Development Funds - Main Users / Purpose

A fund is a mechanism through which resources are channelled, according to pre-determined selection criteria, to demand driven sub-projects, proposed by public, private or voluntary organisations.

Social Funds are typically created as new agencies, often outside the realm of a ministry. Even in cases where they are set up within a ministry, they are still granted a relatively high degree of independence with regard to normal bureaucratic procedures. Social Funds can be viewed along a spectrum with varying degrees of being demand-driven, autonomy, execution responsibility, community participation, financing mechanism (loans or grants) and varying sectors and activities. A Social Fund is not a substitute for fundamental financial or institutional reforms in the economy.

Typical purposes of social funds are:

• to mitigate recession and adjustment-related social costs or to address emergencies such as natural disasters and wars;
• to improve living conditions of the poor through speedy provision of basic economic and social services;
• to strengthen decentralised delivery mechanisms by supporting local (governmental and non-governmental) organisations that are responsive to local needs and to build institutional capacity at the local levels