likely to prosper in a setting where there is free flow of information and broad parameters for public discourse. An unfettered and independent media is the linchpin and key indicator of informational freedom.

Regulatory Environment

Although laws affecting associational life may be favorable for NGO growth and development in theory, the ability of NGOs to flourish may be altogether different in actual practice. Does the government enforce these laws and administrative rules and do so evenhandedly? Lax enforcement and oversight or differential application can render formal constitutional rights hollow and reduce the prospects for NGO empowerment. In addition, many developing countries have very bureaucratic, centralized governance traditions that can also inhibit the vitality and influence of the NGO sector. These tendencies are simultaneously the cause and consequence of the historical weakness of civil society in many parts of the world.

Legal or administrative obstacles that inhibit NGO creation, efficacy and sustainability must be eliminated. Many countries require NGOs to register with the government in order to be officially recognized and accorded certain rights. It is important that this process not be too onerous, cumbersome, or expensive lest it defacto impede NGO development. Some test of `reasonableness' can be devised taking into account such factors as the number of steps required, length of process, cost, and degree of bureaucratic cooperation.

Given the embryonic or fragile nature of the NGO sector in many developing and/or democratizing countries, it is also important that the law permit foreign funding for local organizations.

Economic Environment

Many local NGOs, particularly those with objectives in agriculture and rural development, depend for their success and sustainability on a favorable overall economic environment. If the government's policy is to tax agriculture heavily, then there is little an NGO can do to overcome this burden, even if the members are strongly motivated. Conversely, a favorable overall economic environment may be the single most important approach which government can pursue to encourage and empower local NGOs.

By making economic activity profitable, government encourages formation, capacity building and long-term success of local NGOs. Since, in many USAID-supported countries, nearly 80% of the population is employed directly or indirectly in agriculture, this suggests that the economic environment for agriculture is critical to the rapid growth and long term viability of the local NGO community.

In many countries, structural adjustment programs will be necessary to ensure appropriate economic incentives are in place so the economy can operate as efficiently as possible. Open trading systems are frequently an important compo-nent of the overall policy regime. A favorable economic environment is essential to sustained, broad-based growth; and sustained growth is essential for poverty alle-viation. At the same time, the poor can be vulnerable during periods of structural adjustment.

To guard against suffering and help the poor escape from poverty, various forms of social safety nets should be considered an important part of the overall economic environment. In many cases local NGOs are well placed to manage these social safety nets.

Guidelines for NGO Relationships with Governments and Other Partners

The late 1980s and early 1990s have witnessed an explosion in the creation of new NGOs throughout the world. In some cases this has come about because of widespread discontent with state-dominated social, economic, and political development structures. In other cases NGOs are being formed for reasons of economic self-interest, and the impulse to create an NGO can be understood as a diversification strategy--one of many tactics that characterize peoples' attempts to generate income. Well-publicized donor interest in expanding support for NGOs has contributed to the process and fueled the creation of new NGOs.

The results to date of the new NGO phenomenon are mixed. On the one hand, the effectiveness of the NGO community in delivering services and broad-ening dialogue on the important issues of the day is legitimizing the worldwide movement. On the other hand, some of the less scrupulous NGOs are doing the movement disservice and actually hindering the empowerment of legitimate organizations. Still other NGOs are composed of highly capable individuals who can effectively implement a variety of activities and programs, but they are not necessarily serving as representatives of a broad-based constituency.

In short, the NGO community is extremely diverse and is continuously changing. New organizations are being formed and going out of existence all the time. In such an environment, an important component of an effective enabling environment for NGO growth and empowerment can be the establishment of guidelines for NGO relationships with governments and other partners such as international PVOs.

USAID and other donors can work with and support a variety of NGO consortia, nationally and internationally, to develop and disseminate statements of institutional principles and ethics of praxis. Adherence to widely accepted ethical guidelines will further legitimize, and thus empower, NGOs in the eyes of donors and host governments.

Possibilities for Donor Intervention

The most important role for donors in fostering a favorable NGO enabling environment is to catalyze, encourage and support NGOs and host governments to collaboratively identify current problems and formulate mechanisms for their resolution. There is a nee d for information which might not be available to local actors, but if the reforms are to be successful and sustainable they must be endogenous. Donors can help enormously to create the space for an improved enabling environment, but they should be cautio us about playing too large a role in filling the space that has been created. The following recommendations seek to foster and encourage local actors to find their own solutions.

• Support and Encourage Legal and Regulatory Reform. USAID and other donors can help NGOs become more influential and self-sufficient by supporting NGO participation in efforts to reform national legislation that liberalizes NGO registration and operations, including favorable tax laws. Also necessary for effective NGO action are continued efforts to reform political structures through adjustments that promote decentralization and more pluralistic local governments.

• Promote Government-NGO Collaboration. In the past, many governments have looked suspiciously upon NGOs as dissident political forces rather than as complementary partners in development policy planning and implementation. The changing politica l climate in many areas of the world has already produced better relations between governments and NGOs in a number of countries, but more can be done to improve communication and collaboration. USAID can help legitimize national and local NGOs by consul ting and involving them in all stages of the project and program cycle. USAID missions should consciously and actively encourage governments to trust and cooperate with national NGOs (and vice versa) by including both parties in meetings, conferences and workshops; on project/program design and oversight committees; and through joint NGO/government implementation of USAID-funded activities. Depending on the status of NGOs, encouraging this collaboration may take many forms from simple active incl usion through policy conditionality related to removing legal, regulatory, or other impediments.

  Prospects for government-NGO cooperation may vary according to the level of government (i.e. national versus local) as well as the particular sector or issue area of NGO involvement. For example, service delivery NGOs frequently enjoy better relations wit h national or local governments than do overtly political organizations such as human rights groups which are more likely to have an antagonistic or adversarial relationship. The potential for collaboration may also hinge on the analytical research capabi lities of the NGO; greater capacity probably makes them a more attractive partner and logically increases their prospective policy influence.

• Improve the "Representativeness" of NGOs. In the context of political liberalization, the more traditional social move-ments and other broad-based membership associations are gradually becoming more involved in the national developme nt policy dialogue. But this change often occurs slowly and without any donor or government support and recognition. These institutions do not always look like the nongovernmental organizations that Western planners equate with civil society, but in a dem ocracy the existence of millions of constituents gives these associations a political influence that is missing among the less broad-based, capital city NGOs. Regional and national federations of local grassroots organizations with common interests offer the greatest potential to identify existing development constraints and then transfer this information to the policy arena and to action-oriented programs.

  USAID missions should seek to identify existing membership-based associations and social movements and discern their potential and willingness to become more involved in activities related to national development programs. Whenever possible, NGOs witho ut a broad constituent base should be encouraged to ally with and assist in the federation of local grassroots organizations. USAID should work with existing organizations involved in issues such as human rights, civic education, and elections to dev elop programs that embody distinctively national approaches to civil society. There is also a need for caution, however, to assure that representation extends to those segments of the population, such as women and youths, who have not traditionally partic ipated on an equal basis in decisionmaking and policy formation.

• Expand and Improve NGO Operational Capacity. There are no simple methods that can quickly transform the institutional capacity of local organizations. Capacity building is a real challenge and the need is great, but institution-strengthening t akes a great deal of time, effort, and commitment; and there can be problems, such as the tendency to build dependency and/or overwhelm a fledgling organization with funds and demands. NGOs that are already effective in one area may lose their effectivene ss if they are pushed to expand into other sectors. Experience to date suggests that institution building for its own sake does not work very well. Positive results have been obtained through partnerships between stronger and weaker organizations.

  One effective technique is to build the institutional capacity of less experienced organizations through a combination of relevant training programs and gradual increases in responsibility and decisionmaking power. USAID missions should, whenever possi ble, provide the resources and institutional structures that allow for the participation of local NGOs in projects and programs in a variety of development sectors. Programs and projects should be designed to include training activities that build local N GO capacity while still reaching development objectives. There should be a commitment, together with a time frame, to hand implementation responsibility over to local NGOs, but decisions about how far and how fast to expand operational capacity should be made carefully with assurances that the individual NGOs are fully cognizant of how the changes may affect the organization.

• Expand and Improve NGO Advocacy Capacity. Nongovernmental organizations are at the heart of approaches to bring about more effective and more "public" management of state policies and actions that affect the public and private sector s. The accountability and transparency of state decisionmaking is improved through the informed participation of the organizations and institutions that constitute civil society. USAID and other donors can help generate a more pluralistic public policy ar ena by supporting activities that augment the capacity of nongovernmental organizations to advocate on behalf of their constituents. USAID missions should include appropriate NGOs in all policy dialogues with governments and in other development policy decisionmaking fora. USAID should encourage, and when possible assist, in the creation and expansion of NGO networks, consortia and federations.

• Emphasize the Need for Transparency and Participation. NGOs exhibit huge variation in size, focus, capacity, and institutional organization. Many different social, economic, and political variables have combined to determine the historical evo lution of individual organizations. In many cases, NGOs are highly representative of and accountable to local, widely-held interests. There are also unrepresentative NGOs with leaders steeped in hierarchy and personalized decisionmaking. These organizatio ns may be effective in certain aspects of their operation, but they do not serve as model organizations for the type of behavior needed to build a democratic enabling environment in which NGOs can flourish. USAID missions should support local NGO institut ion-building activities that emphasize participatory decisionmaking and provide mechanisms to establish transparent operating systems.

• Support a Positive Economic Environment. USAID can play an important supporting role for NGOs by helping government understand the economic incentives which affect local production and marketing. This effort can and should involve small-scale producers and marketers, local NGOs, international PVOs/NGOs and other donors as partners. USAID can also assist with the design of social safety nets. USAID can then support a policy dialogue which provides a positive economic environment.

B. Supporting a Flourishing Local NGO Community

Through NPI, USAID is interested in promoting NGO empowerment. A key objective in this regard is to foster strong and vibrant local NGO communities capable of promoting sustainable development. In order to pursue this objective we need to define just what we mean by a vibrant local NGO community, and decide how we would measure it. Bangladesh and South Africa are two countries that are often cited as examples of countries that have succeeded in creating a strong, active and vital NGO sector. Yet even in these cases it is not always clear exactly how the NGO sector is defined or what constitutes a strong NGO community.

This section of the paper proposes some initial ideas for key dimensions that we should consider in fostering a strong and vibrant NGO sector and how these might be measured. However, it is important to remember that assessing the strength of local NGOs and deciding appropriate interventions which will strengthen local capacity is highly context specific. What is significant in East Africa may not be relevant in Central America.

The first key question is how broadly one defines local NGO community. In developing countries there are a wide range of formal associations and organi-zations at the national and local level, and a plethora of traditional and informal groups at the community level. There are NGOs that have been established to deliver certain types of services, political advocacy groups, church groups, affiliates of international NGOs etc. It is very important to draw some broad boundaries around the local NGO community we are interested in strengthening in order to know what dimensions are most important and how we might measure them.

Julie Fisher, in her book, The Road from Rio, has a useful broad definition of the NGO community that includes two major types of NGOs. The first is "Grass-roots Organizations" (GROs), defined as locally based groups that work to improve and develop their own communities through community-wide or more specific memberships such as women or farmers. GROs include both local development associations representing the entire community, such as village councils or neighborhood improvement associations, and interest associations such as women's groups or water users groups. GROs also include productive and profit making groups such as pre-cooperatives, cooperatives and other community based enterprises. GROs can either grow out of traditional organizational roots in the community or be established by an outsider such as a missionary or national or international NGO.

The second major type of NGO defined by Fisher is "Grassroots Support Organizations" (GRSOs) defined as nationally or regionally based assistance organizations, usually staffed by professionals, that channel international funds and provide technical support to communities other than their own to help them develop. Some of these are local "counterparts" to international NGOs, but the vast majority are local. Some GRSOs are membership organizations such as women's organizations, professional associations, and human rights organizations. But most GRSOs provide support to existing grassroots organizations or help create new ones. Usually GRSOs are created from the top down by international NGOs or host country professionals, but some are created from the bottom up by federations of grassroots organizations.

If one accepts a broad, inclusive definition of the NGO community like Fisher's, which includes a variety of groups and associations at the community level as well as formal NGOs, then there are many different dimensions that are important to the creation of a strong and vibrant local NGO community.

Another key question related to measuring NGO empowerment and the vitality of the NGO sector is the roles NGOs should play in contributing to sustainable development. Each NGO role provides measurement opportunities:

• The donor community has often traditionally seen NGOs as a useful alternative to host country governments for delivering services at the community level in priority areas of interest such as family planning, child survival, microenterprise deve lopment, environment etc. A major focus of donors in strengthening the NGO sector has been to develop the institutional capacity of GRSOs to plan, implement and evaluate development programs.
• NGOs at the grass roots level are important forces contributing to democratization and the strengthening of civil society. Because many local voluntary organizations represent the shared values and ideals of their members they can be important advocates and catalysts for social change.
• NGOs can also be sources of innovation and experimentation, testing new approaches to development problems. The NGO sector can also make a very important contribution to development by mobilizing productive energy and resources in the service o f the community and its improvement. Organiza-tions such as producers associations and cooperatives make direct contribu-tions to sustainable development in specific sectors such as agricultural production.
• NGOs also have an important role to play in providing donors and governments with feedback on policies and programs, contributing to policy change and helping to shape the development agenda.

In sum, NGOs play many important roles in the development process ranging from the delivery of goods and services to communities to roles as catalysts, mobilizers, innovators, analysts and advocates. Any effort to strengthen the local NGO sector and to measure its vitality needs to consider these multiple roles that the NGO community plays in promoting sustainable development.

The following sections highlight some of the key dimensions that should be considered in promoting the development of a vibrant local NGO community and measuring its strength and vitality. It is followed by a matrix including proposed indicators to measure each of the different dimensions.

1. Number of NGOs and their Membership

The rate at which new local NGOs are created is one of the measures of the vitality of the local NGO community. However, it is also important to look at the relative rates of growth of the GRSOs and the GROs. A rapid rate of growth in the number of GROs is almost always a sign of strength. However, a rapid proliferation of small, weak, ineffective GRSOs organized in the hopes of capturing outside resources can sometimes detract from the vitality of the local NGO community.

The rate of growth in the membership of GROs, and particularly in what some call "member-accountable people's organizations"--such as cooperatives, women's groups and farmers associations--is a very useful measure of the vitality of the NGO sector. As more and more people of different kinds participate in these organizations, the sector becomes more dynamic.

2. Diversity

Clearly it is a sign of vitality to have many different types of NGOs, representing different groups in the society, and to have them functioning in a variety of different sectors. If NGOs are to play a significant role in the sustainable development of the country then they should have strength in a number of the key sectors such as the environment, health and family planning, agriculture and enterprise development, etc. It is important to have service groups as well as production groups, women's associations as well as men's groups. It is also important to have the right kind of balance and complementarity between the GRSOs at the national level which can mobilize resources and exert political leverage with national government and the GROs at the community level.

Diversity is also key if NGOs are to play an effective and dynamic role as catalysts, innovators and advocates. A healthy and dynamic NGO community should have a real variety of voluntary organizations in each of the different sectors, representing a broad array of distinctive and even conflicting commit-ments, and contributing a wide range of different viewpoints and interests to the development process.

3. Interlinkages/ NGO Networks and Associations

Linkages between NGOs at the local, national and international level can be an important measure of the vitality of the local NGO community. A crucial dimension of NGO empowerment is the ability of NGOs to work together and share information to promote development. National associations of NGOs (GRSOs) can provide a valuable means of information sharing and a common base for dialogue with donors and government. In some countries with strong NGO communities there are also national associations of NGOs at the sectoral level, such as asso-ciations of NGOs working in health, family planning or the environment. It can also be important to have horizontal linkages between grassroots organizations at the local and regional level. Some examples include federations of cooperatives, federations of local development associations, peasant unions, federations of credit associations etc.

Another potentially important set of linkages is between local NGOs and NGOs in other countries in the region and internationally. One way this has happened traditionally is for international NGOs, including cooperative movements, to create local affiliates and counterparts which become part of the international network. Increasingly, international NGOs are now creating valuable partnerships with local NGOs, and helping to vitalize the local NGO sector through an exchange of information, experience and technical expertise. Also, in many parts of the world today there are associations and information exchanges between similar types of NGOs in adjacent countries in a region.

4. Ability to Influence Government Policies and Programs

Political and economic leverage is one of the most powerful measures of NGO empowerment. National associations of NGOs in key sectors such as environment, family planning, and agriculture are increasingly influencing government policy in many developing countries. This is also true of advocacy groups such as some women's associations. NGOs can influence policy many different ways--national meetings and conferences to debate and publicize key issues, NGO participation on government commissions and advisory boards, personal influence of NGO leaders with contacts in government, hiring of NGO leaders to fill key posts in government, etc.

NGOs can influence government policies and programs in many different ways at the national and local levels. NGOs can often influence government programs by example through the development of innovative new approaches and models that are adopted by government. Some governments, such as the Government of India, have adopted policies that a certain percentage of the budget should be set aside for direct support of innovative NGO schemes. Successful models are then picked up and replicated in the system.

5. Relationship to the Private Sector

An important dimension of the vitality of the NGO sector is the degree to which it has established sound and balanced relations with the private sector which stimulate cooperation and financial support. In a balanced relationship there should be an exchange of information and experience without jeopardizing the indepen-dence of the NGOs. One of the measures of this relationship is the number and types of linkages between private business organizations and other NGOs working in service delivery, public advocacy or direct economic production.

6. Independence

This is an important dimension of NGO empowerment and is linked to political and economic leverage discussed above. In order to foster a vibrant and strong NGO sector, with NGOs that are free to speak out and press for change, it is important that NGOs (particularly the GRSOs) not be heavily controlled by donors and governments. But independence is difficult to measure. Financial independence is certainly one measure -- one can look at the percentage of GRSOs that receive the majority of their financing from local sources other than the government or donors, or percentage of total NGO resources provided by donors or government. One could also look at the number and types of issues that NGOs have raised for discussion with donors and government as another measure of inde-pendence. Since many community level groups and other grassroots organizations are small, democratic and independent by nature, the number of grassroots organizations (and proportion relative to GRSOs) is one potential measure of the independence of the local NGO community.

7. Degree of Participation and Responsiveness to Member Needs

In order to have a vital and dynamic local NGO community it is important that NGOs be participatory and responsive to the needs of their members. This is particularly important to examine with respect to grassroots organizations and membership based GRSOs. Even though most of these NGOs are democratic and participatory by nature, this is not always the case, and they can become "ossified" over time, with a leadership group that becomes more and more insular and less responsive to members' needs. For example, this is sometimes the case with cooperatives, and cooperative federations, which start as highly participatory grassroots movements, but can become increasingly bureaucratized over time. As measures one could look at the frequency of changes in leadership of NGOs, how regularly membership rotates on the boards and administrative councils of the NGOs, or how regularly meetings are held with the membership.

8. Sustainability

Sustainability is another key dimension, but the definition and measures of sustainability will vary somewhat depending on the type of NGO in question. If one is talking about a cooperative or other productive association, the rate of capitalization and generation of surpluses is one important measure and the growth of membership is another. If one is talking about a GRSO that captures interna-tional funding in order to provide technical support and training to GROs, more relevant measures of sustainability would be the diversification of its donor base, and percentage of operating costs covered by users fees. There are also other important institutional dimensions of sustainability in addition to the financial. Good planning, management, administration and other aspects are also vital to the sustainability of GRSOs.

A traditional concept of financial sustainability is the ability of an organiza-tion to continue its operations without outside financial assistance. This can be applied relatively easily to community-based grassroots organizations with low costs that weren't initiated with large infusions of cash from donors or govern-ments, or the cooperatives and productive associations. But for the large GRSOs that are highly dependent on outside donor or private sector funding for their existence, complete financial independence is very difficult to achieve and one has to look at other intermediate measures of financial sustainability.

One measure is the diversity of the donor funding base. Another is the percentage of operating costs covered by membership fees, users fees or other local revenues. Still another is the creation of endowments that can cover a portion of operating expenses. For many local NGOs involved in service delivery, direct financial support from government through subventions or contracts to deliver services (at times through formal incorporation of NGO programs in national government schemes) is an important dimension of sustainability. Appropriate fee structures can also be important to sustainability for service delivery NGOs.

9. Institutional Capacity

In order to foster a local NGO community that can make an effective con-tribution to sustainable development, the creation of adequate institutional capacity of NGOs is vital. Institutional capacity encompasses many different capabilities. Key dimensions for NGOs carrying out projects and delivering management services include planning, management and technical capability. They need to be able to plan, implement and monitor and evaluate their activities effectively. It is important that the larger NGOs develop adequate managerial, financial management and monitoring and evaluation systems.

The relative importance of these capabilities depends in part on the type and level of organization. A large national GRSO providing technical assistance and training to grassroots organizations in a large region of the country will need the full range of strategic planning and evaluation, financial management, accounting and technical skills. These types of organizations also require professional tech-nical staff, and the numbers and professional training of that staff is an important measure of their organizational capacity. But even the smaller community-based organizations need basic planning, organizational and accounting skills.

Institutional capacity is challenging to measure. One innovative effort to do so has been developed by USAID's Office of Private and Voluntary Cooperation (PVC). It has developed a PVO/NGO capability self assessment index that covers different dimensions of technical capacity, planning systems, and managerial systems (see matrix).

10. Communications Capacity and Access to Information

Sufficient NGO knowledge of the values and techniques of communication and adequate access to communication technology can also be very important to the creation of an effective and dynamic NGO sector. Good communications capacity helps to stimulate intra-sector networks and horizontal and vertical linkages among the NGOs, and facilitates the sharing of information and resources among NGOs. This capacity should also contribute to the maintenance of good intersectoral relations with the public and private sectors and enhance NGO's broader educational function in civil society as a whole. Increasingly, exchange of information at local, national and international levels is a critical element of sustainable development.

11. Innovativeness

This dimension may be somewhat difficult to define and measure but it is an important aspect of a strong and vibrant local NGO community nevertheless. It is significant in part because one of the key contributions NGOs can make to the sustainable development process in their countries is to adapt or to design and test new approaches to solving tough local development problems. In order to measure this, one could look at the number and types of new approaches (or models) developed and tested in different sectors. Even more important, one could look at the number of new approaches that have been successfully replicated by the NGO in other parts of the country, or that have been adopted and replicated by other NGOs or the government. A further dimension is to look at the number of model approaches that were started on a small scale and have been successfully "scaled up" to a regional or national level.

C. NGO Empowerment: Measuring the Vitality of the Local NGO Community

Dimension	Measures/Indicators
1. Size of the Local NGO community.	Annual Growth in the Number of NGOs--particularly Grass Roots Organizations (GROs)* Annual Growth in the Membership of GROs
2. Diversity	Number of Women's Associations and women led NGOs. Number of Grass Roots Support Organizations (GRSOs)** and GROs by Sector. Number of NGOs representing minority ethnic groups
3. Interlinkages/NGO Networks and Associations	Number of NGO Umbrella Organizations Membership in NGO Umbrella Organizations Number of local NGOs who are members or affiliates of International NGOs Number of GRO based federations (Cooperative Federations, LDA Federations, Peasant Unions etc.)
4. Ability to influence Government Policies and Programs	Number and significance of Policies/Regulations adopted as a result of NGO efforts Number of Fora for regular NGO Government Consultation (Consultative Groups) Advisory Councils etc. % of Govt.Budget allocated for support of NGO programs
5. Relationship to the Private Sector	Number of private businesses making financial contributions to NGOs. Value of contributions (cash and in kind) by the private sector to the NGOs. Number of NGOs that have been sponsored by/created by private businesses. % of GRSOs with representatives of the Private Sector on the board.
6. Independence	Number of GRSOs that receive the majority of their financing from local sources. Number of community based GROs.
7. Degree of Participation and Responsiveness to Member Needs	Frequency of changes of leadership of NGOs Rotation of membership on NGO Boards, and Administrative Councils Frequency of GRO meetings with the membership.
8. Sustainability	% of GRO and GRSO revenues generated by local services % of GROs and GRSOs charging Membership and User Fees.
9. Institutional Capacity	% of GRSOs with full time professional technical staff % of GRSOs with audited financial records. % of GROs that have received technical assistance & training in financial management and accounting. % of GRSOs with transparent and functional financial, accounting, personnel and management systems. Number of GRSOs capable of developing their own training materials and providing training to other NGOs.
10. Communications Capacity and Access to Information	Percentage of GRSOs linked to Internet. Percentage of GRSOs with fax or E-mail capabilities. Percentage of GRSOs with newsletters or publications to share information with other NGOs.
11. Innovativeness	Number of model approaches pilot tested by sector Number of model approaches that have been successfully adopted and replicated by other NGOs or Government.

D. Funding Vehicles for NGO Empowerment

The appropriateness of the following funding mechanisms will depend in large part on what we want to achieve in working with our PVO partners and NGOs. Clear objectives and analysis of the target groups (U.S. PVOs, local PVOs, NGOs) will help to refine the choices for appropriate funding.

For purposes of this section of the paper, PVOs are defined as U.S. PVOs registered with USAID; LPVOs are local, non-U.S. PVOs registered with USAID. NGOs are here referred to as local, nongovernmental organizations not registered with USAID.

The following mechanisms are alternatives available for direct development of PVO, LPVO and NGO capacity.

1. Matching Grants (Solicited)

Matching grants are one co-financing mechanism usually centrally utilized but could also be used by missions to fund PVOs to build the capacity of the PVO to deliver services or to perform as an intermediary to NGOs. These grants generally require a 50-50 match both as a financial capacity building tool and as a commitment to the activity by the PVO. Matching grants to individual PVOs are management-intensive and, while supporting field activities in priority sectors, the main objective is strengthening the organizational capacity in technical, manage-ment, and planning to become proficient in a sector such as microenterprise and/or to transition from one sector to another.

Typically 3-5 years, matching grants have been implemented through cooperative agreements since 1987. Through use of this flexible, capacity building method, U.S. PVOs are making the transition from direct service provision to intermediaries.

2. Direct Grants (solicited or unsolicited)

Direct grants are usually at the field level and have proved effective in building local institutions, encouraging self-reliant community development and supporting private sector growth. Typically 1-3 years duration, direct grants provide a mechanism for missions to work directly with NGOs that are registered with USAID, also referred to as LPVOs. Cost-sharing of 25% from non-USG sources has been a feature of direct grants and should still be encouraged, although this is no longer a requirement (US Policy Determination l6).

Direct grants may be offered for technical assistance, organizational development, etc. to: 1) U.S. PVOs for project implementation, 2) U.S. PVOs for capacity building of LPVOs and NGOs through subgrants, 3) to LPVOs for project implementation, or 4) to experienced LPVOs for capacity building of smaller LPVOs or NGOs through subgrants.

3. Umbrella Models (Solicited)

Most commonly, an "umbrella" is a funding mechanism designed to deliver relatively small amounts of USAID funds to each of a number of organizations through one financial award to a lead organization. A cooperative agreement or contract is received from USAID for subsequent smaller subgrants to NGOs or PVOs for project implementation, with the lead organization responsible for administrative and technical assistance to subgrantees. These could be mission or centrally funded.

The lead organization may be a PVO or local NGO, an association of PVOs or NGOs, or a contractor. A mission could conceivably have direct funding arrange-ments with a number of PVOs/NGOs, as in Bangladesh, and through them, USAID resources can reach hundreds of local NGOs. The recent CDIE study (May 1995) assessing USAID's management of PVO/NGO activities cites the Mission's Family Planning and Health Services Project which provides direct funding to a total of five organizations--two PVOs, two local NGOs, and one international NGO--which in turn provide funding to 106 local NGOs operating at over 300 project sites.

Among the factors to consider in choosing a lead organization are charac-teristics of the local NGO sector, the presence of PVOs and nature of their local relationships, compatibility of USAID's objectives with the lead organization's, and government rela tionships and cooperation. The CDIE study noted several special factors relating to umbrella mechanisms:

• Capacity building of subgrantees is an increasingly important part of umbrella activities, which may include TA, training in fundraising, membership development, networking, management, guidance in strategic planning, and on USAID and donor systems an d procedures.
• Primary advantages for NGO subgrantees are opportunities for networking and institutional strengthening (with assistance from the lead organization).
• There are some management savings for USAID, since only one agreement is managed instead of several. However, the management burden may be substantial should the mission staff decide to review and approve all subawards to assure that funding to subgra ntees is equitably distributed.
• While cost effective and management friendly, umbrella mechanisms are cited by mission staff as difficult to oversee if the lead organization does not have adequate monitoring capabilities. Selection of the lead organization is key.
• Umbrella grants may favor larger PVOs with previous USAID experience. Experience with local communities is important for effective work with smaller, diversified NGOs. Regional and multi-country approaches may make it difficult to work within specifi c cultural and sociopolitical contexts. A PVO with experience in one region may not be appropriate to work with the local community in another region.
• Lack of coordination and communication were frequently cited by PVO, NGO, and USAID respondents to the CDIE study. NGOs may feel isolated from lead PVOs managed from the U.S. Clearly defined roles and lines of authority regarding USAID, the lead organ ization and subgrantees are recommended.
• Financial accountability for subgrantees is a concern when the lead organization does not provide adequate assistance and monitoring.
• If the umbrella is a consortium of U.S. PVOs, resource allocation should be determined and transparent at the outset.

4. Contracts

Contracts are instruments used for the acquisition of property or services for the direct benefit, or use, of USAID. As opposed to assistance instruments (grants and cooperative agreements), which may be awarded only under certain circumstances and for certain purposes, a contract may be used in any situation where USAID determines it is appropriate in accordance with Federal Acquisition Regulations (FAR) and USAID Acquisition Regulations (AIDAR). Contracts may be awarded competitively or non-competitively based on strict guidelines and procedures in the FAR and AIDAR.

In certain cases, contracts may be appropriate mechanisms to accomplish the purposes of NPI. For example, a contract could be awarded to a PVO or other organization for training and technical assistance services to build the capacity of PVOs or local NGOs, or to operate an NGO network or clearinghouse. NGOs may be awarded contracts to supply specific services, such as community needs assessments, baseline surveys, etc., which may help to build their track record and increase their capacity to deliver such services. There are many other instances in which contracts could be appropriate funding instruments to further capacity building; however, this should be analyzed carefully in relation to the restriction of flexibility in the award and management of contracts under the FAR and AIDAR.

5. Modified RFA (Solicited and Unsolicited)

It has been suggested that USAID could benefit more from the experience and ingenuity of the PVO community by accepting more unsolicited proposals. The management burden imposed by the review process would make this unattractive unless USAID accepted less prescriptive review criteria. Alternatively, creative responses could be facilitated by requesting proposals that address specific sectors or capacity building, criteria for NGO empowerment, etc. A second modified RFA approach could be a two-step process whereby a concept paper is solicited, submitted and reviewed before successful candidates are invited to develop formal proposals.

6. Consortium Funding

Consortium funding is an approach used by SIDA (Sweden), the Ford Foundation, and others. Donors contribute to a single fund, to be administered by the lead agency, so that NGOs receive and administer funding in a simplified man-ner. Standard formats for financial reports, progress reports and project monitoring are used, and the recipient sends the same reports to all donors. Since USAID's strengths are its in-country presence and ability to directly fund local NGO acti-vities, this approach may not work well. However, this model allows for longer-term funding which is critical to effective NGO capacity building and sustainability and might be worthy of consideration.

7. Performance Block Grants (Solicited)

For purposes of conducting activities in a region or sub-region, for both technical and NGO empowerment, USAID would provide a large central grant to a PVO. The grant would be based on an RFA with standards and criteria established. The PVO would be responsible for reporting on administrative management, progress and achieving planned results and local sustainability. An advantage of this approach would be longer duration, reduced overhead costs and enhanced opportunity for sustainability. USAID missions would be responsible for strategy development, analysis, negotiation with the government, donor coordination and results oversight.

8. General Support Grants (Solicited)

Under this model, USAID would support large grants to PVOs to cover all the activities they conduct with us. These would be used for NGO empowerment in a variety of sectors and/or for focusing on institutional strengthening, targeted strategically in a variety of countries where sustainability appears bright. The PVO would be responsible for reporting to USAID on progress. To the extent USAID would be supporting programs, not projects, it would be important to develop appropriate indicators for impact. Through this approach, USAID could reduce overhead costs and direct its resources toward strategy development, analysis, government-to-government and possible multilateral liaison as well as performance monitoring. USAID would be able to move funds early in the year, then negotiate work orders for the PVO in individual countries through field missions. Multi-year partnerships would be negotiated with possibilities for renewal or expansion.

Less attention would be directed to process and more to substance and impact. Advantages to PVOs include concentration on expertise, both technically and managerial, and consolidation of overhead in one grant with greater staff planning.

9. Network Support Grants

Support for the formation and strengthening of networks of PVOs and NGOs to facilitate the sharing of lessons learned and outreach to developing affiliates or partners, e.g. SEEP, could be expanded.

10. Joint USAID Programs

Joint programs between two bureaus to provide support for capacity building, e.g. PVC with Global, and a country-specific project, such as in child survival, might be utilized, although management coordination would be important.

11. Technical Assistance to PVOs/NGOs through Universities

Technical assistance around a sectoral theme or approach, e.g Johns Hopkins for child survival, should continue to be considered for use within NPI. Through the JHU TA, a range of U.S. PVOs with little or no child survival experience have developed considerable expertise over a ten-year period and are increasingly engaged in working with community-based organizations. Similar arrangements could be developed around sectoral themes such as agricultural productivity.

12. Endowments

Endowments are vehicles to fund NGOs to do valuable development work and to increase their long-term stability and financial self-reliance. There are two kinds -- those which cover all operating costs of NGOs, and those which provide only enough income to cover core administrative costs, with the expectation that income for operating programs would come from additional project grants. In both cases, the endowment increases the local organization's sustainability and allows it to make long-term decisions on staff development, research, strategic program choices and policy reform. Organizations do not have to reconsider these decisions at the end of every grant cycle.

To establish an endowment, USAID would make a large grant to a local NGO or coalition of NGOs; that entity would then invest the funds locally or offshore. The goal is that the NGO would operate wholly or partially on the income derived from the investment.

Endowments could also be used to establish a local grantmaking foundation, which is the approach now being used by the Ford Foundation in several countries. It would be possible for USAID to join donor consortia to support such vehicles for long-term impact. The clear advantage is long-term financial sustainability. The constraints include hurdles such as initial funding requirements, determining organi-zational forms, making wise investments, governance issues, trustee education, and accountability.

13. Bilateral Programs to Initiate NGO Units

USAID would provide bilateral assistance to a MOH or other governmental unit to partially finance the development of an organizational structure to strengthen the local private and voluntary sector. The unit would provide sub-grants to NGOs in a variety of sectors throughout the country. This successful model was supported in India from 198l until 1989. A USAID evaluation docu-mented the effectiveness of this collaborative relationship between USAID and GOI, resulting in a strengthened government capability to support health projects carried out by local NGOs.

14. Parallel Funding

A form of joint funding, USAID can help PVOs leverage funds by arranging with other donors to fund specific development activities. Due to USAID's need for separate accountability, parallel funding has been a preferred joint funding approach, whereby each donor has a separate contract or assistance instrument with a PVO for separate aspects of an activity. While this allows USAID to account for its resources separately and ensure control over their use, philo-sophical, administrative and logistical problems can pose difficulties. These include lack of agreement between USAID and other donors on what organizations and activities merit combined funding; differences in accounting standards and require-ments; duplication of reporting; and possible differences in procurement practices, regulations and disbursement periods.

15. Debt Swaps

Also called debt conversion, debt swaps allow PVOs, universities, cooperatives, agricultural research institutions, and other not-for-profit entities to use USAID funds to purchase external debt for inconvertible currency and redeem that debt at some premium in local currency. This mechanism has significant potential for providing additional resources for development, at the same time helping developing countries to reduce their external debt and debt servicing burden. Constraints on debt swaps relate to their budget costs, lack of knowledge among USAID staff and PVOs about debt conversions, and little available knowledge about lessons learned.

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III. New Management Vehicles

Program Interventions/ Management Reforms

The specific program which USAID and its PVO partners will pursue builds on the new USAID/PVO Partnerships Policy and on activities already underway in several "Leading Edge" missions. The goal is rapid broadening and deepening of existing USAID program directions and the development of NGO programs more closely integrated with the other components of the NPI -- small business and local governance.

The focus of the effort must be the field. USAID missions need to see NGO empowerment as a new way of achieving their sustainable development objectives and to adjust the way they implement their programs accordingly. In addition, USAID/W will put in place support instruments and institutions which will facilitate the successful implementation of the NGO empowerment component of NPI.

While much can be accomplished through rigorous application of Agency processes -- especially as envisioned in the reengineering exercise to be implemented October 1 -- it is also true that additional resources will be required.

Field Activities

1. USAID field missions--working with governments, local NGOs, U.S. and other international PVOs where appropriate, and other donors--will assess the legal, regulatory and economic environment for NGO empowerment. This assessment should be conducted by all USAID field missions and should be regularly updated.

2. USAID field missions, working with PVO/NGO partners and other donors should assist recipient countries to create an enabling environment favorable to NGO empowerment. Each country will differ, so this effort must be approached with full understanding of local issues.

3. In managing its programs in all sectors, USAID will seek opportunities to support development of local NGOs. In many cases, particularly in child survival, microenterprise, family planning and other service delivery programs, USAID utilizes PVOs or even local NGOs as service providers, but does not necessarily seek to enhance local capacity or sustainability of local partners. Where appropriate, USAID will build indicators of strengthened institutional capacity of local NGOs into procurement and assistance documents as a performance result. Where appro-priate, USAID field missions will include training to improve management capacity of local NGOs in procurement and assistance documents.

4. USAID missions will actively involve PVOs and local NGOs in formulating strategic objectives for the U.S. development assistance program. USAID strategy documents will be approved only if they clearly reflect PVO/NGO participation.

5. USAID missions will assess opportunities for involving PVOs and NGOs in program design and as program implementation partners. Missions should report on this assessment in their program design and implementation documents.

6. USAID missions will utilize their training and exchange programs for training local NGO leaders. In some cases, this might involve bringing participants to the U.S. to learn from U.S. PVOs/NGOs. USAID will provide opportunities for appropriate training in areas such as technical skills development, planning, management and evaluation, and communications and advocacy.

7. USAID missions will seek opportunities to strengthen local infrastructure which supports NGO empowerment. This can include training facilities, media for networking and communication, and support for governmental activities such as an NGO ombudsman.

USAID Central Programs

1. USAID, working with the PVOs and other donors, will become a learning center on the role of NGOs in development. This effort will include a modest professional staff dedicated to NPI and select financing for research. This effort will include development of effective means for measuring NGO empowerment, including development of indicators of institutional capacity.

2. USAID will develop "rapid assessment" and other techniques to assist in evaluation of the NGO community and the enabling environment for NGO empowerment. This material will be developed in consultation with USAID's partners, including other donors, and will be widely available. USAID will seek multilateral sponsorship for publication of this material.

3. USAID will develop comparative materials which illustrate the measures taken by other developing countries to ensure a favorable enabling environment. This material will also be structured to demonstrate the benefits which such an environment has for sustainable development. This material will be developed in consultation with USAID's partners and will be widely available. USAID will seek multilateral sponsorship for publication of this material.

4. To help facilitate a positive enabling environment, USAID will develop "partnership models" for governments and NGOs to use in conducting relations. These models will demonstrate the positive effects of a clear understanding of roles and responsibilities.

5. USAID will work toward an international standard for local NGO registration requirements in developing countries. The goal will be a standard which is simple, inexpensive, and can be met in a brief time frame.

6. USAID, working with U.S. PVOs, will identify and support or--if necessary--create an entity which can identify non-traditional NGOs in the U.S. which are interested and able to assist strengthening of NGOs overseas. Over time, this entity may support or facilitate capacity building of these non-traditional U.S. NGOs.

7. USAID--working with U.S. PVOs, select local NGOs, and bilateral and multilateral donors--will identify and support (or, if necessary, create) entities which will facilitate South-South dialogue and exchange of ideas among NGOs. These entities might be regional or global. Over time, these entities might facilitate development of regional NGOs and support capacity building for local NGOs.

8. USAID will expand its donor coordination capacity with respect to work on NGO empowerment. USAID will seek the support of other donors and the multi-lateral institutions in work on the NGO enabling environment, on the partnership models and on the entity to support South-South interaction among NGOs.

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