Social Fund programs work with local governments, NGOs, communities, and development agencies to serve the broader national objective of poverty alleviation. Programs are often positioned within an agency under the central government’s Ministry of Finance, Planning, or Social Welfare.  The agency managing the social fund acts as an intermediary, and provides grants to communities to implement eligible small-scale infrastructure and/or social service subprojects.

The community beneficiaries will generally be made sponsors of a subproject once organization and representation have been established. A number of actors can provide support to communities through the implementation process (e.g., a funding agency, district technical teams, NGOs). 

However, it is important to define the institutional arrangements from the start, taking into account the institutions involved, the activities to be undertaken by each, and functional linkages, such as the institution’s relationship to the community as well as to the funding agency.

Institutional arrangements

Many institutional options are available to provide funding and support to community-based organizations, including local and municipal governments, the private sector, civil society, and a central government or central fund (i.e., a funding agency).  Three broad sets of arrangements have emerged, although there are many variations regarding the role of each player and fund flows:

• partnerships between community-based organizations and elected local or municipal governments,
• partnerships between community-based organizations and private support organizations (NGOs or private firms), and
• direct partnerships between community-based organizations and central government or a central fund including other, higher-level governments and fund (e.g., states or provinces in federal systems)

These arrangements are illustrated by the diagram below. Note that fund flows are indicated by shaded arrows; shaded boxes indicate primary partner organization.  In each arrangement, support may be provided by other institutions, and these are shown to the side of each diagram.

From the PRSP Sourcebook, CDD Chapter 9 (Dongier et al., 2002)

Increasingly, Social Fund and CDD-type programs are empowering communities through direct financing, which allows them to play a central role in fund management and the establishment of transparency and accountability mechanisms.  In this model, communities receive funds directly from the funding agency, procure materials, hire contractors and consultants/technical experts, employ labor, and ultimately mange the overall implementation of the subproject.