Social Investment Fund (SIF)
Anek Nakabutra
Director, Social Investment Fund

Since the democratic reform, I had been involved in the innovative development direct assistance program of CIDA. Later, we founded LDI and NGO-COD. The latter became the first social movement in Thailand where civil society & community-based organizations were organized to come up with a new constitution. Since the financial crisis, where the region was severely affected, SIF has been promoting bottom-up approach to give opportunities for communities nation-wide to cope with their own crisis.

The Challenge

Should things be the same as the past especially in the case of Thailand? No way because the government is changing fast & revenue from taxes is at 100M Baht, which are thrown as villages' funds. There is so much money and NGO do not know how to cope with this large amount. Although there are resources, and there is little capability. NGOs may be politicized or embroiled in bureaucratic system, but SIF try to liberalize them. The September 11 brought worst situation than the financial crisis. So the proposition is to change orientation from money to something else. But can NGOs sustain? It is doubtful given the current economic crisis.

SIF was the first funding mechanism that directly challenged government and demanded autonomy and money. It was given loan fund from World Bank. It handled the money and is delivering the funds directly to CBOs without interference from anyone.

The social fund was used as tool for community to learn to solve their problems. At the same time, local assets and local wisdom were harnessed from the community for local people to participate in their community learning/development. The second step is SIF utilized the community masterplan. It involves an in-depth research of learning about strengths & weaknesses of the locals, of community in relation to what they do. It involved learning what social capital or assets are there in the minds of locals or the community.

Thailand is still very rich in cultural and social capital. This is why Thailand does not experience social chaos like Argentina. In fact, these capitals have been in existence for a thousand years. However, both the NGOs and government do not realize or recognize the local resource. Part of NGO innovation introduced is to lead even liberalize local community from patronage system. NGOs tried to create space for the poor. SIF created space for NGO to work with the poor. Despite the efforts, the patronage system exists in the community. It is still widely practiced. So what to do now? Thai Constitution provides for decentralization, so SIF works with the Tambun Administrative Organizations (TAO). TAO creation is an attempt by government on decentralization, but power and money dictates the scenario within, leaving localization or people empowerment behind. CBOs/CSOs have a role to play to balance off the situation especially with globalization as major concern. SIF sees that the alternative to economic recovery is to bring new assets or consider asset-based community development. The assets are in the local community -- there are so much sharing and caring among people, and compassion for natural resources in the local community. Again, do NGOs mobilize these assets? Money capital is recognized but not so much the social capital. SIF tried to bring out a concept, where it synthesizes knowledge and money capital.

Globalization and privatization of government posed renewed challenge for local community. Money is not a problem to Thai NGOs as there are 1 million allotments per TAO per year. What is needed is to harness the knowledge. But in Bangkok, which is the seat of power, knowledge is less and less responsive or proactive to local needs. The institution realized that there is wealth of knowledge, local practices on natural resource or social safety nets from the community. And the practices/system have been there for years

No state can fix the complex impact of the crisis. The problems can't be solved by money alone but by knowledge that is so diversified and is waiting to be processed in the communities of Thailand. The way to reform the community is through social capital. So NGOs will still use the money, but will use it for people to learn and process the social capital present both in urban and rural communities. The challenge is how to process, localize the social capital.

SIF lessons are:

the need for synergy and the need to protect the sector from being politicized;
to use one standard of measuring the social capital, which is not readily available now; and
social capital is so diversified, powerful waiting to be re-processed.

What kind of resource SIF support/mobilize?

Model 1 - matching for social safety nets Model 2 - revolving loan fund or pay back system. Model 3 - Joint philanthropic social safety nets program fund Model 4 - joint venture or venture profit to help the poor

Social capital is the spirit that guides or directs development. It is the core value that has been neglected. NGOs flaw is: they learned from western wisdom or state knowledge, but they devalue/degrade the local wisdom. Thus, they cannot mobilize the knowledge that still exists.

Human capital is also important. Money capital tends to draw men together. Men monopolize that area, while more women, children or the youth sector are out. There is an abundance of human capital in Thailand. There are hundreds of thousands of volunteers or people who work without pay in Thailand. But are they accepted as NGOs? Are they mobilized more? These human capital with hearts and brains are there waiting to be tapped.

Humannet are human links or relation, which is part of the human capital. They carry the social fiber, so they need to be organized and registered.

NGOs cannot be proactive in times of crisis. They need to create the learning process and conducts forum, dialogue and let people learn in very simple ways how to solve their problems. But people need to be capable to process. One point of concern is the TAO. How can the knowledge be synthesized? Are the TAO prepared to do development work? There are more questions to answers and challenges for Thai NGOs, such as:

should we shift our paradigm from money to social capital?
should we create synergy to link those who believe in money power and they may not understand social power? and
how can we link people to change the scenario and balance (neutralize) the super power?

Top

Sustainability of Partners NGOs
Ms. Felicitas Rixhon
Executive Director
Children and Youth Foundation of the Philippines

The Children and Youth Foundation of the Philippines (CYFP) is a resource organization and does not implement programs directly. CYFP identifies effective programs and organizations to implement their own agenda. However, based on their experience this approach has its problems because support provided to the organization is only for a short period of time (3 or 5 years) and after this the organizations will still be addressing the problems, which they were helped. CYFP recognized the need for the organizations to attain a certain degree of sustainability in order to do the work that they are supposed to do after the funds and assistance are withdrawn.

In view of this, CYFP defines sustainability as the ability of the organizations to do what they are mandated to do or what they feel they should do and produce the outcomes that are necessary after assistance is phased-out. For an organization to be sustainable, it should possess the following qualities or hallmark of effectiveness and sustainability:

There should be continued and satisfactory functioning of the organizational structure. To do this, CYFP developed organizational standards based on best practices that their partner organizations were asked to go through. Series of consultation with partners is conducted to find out whether the concepts introduced in the standards are the same concepts that they believe in and to take ownership of the standards. They did their own self-assessment and a CYFP staff visits them to validate their own rating in order to help CYFP develop a training agenda for the organization. CYFP also provided technical assistance in organizational assessment and in documenting their experiences and processes and consolidates information necessary for the organizational assessment. Weaknesses in the human resource aspect were addressed by soliciting the assistance of the Association of Foundations (AF) in crafting their own policy manuals to be used in implementing their projects.
There should be continued achievement of program objectives through service delivery standards. CYFP's assistance did not only focus on building the organizational capabilities but also on how services are delivered. At the moment, CYFP is developing service delivery standards to help the organizations determine what is necessary to deliver their services much better to the target sector. Some of the service delivery standards being developed fall under the mandates of CYFP, which are case management, youth participation, technical education and early childhood development.
Enhanced organizational capabilities as well as continued provision of benefits and initiatives. Both the organizational & service delivery standards should ensure further enhancement of the capabilities and continuation of benefits and initiatives.
Another important quality that an organization must have to be sustainable is financial sustainability. There must be continued access to generation of resources to cover costs. CYFP teaches the organizations ways to access other sources based on the principle of diversification of funding sources. The organizations should not be locked-in to a certain donor or funding institution for resources. They should be able to network with different organizations including the government and business sector to diversify sources of funds.
Effective programs that generate long-term commitment for partners are the last quality of a sustainable organization. The Pangarap Foundation, one of the programs of CYFP, illustrates this quality. The said foundation is a shelter for street children offering drop-in services and residential support. At the moment, 4 international donors provide assistance to the foundation. The assistance of these international donors was a result of the initiatives by the foundation following the recommendation of CYFP. Aside from this strategy, the foundation through the intercession of CYFP is currently exploring strategic partnerships with business and has been offering training programs to other organizations based on their strengths with emphasis on life skills and value formation. Last year the foundation generated Php5M, which they now hold as trust fund, by holding fund raising activities.

In summary, the basic strategies adopted by CYFP as exemplified with their work on Pangarap Foundation are:

linking partners to resources through research
matching organizations to training institutions that are experts on fund raising & providing funds at the time it is necessary
granting soft loans for initial or kick-off activities
developing tri-sectoral partnership -- changing strategy by letting proponent form their own consortium within the local community

Challenges faced by CYFP on Sustainability

Identify appropriate strategies. It was process-intensive to change mind set of the community that as they implement their projects they can also raise additional funds and can even concentrate on enterprise development
Paradigm shift
Patience and time
Dedication of resources. Each partner has to think of what it wants to do. CYFP can only provided range of ideas and choices and dedicated resources in order to kick-off what the organization wants to do.
Capacity building -- being able to provide the resources and funds at the time it is necessary

Values of Sustainability

Accountability
Integrity
Transparency
Creativity
Productivity
Excellence through continuous improvement

Session 2

Session 2: Sustainability of Partners And Communities

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Partnership with Business Sector
Tom Malik
Executive Director
Rio Tinto Foundation

In the last 10-15 years, there was a paradigm shift from business partnership for profit into a cross-sectional or inter-sectoral alliance wherein individuals, groups or organizations agree to work together in fulfillment of an obligation or specific tasks that are not necessarily business in nature.

The paradigm shift is due to:

the change in expectations of stakeholders towards business; stakeholders demand the business sector be more involved in the social, political and environmental issues and not just be confined to providing employment
shrinking role of government -- with the advent of the globalization & decentralization era and the move towards regional autonomy in Indonesia there is more room for the various sectors to veer away from the traditional issues they have been involved with
increase customer interest & demand for companies to be more sensitive and socially responsive to the environmental and social issues among others affecting the community

Given this paradigm shift, each sector needs to understand the benefit of tri-sectoral partnership. Tri-sectoral partnership provides:

mechanism for different sector to work together, share costs and risks in both social and financial management with the local government and communities
opportunity to mobilize and combine resources
creates and ensures greater awareness of current issues in the community by each sector
creates bigger and dynamic network
reduces community dependency especially on business sector since they are a part of the partnership
replaces conflict with cooperation for all parties

Principles of Partnership

Equity -- each partner brings in not necessarily capital but values and strengths. It involves honoring and respecting each other thus bringing about trust and transparency
Transparency -- being open to expectations of each sector about what it wants to achieve
Mutual benefit -- all partners should benefit from the partnership

Rio Tinto Policy

In working with the communities, Rio Tinto's policy is based on the principles of partnership cited above. The Rio Tinto policy has the following salient points:

Mutual respect is the key to a lasting, beneficial and interactive relationship among the partners. It involves continuing, effective and open communication as well as realistic expectations between partners.
Active partnership seeks mutual commitment and reciprocity based on trust and openness among all parties.
Long-term commitment to build the trust of the community to be able to work on long-term goal.

Community Development Strategy of Rio Tinto

The stages in community development strategy of Rio Tinto are illustrated in the figure below.

Compliance -- working in accordance to local and national standards. It is merely complying with regulations

Risks Management -- going beyond compliance. It is innovating on the different ways of communication and working together with communities

Value Creation -- goes beyond compliance and risks management. It is creating values and working strategically towards the company image and well-being of society

Tri-sectoral Initiatives of Rio Tinto:

Kelian Equatorial Mine (KEM) Closure Program
- It is a gold mine operated by Rio Tinto and East Kalimantan, which is due to close in 2004. Rio Tinto has committed to complete the plant and mine closure through direct consultation with all stakeholders.
- The partners of Rio Tinto in this initiative are the business partners for development and the natural resource cluster, a WB program
- Regular meetings with all the stakeholders are conducted to discuss current issues and possible solutions.
Rio Tinto Foundation
- The foundation was founded in 1995 by the Kelian gold mine with CRA Australia as the mother company before the merger in 1996. Its motto is "its more worthy to teach a man how to fish than just to give him fish".
- The foundation is an integrated program where the vision is to improve the community well being and environmental protection through agriculture, health education, culture environment and management program.
- Four main programs of the foundation in East Kalimantan are health, agriculture, education and culture. The current focus area is in the West Kuta district about 30,000 square kilometers with 150,000 population. Since it is a remote area, the big challenge is transportation and communication.
- One of its first programs is the TB control program. It is based on a 5-year partnership with the Ministry of Health, East Kalamantan Province, Kutai agency, and an Indonesian NGO working specifically on TB control. Started in 1996 with a pilot of 6 villages, the program has since then grown steadily. As of last year the program has covered the whole of the regency with a population of 150,000. Since its implementation the program has consistently surpassed the WHO target of 85% cure rate, well above the 60% cure rate achieved at the national level.
- The School health education program in partnership with an NGO -- Community OutReach International (CORI) teaches the 5th graders the basic health knowledge and encourages the parents to practice healthy living and instills awareness on the prevailing health issues in the community.
- Program on agriculture is one of the most important program of Rio Tinto Foundation since most of the people of West Kuta are farmers. In partnership with the Department of Agriculture of West Kuta, FAO and the University of Mulawarman and Care International, the program assists around 1000 farmers in 46 villages. Priority issue is food security and diversification in short-term crops and long term investment into commodities as well as strengthening local farmers groups. It utilizes the ToT method to build the leadership skills of the local farmer leaders and network with other groups and receive support from outside sources. To date, the program has received additional funding from the Embassy of New Zealand and AusAid;
- Rio Tinto Foundation's cultural program is more than just making publications on the Indonesian culture. The program involves series of consultations with the 70 cultural leaders to find out their concerns and priorities in the light of the diminishing interest in heritage and culture among the youth. The cultural leaders also provide insights on the how to use the cultural wisdom especially in the areas of health, agriculture and traditional medicines among others.
- The foundation has been working with various universities in Indonesia in improving its human resources & capabilities to provide better education and service.

Top

Plenary Discussion

Q. Based on Rio Tinto's experience, have there been cases or actual experiences where the equity investment from civil society was other than social equity? How did Rio Tinto handled incongruence in terms of timetable of civil society needs and long term objectives of business?

Also, in your experience in implementing a contract, have you had a situation when a contract was broken and did you imposed sanctions as in a court case?

R. T. Malik: It takes a lot of time and efforts for the civil society organizations and the business sector, since the latter has its own objectives and are used to having quantitative measures. It is much more difficulty with the foundation because as Mr. Caccam mentioned earlier -- how do you quantify the results of what you are doing and how do you sit down with parties of different sectors and be able to agree on common objectives and timetable. There is a need to work together to level-off expectations from each sector and push forward the partnership's agenda and stick to the original agreement. The business community is aiming for a long-term benefit from the partnership while there is shorter term expectations from both the CSOs and government. It is important that the business sector show consistent commitment towards the original objectives of the partnership.

On breach of contract issue, Rio Tinto had not experienced any. The Asian way is to sit down with the different parties and try to resolve and understand the other's perspective to find a common ground.

A. Nakabutra: There are three ways to deal with business. One is to organize as civil society and let them become involved as part of a task force and be involved. Like in Thailand, the government has many policies on community enterprise i.e. one village one product. It is impossible for the villages to develop on their own the capacity to do marketing, feasibility study and investment channel to link with small and medium enterprises. What the foundation did was to organize the business sector in a civic way then linked and matched them with community-based organizations. A second way is by encouraging volunteers and sub-contract on a civic manner. Currently, SIF has a MOU with the Bank of Agriculture since both have common policies and objectives to empower the farmers and the agriculture group. After the MOU, the next step is to do a joint action plan between the bank and the farmers group through the facilitation of the foundation. Engaging in contracts is very delicate because business sector have a lot of power so that there is a need to educate the sector not to use their money power and treat the community like a labor force.

Q. Is social investment fund given as grants to community-based organizations? If the funds are provided as loans to individuals, do the CBOs get to keep the repayments to themselves? Is something paid back to the government?

Do they charge market interest rates when they lend out to the community?

R. A. Nakabutra: There are three levels by which CBOs access the fund. The government through the Ministry of Finance acquires loan from World Bank, which is payable in 15 years at an interest of 6.5% per annum. Once the CBO or the network of CBOs get the funds, it is either released as loan fund, revolving fund or as grant depending on the project design. The idea is to let them think for their own future. They are not required to payback but are made aware of the social costs. It is the government that pays the World Bank while the communities are asked to pay back to the society and are informed that their taxes serve as payment to the World Bank. The institution only gets 5% of the fund to cover administrative costs and be able to utilize volunteers nationwide.

Some charge a minimal interest of 2 Baht per month, which goes to the social safety net fund. All the profit goes back to the community in the form of social safety net, social welfare fund, scholarship fund and community forest program. The profit also helps the poor members who have no way of saving money on a monthly basis.

Q. All the presenters' organizations have dual function -- as implementing organization and as resource organization. Do you think there could be conflict of interest within the organization? In the future, do you still plan to continue the dual function or focus on only one function?

R. F. Rixhon: No conflict in the organization because its major function is to help organizations who will do the projects themselves and strengthen them to be able to do the project in a continuous way. CYFP is basically a resource organization and does not implement projects. It funds projects and provides technical assistance to organizations that receive their financial assistance. It is a direct implementer in the sense that it develops capacities of the assisted organizations.

T. Malik: At the time of Rio Tinto Foundation's establishment in 1996, the area was still part of a larger regency called Kuta regency which is in the very remote part of East Kalimantan. Rio Tinto wanted to work closely with the community, however there was no NGOs or CSOs yet. Given this scenario, Rio Tinto Foundation was established to implement programs and work with the community. The 5-year strategic plan of the foundation envisions that within 5-10 years, the organization in West Kuta should become independent of the foundation especially in their management and finances. In preparation for this, capability building activities are provided to the local people for them to know how to manage programs and look for alternative funding resources.

A. Nakabutra: There is always conflict unless focus is made on localization and decentralization through the CBOs or their network. But when there is partnership among the three sectors, the division of labor ensures less conflict.

Q. Given the innovative models presented in directly funneling the funds to the CBOs without intermediary organizations, have you been able to tract repayments to the revolving fund and are those repayments acceptable as far as you are concerned?

R. A. Nakabutra: Yes. Through the volunteers from the business and civil sectors who form the task force and conduct screening and monitoring for the organization. Aside from this, the organization works directly with the networks of CBOs and gives part of the social safety net amounting to 2 M Baht to help the poorest of the poor.

Q. How much money does the Rio Tinto Corporation put into the Foundation? What benefits do the corporation gets from the foundation?

R. T. Malik: The budget of the foundation is approved every year by the Rio Tinto headquarters and is not part of the percentage of the operations in Indonesia. Each operation has its own community development program and directly supports it. The foundation is separated from the business and gets funding from external sources. 100% of the generated funds are allocated to the beneficiaries and is monitored by the foundation's credible consultants.

Sustainability of Partners & Communities

Social Investment Fund (SIF)Anek Nakabutra Director, Social Investment Fund