PNPM PEDULI OPERATIONAL MANUAL 2012

The PDO for PNPM Peduli is:  “Improved capacities of Indonesian CSOs to reach and empower marginalised groups to improve their socio-economic conditions”.   The Program has three components with objectives that reflect the chain of influence described above:

• Component 1: To create partnerships between CSOs and community based groups to address development priorities of marginalised groups; 
• Component 2: To strengthen local CSO capacities to implement participatory and gender inclusive development programs; and  
• Component 3: To strengthen capacities of Executing Organisations to manage grants, build CSO capacity and engage with GoI.  

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The theory of change explains how PNPM Peduli is expected to achieve its PDO through an intended chain of influence.  The premise of the program is that certain groups are not reached by ‘mainstream’ development programs because of social and economic exclusion, together with internalised and external stigmatisation. As a result,  their needs remain invisible and their opportunities for participation is severely limited. However, through opportunities to build their capacities and awareness of rights, marginalised people are more able to enagage with others to take collective action to   better use their limited assets for livelihoods, increase their skills to mobilise other resources and demand better services. This contributes to improvements in governance, social and economic opportunities, access to and quality of services and citizen empowerment. Engagement with the broader community and government in turns influences perceptions about the potential of marginalised people to contribute to development and helps to build social cohesion and social capital.  Specific attention to marginalised women has a multiplier effect as it not only promotes gender equality, a Millenium Development Goal in its own right, but also brings about exponential social and economic benefits for their families and wider communities.

Local CSOs in Indonesia are regarded to have comparative advantage in working with marginalized groups because they work at the grass roots level.  PNPM Peduli can leverage this potential and scale up change by strengthening CSO capacities and helping them to become more effective and sustainable organisations. This will be done through financial, capacity building and knowledge management support for their programs. This leveraging can be done most efficiently by working through national CSOs as implementing teams, with back up support from PSF.

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Selected Executing Organizations in the pilot phase (June 2011 – December 2012) developed and agreed to the following values and principles that they believe guide the way that they work: 

Values

• Transparency and Accountability
• Social and gender equity
• Social justice
• Tolerance and pluralism

Principles:

• Value based development
• Innovation and continuous learning
•  

  Empowerment of marginalized groups

• Demand-driven approach
• Working with existing local assets
• Outcomes sustainability
• Synergies between groups
• Open access to information 
• Respecting of diversity

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1. Executing Organizations (picture above in green): are national partners that have been awarded a grant from the World Bank to partner with local organizations working with marginalized groups. EOs award and administer sub-grants to Primary Partners and Tertiary Partners. Their role is outlined in the section below. In the pilot phase there are 3 EOs
2. Primary Partners (pictured above in blue): are local CSOs/branches that have received a sub-grant from an Executing Organization and are conducting activities at the local level with marginalized groups. 

   In the pilot phase there are 56 Primary Partners

3. Intermediary Partners: are national partners that have been awarded a sub-grant from an Executing Organization to award and manage sub-grants to Tertiary Partners. IPs fulfill the same role as the EOs including coordinating the provision of capacity support, monitoring and evaluation of activities : In the pilot phase there are 3 IPs It is intended that well performing IPs will graduate to EO status in Phase II (Jan 2013)
4. Tertiary Partners: are local CSOs/branches that have received a sub-grant from an Intermediary Partner and are conducting activities at the local level with marginalized groups. Ø  In the pilot phase there are 10  TPs Ø  In Phase II, TPs will become Primary Partners under an EO.

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• The “World Bank Guidelines on Preventing and Combating Fraud and Corruption in Projects” dated October 15, 2006 and revised in January 2011, outline the need to prevent and combat fraud and corruption, including in recipient-executed trust fund grants.

• All CSO staff involved in PNPM Peduli must sign the PNPM Peduli Integrity Pact that outlines ethical standards of practice expected by the program.

• The following anti-corruption provisions apply at the grant and sub-grant level:

Enhanced Disclosure Provisions and Transparency

• Executing Organizations are required to simplify disclosed materials and make them readily available to the public. This can be through the Executing Organization’s website. Specific disclosure measures related to information will include, but not be limited to:

               - Overview of activities and locations of the project;

              - Public disclosure of annual procurement plans and schedules (and their updates);

              - All short lists of consultants contracted for the project will be made publicly available in accordance with World Bank consultant guidelines (Guidelines Selection and Employment of Consultants Under IBRD Loans and IDA Credits and Grants by World Bank Borrower or Recipients - January 2011  (herein after referred to as “Consultant Guidelines”);

              - All information regarding contracts awarded will be publicly disclosed;

              - Disclosure of audit reports and mid-term reviews;

              - Available conduits/channels for complaints.

Community Oversight

• PNPM Peduli recognizes that greater oversight by communities is likely to reduce the risk of corruption and misuse of power. Beneficiary participation and empowerment are core values of PNPM Peduli that will be operationalized by putting in place mechanisms for enabling the active participation of program beneficiaries in all phases of the sub-project cycle, including design, monitoring and evaluation. Mechanisms are also in place to enable beneficiaries’ access to key information regarding the program and its sub-projects.

Mitigating Collusion 

• Opportunity for collusion and fraud exist in any project. However, due to the participatory and transparent nature of PNPM Peduli, many of the possible risks are significantly reduced. Transparent procurement under the program with appropriate oversight is the starting point for reducing the likelihood of collusion. Performance of project consultants/contractors/suppliers will be monitored and evaluated by the PNPM Peduli team. Interim audits by the Bank will be conducted if necessary in addition to EO’s internal control arrangements.

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• A complaints handling system is housed in the program Management Information System (MIS) to allow beneficiaries and other stakeholders at all program levels (including sub-grantees, EOs and the general public) to lodge complaints and receive feedback and resolution on aspects related to project implementation.
  
  • The complaints handling system is currently being tested to ensure it is accessible to a range of stakeholders and different groups (including indigenous people) engaged in PNPM Peduli and ensure it is responsive and accountable to them and other relevant stakeholders. It is intended it will use an SMS gateway. The system builds on lessons learned from programs including PNPM Mandiri.
  • The PSF is responsible for coordinating and managing the complaints handling system and providing program implementers with training. This includes managing the database of complaints lodged, follow-up actions taken, and sanctions applied and this will be publicly available. The aim is to increase participants’ involvement in the program and increase the likelihood of them raising concerns. The PSF will ensure that complaints will be addressed and resolved in a professional and timely fashion, and without risk of reprisal to 'whistleblowers' in public.
  • Important lessons learned from resolved issues will be communicated through discussions and/or website to reduce the likelihood of recurrence.
Sanctions and Remedies
 
• Clear sanctions and remedies are an important final step in the effort to fight corruption. This project will apply a zero-tolerance policy to corruption. Evidence of corruption, collusion or fraud will be grounds for terminating the relevant grant agreement, possibly with additional penalties. In cases of corruption, disbursement can be suspended or stopped completely if cases are not dealt with effectively.
• Local CSOs and sub-national branches follow the systems of their Executing Organization partner in applying sanctions and remedies related to mismanagement or corruption in sub-grants and funds allocated for PNPM Peduli supported projects. Where necessary, Executing Organizations may amend their sub-grant agreement or in extreme circumstances, terminate the agreement. 

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• Executing Organizations are responsible for ensuring that the CSOs partners comply with World Bank safeguard policies and have systems in place to mitigate environment and social safeguard risks. The World Bank provides training and ongoing support to assist Executing Organizations in establishing their capacities, systems and tools to identify and reduce potential safeguard risks.

• Below is the list of activities that are banned under the World Bank and Social Environmental Safeguard Policies:

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Fiduciary Requirements

• Have existed as an organisation for the past two years and have documented external audit reports for the past two years;
• Have an Operation Manual outlining clear standard financial and operational procedures for program and financial management;
• Be willing and able to establish a separate account in the name of the Project or have an accounting system to adequately separate Project funds; and
• Be willing and able to be audited by an external independent auditor on an annual basis for the duration of the Grant Agreement.

• Established and strong working partnerships with local CSOs working supporting activities to targeted marginalized groups;
• Able to identify potential CSO projects and activities consistent with the objectives of PNPM Peduli in reaching the most marginalized;
• Demonstrated experience strengthening the capacity of local CSO networks evidenced by reference letters from recipients for recent programs;
• Demonstrated experience in grant making to local CSOs and existing grantees carrying out project activities reaching marginalized groups;
• Capacity and willingness to upscale support for local CSOs over time through increased number and reach of sub-grants;
• Demonstrated staffing and resources that will be allocated (either existing or contracted for the project purposes) to ensure on-granting is well managed;
 
Grant Model B: Capacity and Experience
• Have established sub-national branches of the organisation supporting activities to targeted marginalized groups;
• Established and strong working partnerships with local grassroots and community groups at the sub-national level working in the priority themes areas of the program evidenced by long term engagement, identification of potential partners and projects and demonstrated understanding of activities reaching the most marginalized;
• Propose projects that will be carried out by their sub-national branches that target the most marginalized groups, propose a logical implementation strategy for activities, propose a credible M&E systems and sound budget;
• Capacity and willingness to upscale support for sub-national branches over time through increased number and reach of sub-grants;
• Demonstrated staffing and resources that will be allocated (either existing or contracted for the project purposes) to ensure on-granting is well managed;
Governance Requirements
• Have a credible and transparent organisation structure that ensures decision-making processes are consultative and the Board decisions and operations are transparent to members and beneficiaries. 

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• Supporting local CSO/branches to develop high quality proposals;
• Administering and managing sub-grant/funding agreements with local CSOs/branches in accordance with the Operational Manual;
• Submitting quarterly Financial Monitoring Reports (FMR) according to World Bank guidelines including reporting on expenses, procurement and activity components;
• Receiving and reviewing financial and activity reports from local CSOs/branches that will form the basis for FMR reporting to the PSF;
• Assess to what extent the mechanisms and processes used by CSOs or branches are adequate to ensure that sub-grants are managed in a way that: (a) is fully participatory; (b) mitigates against the risk of fraud, corruption, or elite capture; (c) ensures full transparency and accountability to the end users and to the CSO over the use of resources; (d) provides recourse to beneficiaries to complain in case of (perceived) abuse of funds; and (e) allows for systematic follow up and supervision of the use of sub-grants.
• Strengthen the capacity, systems, and processes of CSOs and Branches to ensure the mechanisms and processes for the administration of sub-grants are adequate.

• Selecting suitable partners (local CSO/branches) and project activities utilizing the Operational Manual guidelines to ensure that the right partners are selected and the target marginalized groups are reached;
• Oversight to activities conducted by local CSO/branches including collection and review of activity reporting, monitoring progress towards set project objectives.

• Conducting an initial assessment (combining self-assessment) of local CSO/branches’ financial and programmatic capacities;
• Developing Capacity Development Plans together with each CSO/branch that identify institutional capacity needs and plans for implementation of relevant support;
• Implementing and managing capacity building to partners, including contracting external training providers where required.

• Through project implementation, testing the Operational Manual throughout the pilot phase and providing feedback during review sessions to fine tune the Manual and project implementation;
• Ensuring experiences and lessons learned are shared across the local CSO/branch network supporting documentation of good practices and lessons learned;
• Engaging in periodic Knowledge Sharing sessions across the Peduli network to promote cross-sharing of information and learning.

• Identifying their organizational needs and engaging in capacity support throughout the duration of the Grant Agreement in order to strengthen their management capacity and sustainability.
• Based on their expertise, experience, lesson learned and good practices, Executing Organizations  play crucial role in selecting quality partners in implementing PNPM Peduli, actively initiate and engage in capacity building activities and monitoring and evaluation of their partners.
• Executing Organizations actively engage in the learning environment, with the other Executing Organizations and their local networks, to enhance project results, promote sustainability and maximize project impacts.
• Executing Organizations demonstrate a commitment towards strengthening their management capacity through identification of relevant and sustainable capacity building needs and provide capacity support to their sub-grant partners for the duration of the funding agreement.
• Executing Organizations are responsible to carry monitoring and evaluation activities throughout the life of PNPM Peduli. With their own monitoring and evaluation system, Executing Organizations and their sub-grant partners promote participation, gender inclusivity, downward accountability, learning and focus on emerging changes. 

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Executing Organizations were selected through a competitive process outlined below:

1. Initial Mapping and Shortlisting of Potential Executing Organisations. Under two type of models (Model A – traditional grant making organizations that provide grants to local CSOs, and Model B – mass membership based organizations that provide funds to local branches of their own organization). These organizations were invited to join design process of the program so that systems and mechanisms were appropriate and responsive to the way CSOs work as well as meeting core World Bank requirements.

2. Verification Process (with CSO experts and practitioners). The list of eligible organizations was reviewed by an external list of CSO experts and practitioners to ensure those on the list were eligible and that there were no potential organizations missing from the list.

3. Pre-Proposal Submission Stage: Shortlisted organizations were invited to submit a form of expression of interest where they outlined why PNPM Peduli supported their mission and the types of activities they would support if they were selected as an Executing Organization.

4. Appraisal and shortlisting. Eligible organizations were shortlisted based on pre-proposals under Model A and B and invited to submit full proposals.

5. Pre-proposal Meeting and Writing Clinics (including sharing of selection criteria and scoring) All shortlisted organizations were provided with support to finalize their proposals. This included the opportunity to present and discuss their draft technical proposal with the task team, and draft budget with the fiduciary team.

6. Selection of final EO candidates (Model A and B were appraised separately). The selection panel comprised external CSO experts and practitioners.

7. Selected EOs approved by the Joint Management Committee (JMC). The organizations selected by the Selection Committee were submitted to the JMC for final approval. 

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• Executing Organizations are required to open a designated bank account (DA) in Indonesian Rupiah (IDR) for PNPM Peduli grants at a local commercial bank (acceptable to the World Bank). Executing Organizations are advised to choose a nation-wide bank to ensure efficiency in receiving and disbursing the funds.
• Executing Organizations prepare and submit to the World Bank a disbursement plan for approval. Disbursements are made on a six monthly basis in line with projected needs outlined in the approved disbursement plan. Disbursement is triggered based on submission and World Bank approval of the Quarterly Financial Monitoring Report. Refer to the FMR section below.
• Monthly meeting are held between the EOs together with the financial management team in the PSF to discuss progress, ensure disbursements are on track and to help early identification of any issues.
• Copies of documentation for expenditures submitted for disbursement will also be retained at the EO office and shall be made available to the auditors for the annual audit and to the Bank and its representatives if requested.

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• Executing Organizations are required to submit Quarterly Financial Monitoring Report (FMR) to the World Bank, at the latest 45 days after end of each quarter.
• The FMR should consist of supporting documents as follow: 

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• Executing Organizations contract an external auditor to audit PNPM Peduli project activities at the EO and local CSO/branch levels. The budget for the auditor is included in the EOs project budget.
• The audit will be carried out at the EO and local CSO/branch levels. For organizations that currently do not have external audits of their organization, the World Bank will provide capacity support to these organizations and contribute to the costs of an organizational audit. The objective being that in the second year the organization carries out an organizational audit as well as a project level audit. 
• Executing Organizations must submit the audit report to the World Bank at the latest 6 months after the end of each fiscal year (January – December). In addition to this, the World Bank conducts supporting mission to do random spot checks.

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• PNPM Peduli beneficiaries are those who experience different kinds of discrimination that result in them being treated in a less favourable way. They are poor, but they are not necessarily the poorest. They are excluded from economic life, social services and civic life. They reflect characteristic of both economic and social exclusion:

• Social Exclusion

• Economic Exclusion

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• EOs are responsible for providing capacity building support to all grant partners based on needs and areas identified together.
• EOs use their existing procedures to assess capacity building needs for their sub-grantees in a participatory manner and develop capacity building plans that outline specific trainings to their local partners.
• IPs conduct capacity building assessments and develop capacity building plan of their tertiary sub-grantees. The EOs provide oversight of this process and final approval of the proposed capacity building plans.
• Capacity Building activities conducted may include improvements to core systems, such as fiduciary management, monitoring and evaluation, public accountability and transparency, also governance aspect of the organization.
• Capacity building activities should also focus on strengthening development practice in working with the most marginalized. This includes ensuring a rights-based holistic approach and strengths based approach to working with target communities.
• In the case of IPs, capacity building activities will likely include strengthening their capacity as grant-making institutions.
• It is expected that the EOs will source suitably qualified experts to provide capacity support to local partners where the expertise does not exist in-house within the EOs.

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