Local Capacity Development Lessons Learned – Indonesia Overview I. This lessons learned assessment is part of an effort to identify effective Local Capacity Development (LCD) programs and programmatic traits, modalities and approaches that are most conducive to strengthening the capacity of local Civil Society Organizations (CSOs) 1 and their ability to realize their mandate. USAID/DRG/W conducted these lessons learned evaluations in Central Asia and Indonesia -- countries with a diverse history of supporting CSOs through different program models, including direct granting as well as strengthening CSOs through intermediary organizations. Similar assessments may be carried out in other countries in the future. The lessons learned will contribute to the development of policies and practices in support of USAID’s Implementation and Procurement Reform (IPR) Objective 2 on Local Capacity Development as they continue to unfold. The assessment for Indonesia took place over a two-week period from July 9-24, 2012. The assessment team included Claire Ehmann, DRG Civil Society and Media team leader, Faye Haselkorn, Democracy Specialist on the DRG Cross Sectoral Programs team, and Yoke Sudharbo, USAID/Indonesia. The team conducted meetings with Civil Society Organizations (CSOs), think tanks, outside experts, USAID Mission staff and a limited number of other donors and government officials in Jakarta, Bandung, and Kupang. The team met with more than 100 people and 20 local organizations in a combination of individual and group interviews during the course of their fieldwork. The discussions were open-ended and focused on four main lines of inquiry: (1) the state of civil society in Indonesia today; (2) local CSO experience with donor capacity-building activities; (3) experiences of local organizations as a direct awardees and as sub-grantees; and (4) the types of capacity building interventions considered to be most important/useful to local CSOs. II. USAID/Indonesia: Past and Current Program Modalities Indonesia was selected for this assessment because USAID/Indonesia already has rich experience working with CSOs under varied types of grant modalities and sectors prior to the onset of IPR. This includes grants under grants, grants under contracts, and direct grants to local organizations, among others. The existence of a vibrant, strong civil society and free media, as well as government partners at both the central and local level committed to opening space for civil society, has enabled the Mission to employ relatively advanced approaches and partnership models with local organizations. The team met with several groups who spoke of the direct grants received from USAID in the mid-1990s, and one even recalled back to 1983. In addition to the experience with direct awards, the team also learned of a variety of approaches to civil society capacity development within the context of programs implemented by USAID’s more traditional implementing partners. This ranged from capacity development provided directly by the US partner, use of local intermediaries or services providers to provide 1

Although IPR’s objective for strengthening country systems includes partner governments (objective 1), civil society organizations (objective 2) and private sector (objective 2), this lessons learned assessment focuses primarily on CSOs.

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capacity development services and allocations within sub-recipient budgets to fund capacity development identified by the recipient themselves. Between 2000 and 2005, USAID’s Civil Society Strengthening Program (CSSP) supported a wide range of civil society organizations located in USAID’s six priority regions, Jakarta and Yogyakarta. In all, CSSP dealt directly with some 1,900 CSOs, more than 300 of them on a sustained basis and 71 of these were grantee partners and key Service Providers. Annex 1 provides an illustrative typology of Local Capacity Development and operational arrangements that have been used in Indonesia in recent years within the context of specific projects. This is by no means comprehensive, but rather is intended to give a snapshot of the types of program modalities that we learned about in the course of our fieldwork. III. State of Civil Society The team considered the overall state of Indonesia’s civil society sector which has important implications for capacity of CSOs. (Note: this analysis is based on our limited sample of key informant and focus group interviews and desktop research; a more formal methodology such as the CSO Sustainability Index would provide the mission with an annual measure of the civil society environment). Legal Environment: The Indonesian Constitution was amended after the New Order regime 2 to include clear protection for freedom of association (article 28) and freedom of expression (article 28E), and Indonesia has ratified the International Covenant on Civil and Political Rights (ICCPR). Since 1998, the number of CSOs has increased exponentially; according to a survey conducted by the Indonesian Financial Transactions Report and Analysis Center (PPATK) and the Charity Commission for England and Wales, there are more than 20,000 CSOs registered in Indonesia (Nugroho, 2011). The vast majority of CSOs are registered as foundations, or yayasans, which are registered with the Ministry of Law and Human Rights. Membership-based organizations can register as an association, or perkumpulan, which are still regulated under a colonial-era law from 1870; legal entity status is also granted by the Ministry of Law and Human Rights. Most CSOs register as yayasans; however some of the groups interviewed that have large networks preferred the perkumpulan status, calling it “more democratic and less hierarchical.” A draconian 1985 law on “societal organizations” intended to control civil society allows the government to arbitrarily dissolve organizations. The definition of societal organizations under the law is extremely broad and includes both foundations and associations, but the law is rarely enforced. However, in response to a series of violent activities perpetrated by societal organizations, the Parliament conducted a joint meeting with the government and committed to pushing the revision of the Law on Societal Organizations; a bill is currently on Parliament’s Priority Revision list for 2011-12. The new bill requires Societal Organizations to register with the Ministry of Home Affairs (MOHA) and any organizations receiving foreign funding would also have to register that funding with MOHA. According to the International Center for Not-for-Profit Law’s (ICNL) recent analysis, “A broadly sweeping and highly 2

“New Order” refers to the regime of former Indonesian President Suharto from 1966 - 1998. “Reformasi” refers to the period immediately following the fall of Suharto until present.

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politicized legal status, as represented by the social organization, is clearly not suitable for a democratic country like Indonesia… instead of vesting regulatory authority with the MOHA, it would be better to assign the Ministry of Law and Human Rights to handle… registration.” (Nugroho, 2011) Indonesian CSOs need a better legal framework. Awareness of the legal environment among CSOs interviewed was fairly low. For example, since 2008, the Income Tax Law has made available tax deductions for donations in response to disaster rehabilitation, research and development, social infrastructure construction costs, education, and sports; however, most of the CSOs we interviewed were not aware of this benefit and it is unclear how many CSOs take advantage of it. There are no national-level coalitions to improve the overall legal environment for civil society, although Yappika is attempting to raise awareness of the Draft Bill on Societal Organizations. Under the current CSO legal environment, CSOs did not mention difficulties with registration. However many expressed concern about the new draft CSO law pending in Parliament that would require all groups to re-register and Yappika is leading an advocacy effort against the draft bill. The current framework has many other weaknesses, particularly lack of tax incentives for donations, and government procurement to independent CSOs is nonexistent (and viewed as a source of corruption to “red plate” CSOs). Organizational Capacity: The CSOs we met with in Jakarta, Bandung, and Kupang all exhibited a relatively high level of organizational capacity and good internal governance; however these are an elite group, and it is likely that capacity of most CSOs outside of large cities is much lower. The CIVICUS report (2005) cites common challenges for CSOs: lack of deep leadership/“one-man-shows”; mostly urban-based, elite; lack of reach to constituents; lack of management skills; difficulty recruiting and maintaining talent; lack of dedication to mission, chasing donor funds; lack of accountability. Financial Viability: CSOs are very dependent on foreign donors. Many described a decreasing funding environment from Western donors, due to Indonesia’s rising status as a middle-income country and the global financial crisis. Many CSOs are struggling to remain operative. Very few CSOs have explored alternative fundraising methods; funding from government, individual donations, fee-for-service, social enterprises, or CSR are in nascent stages. While philanthropy is on the increase, it remains mostly limited to charitable religious organizations; some CSOs like Indonesia Corruption Watch and Greenpeace are beginning to experiment with individual giving. It is likely that these methods will need to be explored in future as donor funding inevitably continues to decrease. Tax incentives for donations are limited to certain sectors; CSOs do not enjoy tax-exempt status. Traditionally the government has not looked to civil society to provide social services and government procurement is very limited. While there are some funds procurement laws are limiting to CSO participation in tenders for services. The government has a small-grant program for CSOs to work on voter education and women’s empowerment; there is an effort underway to review the program to improve selection criteria and processes (most CSOs interviewed had not heard of this fund or

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dismissed this type of “social assistance” as going to Government-Organized NonGovernmental Organizations, or GONGOs). Several CSOs we met with were skeptical about government funds since, given pervasive corruption, it is assumed that NGOs that receive GoI funds must be corrupt themselves. Most of the independent NGOs that work closely with the Government do so with direct or indirect donor funding, rather than government funding. That said, The Ministry of National Planning (BAPPENAS) has proposed a Civil Society Trust Fund as part of its mid-term development plan for 2014; however MOHA has yet to act to implement such a fund. Advocacy: Indonesian civil society has a rich history of advocacy and has played a significant role in the transition to democracy. There are many watchdog groups that advocate on numerous issues, including anti-corruption, the environment, and women’s empowerment. Some CSOs have had success having influence over drafting legislation; however, access to officials still seems to be based mainly on individual personal relationships; there are not institutionalized channels of communication . CSOs consult with government at various levels but their impact is limited. At the local level, some CSOs such as members of the Pattiro network, are taking a less adversarial and more collaborative approach of “critical” or “constructive engagement”, working with local government on budget transparency issues, for example. For the most part, however, CSO-government interactions still tends to be more adversarial, and a good deal of tension continues to exist between government and civil society. The Bali Democracy Forum, for example, did not allow CSO participation. Even those supportive of civil society within the GoI, struggle to identify civil society interlocutors that could adequately represent a much larger CSO community. Infrastructure/Networks: The CSOs interviewed placed a high value on networks as very important to the health of the CSO sector; CSOs get capacity building support from networks and some do their work through networks. Often these efforts are self-financed, demonstrating the commitment that groups place on the kind of peer-to-peer learning that can come from sharing experiences. Many CSOs have Internet access and use technology to stay in touch with partners in rural areas; mobile phone penetration is quite high. There are not many NGO resource centers that provide training services or information to CSOs, particularly in provinces; Satunama and PIRAC (see annex 2) provide a broad range of capacity building services but they are limited to major cities. There are not strong national CSO networks that advocate on behalf of the entire civil society sector (on issues such as the legal enabling environment, for example). Public Image: Some CSOs, such as Indonesian Corruption Watch, DPR 3-Watch, and FITRA are known to the public. The media environment is quite free and national newspapers will cover CSOs and quote CSO leaders on issues such as corruption, for example. However, overall public trust in CSOs remains low. LP3ES and Konsul LSM (NGO Council) have made efforts to promote a Code of Ethics and accountability standards for self-regulation among the 3

DPR is the Indonesian abbreviation for the “People’s Representative Council”, the upper chamber of the Indonesian Parliament.

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CSO sector. These efforts have been slow to develop but may be gaining traction; the NGO Council now has 96 members in 16 provinces. Satunama has launched an NGO Certification program intended to improve NGO accountability and management performance, based on the successful Philippine Council for NGO Certification (PCNC). Donor recognition of these accountability measures might create incentive for more organizations to join. BAPPENAS made civil society a priority in its 2010-14 plan to encourage “civil society to be a partner in Indonesia’s democratization process” but expressed that it is difficult to form partnerships with CSOs because there are not umbrella organizations to represent varied interests. Relationships with the private sector in the past were mainly adversarial; however, a constituency for CSR seems to be emerging as more companies are willing to collaborate with CSOs on community development projects. Relationships with government on the whole are fairly good, but not without problems. Some CSOs such as transparency watchdogs have a more oppositional relationship to government; others have developed more collaborative relationships (Pattiro); there seems to be a healthy mix. However, government is still suspicious of civil society and does not encourage institutionalized dialogue (the Bali Democracy Forum, for example, did not allow CSO participation). IV. Other Findings and Analysis The team met with representatives of more than 20 civil society organizations, several donors and international organizations and a few Government of Indonesia representatives. Due to time constraints, most of the CSO interviews focused on current and past USAID grantees. This small sample is admittedly biased toward large, Jakarta-based NGOs (Big NGOs or BINGOs as they are often called in Indonesia), although we met with several small NGOs in Kupang and Bandung. USAID has left a legacy of several strong organizations that continue to thrive such as Yayasan Kehati (recipient of a USAID endowment under the project name Indonesian Biodiversity Foundation), Pattiro (supported by CSSP) and LP3ES (a former direct USAID recipient). Yappika received significant support in its early years of operation from CIDA. Kemitraan grew from being a UNDP implementing partner to have become one of the leading national level NGOs with funding by many donors, including USAID. While we learned a great deal from meeting with these and other organizations, we also recognize there is still a lot to learn. We hope too that our findings will contribute to the Indonesia Mission’s own plans for assessments, LCD program design and mapping. For brief profiles of the local organizations that we met with, see Annex 2. Local Organizations Prefer Being a Direct USAID Recipient When asked if they would rather be a direct grantee or a sub-grantee, every organization we met with responded that they would rather be a direct USAID partner. This included organizations that are already direct USAID grantees and a few that have been direct grantees of other donors. CSOs cited a number of reasons for this. Some felt that a direct award would facilitate better communication with the donor and more flexibility about programming, enabling programs to be more comprehensive, tailored to local needs and with better development outcomes. Local CSOs can’t always count on the lead implementer to advocate on their behalf

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with the donor. Some CSOs also expressed a desire to be partners with USAID, and felt that direct awards create the conditions for greater partnership. (One organization that has been a sub-recipient for some time, said that USAID was not their partner. Their partner is the prime implementer.) Several emphasized that a benefit of direct USAID awards is greater transparency and accountability to beneficiaries. Often being a sub-awardee, groups might not understand (or be privy to) an entire program and find it difficult to explain the program to their constituents. Groups with strong ties to grassroots organizations especially would rather that USAID fund their agenda, not implement a donor agenda. Many grantees expressed a desire to be more involved in donor planning. Finally, having that direct relationship with the donor, puts the CSO in more of a leadership role, and empowers them to have greater influence over the course of their development program. One respondent replied that direct grants give more independence and that intermediary organization often have stricter requirements than the donors themselves. Regarding sub-granting, many CSOs also told us that they would rather be a sub to a local Indonesian CSO than an international CSO . Funding for Capacity Development is Limited Many groups expressed that USAID, EU and other donor funding has become very “projectized” (as opposed to the more open and flexible civil society support grants that donors made in the 1990s). In general, grants do not include a capacity building component – a key weakness in programming. Most donors, we were told, don’t look at internal capacity, they only look for results. Some added also that they assumed that after ”reformasi ” (see previous footnote), CSOs were “strong enough”. There remain a few donors supporting NGO capacity 4[1]. Ford foundation was cited as one of the exceptions. Several organizations we met with reported that they received funding for institution building as part of their Ford Foundation grant. Even in more traditional US partner-implemented programs, local CSOs are often funded to deliver core aspects of a USAID program (either as direct or indirect recipients) without sufficient regard for capacity development needs of local partners. DG’s Kinerja program, a local government service delivery program started in 2010, for example, was designed to build a more lasting and local technical assistance infrastructure, with local CSOs providing most of the capacity building services for the targeted district and city governments. Kinerja uses diverse methods to engage with local CSOs which has provided flexible system that is beneficial for the project and promotes innovative ideas. On the other hand, the program design had assumed that existing CSO capacity was sufficient to deliver technical assistance to local governments. But, in practice this has not been the case. CSOs may have not have sufficient technical knowledge, or they may lack experience and capacity necessary to be credible service providers for local governments. The local CSO service providers, they learned, needed more capacity building directed at them before they could be effective capacity development providers to local government.

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During our fieldwork we learned about an assessment that AUSAID is currently funding (implemented by international consultant STATT) on the NGO sector in Indonesia. One key area of inquiry is donor support for NGO capacity.

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DG’s Prorep program (a legislative strengthening program that includes key components on strengthening capacity of think tanks and membership/constituency-based CSOs) also faced a number of issues in the first round of grant-making due to capacity of its grantees. The issues ranged from an insufficient number and poor quality of applications to partner organizations unable to comply with grant requirements and having weak linkages to their constituencies. To respond to this challenge, the Prorep contractor made a number of critical changes to their approach. For one, they switched to fix obligation grants (FOGs) and simplified grants[ and reconfigured their own staffing plan so that each sub-grantee would have access to a project support team. They also allocated 30% of the recipient grant amount to capacity development for areas identified by the recipients themselves including engagement with policymakers and organizational assessment and development, among others. Organizations Identified Most Important Capacity Development Needs We also asked CSOs to prioritize which capacity building interventions are the most important to their organization and why. The following capacity development areas are listed according to the priority most often cited by our respondents. However, CSOs felt that it was difficult to prioritize since, they said, all of the areas are important. Fundraising Planning – Very few Indonesian CSOs are engaged in fundraising outside of donor funds. Most organizations we met with felt that the whole area of fundraising was generally underappreciated by local CSOs. At the same time, they felt that, with donor funds shrinking, CSOs would need to look to other sources of funds. Zakat (a type of obligatory charity under Islamic law), individual giving, corporate philanthropy, fee for services, social enterprises are all in their nascent stages, but could play a greater role in funding CSO activity in the future. Most of the CSOs we met with were less optimistic about funding from local government sources due to corruption and potential loss of independence (the latter was particularly true to democracy CSOs). Resource Centers – There are some NGO resource centers that provide training, information or other services to local CSOs, but this is another area that could be further developed. Many of the resource centers that currently exist are specialized. For instance, Kemitraan has knowledge resource center where they conduct research and develop an index; TIFA has a digital library of CSO resources ; FITRA has budget resource center to educate CSOs about the government budget process; and, PIRAC serves as a resource center on philanthropy. As one of the consultants to AUSAID’s CSO sector study noted, there seems to be a reasonable supply of short-course training providers of varying depth on a range of capacity development issues.. However, there is a dearth of advice and mentoring services and local NGO’s may need to be encourage to expand in these areas. Technical/Sector-Specific skills – Most CSOs felt that technical capacity, including keeping up with best practices and trends in their field, continues to be a challenge. Strategic Planning – Most people we met with commented on the importance of strategic planning and developing a vision to their future success. It emerged as a priority because many

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people felt that donors don’t usually fund strategic planning. AUSAID also noted that most Indonesian CSOs do not do long-term strategic planning. Instead, they are mostly driven by whatever funding is available. Networking -- Several respondents cited the importance of networks – whether formal or informal to their organization’s ability to develop and adapt. Networks are very important to the health of the CSO sector. CSOs get capacity building support from networks and work through networks. Often these efforts are self-financed by the CSOs themselves. They would like donors to facilitate annual meeting for gathering organizations to discuss issues with implementation, communication and coordination among their various partners. Several people said that they even wished USAID would have more meetings where they bring local partners together to share information. Peer-to-Peer Learning – Related to importance of networking described above, CSOs placed high value on peer-to-peer learning and sharing experiences with each other. SIAP2 partners, in particular, felt that the SIAP2 program offers peer learning opportunities for CSOs in the regions. For instance one member of the Pattiro network may have a really good experience in complaint management and the Pattiro partner in another part of Indonesia might have excelled in social auditing. They also felt that there is a lot to be learned from outside Indonesia. For instance, Indonesian CSOs first learned about social auditing from Indian CSOs. Financial Management -- There was an interesting split in perspectives on the importance of financial management to CSO capacity. Several CSO representatives that we spoke with said that they have received donor grants for many years, have been managing them responsibly, have financial systems in place and adhere to generally accepted accounting procedures. They felt that there is already a lot of attention of financial management systems by donors and CSOs alike, so they didn’t feel that it was a priority for the purpose of our discussion. Others felt that, although they have their own systems, they feel hostage to donor financial management systems. (That said, a couple of USAID recipients told us that adhering to USAID’s strict standards have made them a stronger organization.) On the other hand, some of the smaller and less experienced organizations – particularly those who recently became a USAID recipient or sub-recipient – ranked financial management high because they weren’t comfortable working with donors and felt they needed to know more about the donor’s rules and reporting requirements. In a similar exercise with USAID staff, financial management was identified as the most important (and weakest) CSO capacity. Human resources – A number of issues were raised related to both capacity of CSO staff and the adequacy (or lack thereof) of human resource systems used by CSOs. Regarding the former, we were told that it’s common for staff to join CSOs without adequate technical capacity or higher education degree. The capacity of human resource systems was a particular issue with some new USAID partners that need to expand quickly to meet the grant requirements, but whose payroll and personnel systems are stretched beyond capacity. Even some CSO subrecipients expressed this as a major area of concern. For instance, one organization that was

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previously operated by volunteers, now find themselves having to recruit permanent professional staff to manage the USAID funding. Legal Environment – Many of the CSOs that we spoke with did not consider the legal enabling environment to be their highest priority. However, several did express knowledge about pending changes to legislation and expressed concern over potential over regulation by the government. Their concern was tempered by the fact that much of the current legislation is not implemented anyway. We also learned that there are no strong national CSO networks that advocate on behalf of the entire civil society sector (on issues such as the legal enabling environment, for example). Technology – Although most CSOs that we met with did not include technology to be one of their top priorities, they did feel that, in general, CSOs do not use technology as much as they could to advance their agenda. Greater Donor Attention to Government Means Fewer Resource for Civil Society Several CSOs that we met with raised concern about the impact that the Paris Declaration, Accra Agenda for Action, Jakarta Commitments and other aid effectiveness agreements are having on Indonesia’s civil society. Prior to Paris, they said, donors paid more attention, and devoted more resources toward civil society. Now donors are keen to do everything through government structures and bypass independent civil society. The way they see it, funding and capacity development that used to go to NGOs, is now going to government and government is not doing a good enough job in engaging civil society. If government does fund civil society, it is usually directed at what they call “red plate” NGOs 5. Many felt that donors too don’t consult with civil society directly – they only consult with government. CSO Program Implementation issues The biggest implementation issue we heard of from local partners is that USAID’s cost reimbursement system was very burdensome and problematic for CSOs. Those who have been able to amend their awards to a pre-financing structure (advance) expressed that this is a much better model. For those organizations that received an advance, it made a big difference in their ability to implement the program since they otherwise lacked cash flow. For instance the Economic Growth office’s local partner SAINS delayed start up by 8 months until they could get an advance. However, as we learned from the Mission’s financial management and procurement staff, the advance system comes at a cost and requires a higher standard for the recipient’s financial systems and a greater burden of reporting that is time consuming for both USAID and recipient organization. The other major issue raised by CSO recipients is the need for greater flexibility. This included specific- implementation issues – such as the ability to move between line items or to make adjustments to respond to changing circumstances. But, it also referred to flexibility by the 5

Red Plate NGO is the term that Indonesians use for Government Organized NGOs or GONGOs. It gets it name from the fact that Indonesia government vehicles have red license plates.

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donors to fund CSO priorities, not just donor priorities. Some organizations felt there is a “mismatch” between what donors are willing to fund and what CSOs want to do. For instance, Alpha Omega’s program is built upon an assistance relationship with local Community Based Organizations (CBOs) over a five-year period, but most donors have a shorter time-span. Or donors may not be willing to fund an aspect of the program that CSO deems crucial to its success . Many told us that donors were more flexible in the past (before Reformasi). Now donors are very project oriented or base their assistance on government-to-government agreements rather than CSO priorities. V. Recommendations Our recommendations are based on lessons learned from Indonesia, but could be applied to other USAID Misisons. Build a capacity-building component into new awards: Many CSOs mentioned that USAID funding, which had been more flexible in the past, has become very projectized and organizational costs such as strategic planning are not allowed. While partners did find the financial management assistance provided through the pre-award audit process to be very useful, capacity building beyond financial management is needed. One approach might be to adapt the PROREP approach which allows organizations to propose up to 30% of their grant funding to capacity-building. The EU currently allows partners to use 7% of their award for capacity building support of their choice. The exact level of resources needed would need to be determined in large part by an organizational capacity development assessment. Although there is no “magic bullet” formula for determining the appropriate percentage that should go towards capacity development, one international capacity development consultant operating in Indonesia said that they use 7 - 10% as a “rule of thumb”. Put CSOs in the lead to determine capacity building needs: One model is to include “vouchers” for capacity building which then lets the CSO procure its own services, from either a local or an international partner. This puts CSOs in the lead of their internal management and can help build up a local “market” for capacity-building services. Combined with an externally facilitated but internally-led organizational capacity assessment (OCA), this approach maximizes the involvement of CSOs in identifying and addressing their own capacity development needs. To maximize the success of this approach, USAID should first ensure that sufficient local capacity already exists to provide the needed capacity development services. If not, the Mission may need to strengthen the capacity of capacity development providers. Look to local CSOs as grantmakers: There are many CSOs that do have capacity to manage USAID awards and could also manage sub-awardees; future awards could rely less on international partners and encourage local CSOs to provide these services. Missions should seek to identify organizations that have the potential to be intermediary grantmakers. Care should be taken in choosing CSO grantmakers. They will need to have strong linkages to CSOs in their sector or geographic area, as well as be seen as objective and un-biased by other CSOs working in that particular sector. This approach may tend to favor “BINGOs”, so it will be

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important to both USAID and the direct recipient to ensure that linkages are made with smaller organizations. Explore more FOGs and other grant modalities that require less micromanagement of partners: Mission-level LCD teams could explore ways to streamline grant procurement and administration. Explore requirements to match funds: CSOs are very donor dependent and will remain that way while foreign donor investment is still high. Based on more assessment in each sector, the mission could explore modalities such as challenge grants in future awards that would require awardees to match funding (from other donors, individual donations, public-private partnerships, or in-kind contributions) to encourage local CSOs to build their fundraising capacity. Consider contracting with local partners for M&E: Given the increased workload involved in managing local partners, Missions could also consider engaging local organizations to enhance M&E efforts. This would augment USAID’s internal capacity, and provide an “early warning” system for organizations that may be having implementation problems. In countries with strong civil society such as Indonesia, there are local organizations with networks and experience doing M&E, so much of this could be done through local organizations. Make program development more collaborative: The CSOs interviewed all would like to be more involved in program design and planning. To encourage more participation, soliciting via APS, Missions should consider doing 2-stage procurement: concept paper and then full proposal stage. Consider allowing proposal submission in Bahasa Indonesian to reach out to partners outside of Jakarta and beyond “BINGOs” (Big NGOs). Provide TA (either mission or through a mechanism) to local CSOs to develop full proposals. Encourage partner networking and learning: Hold partner meetings with grantees to allow for better networking and information sharing. The IKAT-US model of partnering Indonesian CSOs with other CSOs in the ASEAN region is promising model to promote CSO-CSO learning. USAID could use its international network to help local CSOs connect with CSOs in other countries such as India (where Pattiro learned about Social Networking) and elsewhere. Consider third party contracts or grants for capacity development and services: Training and other type of technical support on USAID procedures and regulations are useful and Missions should continue to provide them to local partners. As much as possible, training should be provided in the local language. Where possible, Missions should use in-house USAID staff and expertise to deliver the trainings, as it will contribute to relationship-building between USAID and its partners. Missions may wish to contract with local organizations for other types of capacity development services, particularly those that can’t be provided through the existing CSO capacity development market.

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Explore twinning to reach smaller organizations: Consider twinning stronger local CSOs with smaller ones (“sister CSOs”), or allow consortia of CSOs to apply for grants, to reach out to more local organizations.

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Annex 1: Illustrative Typology of LCD Program 6

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Program Name/Office or Sector

Procurement Modality

Capacity Development Delivery Modality(ies)

Partners

Strengthening Integrity and Accountability Program 2(SIAP2)/Democracy and Governance (ongoing since 2010)

APS with multiple cooperative agreements to consortia and networks and one FOG to local organizations

Awards to Local Organizations Network provides capacity development

Civic Empowerment In Promoting Integrity And Accountability: Kemitraan (lead partner) leads a consortium that includes three local partners (LSPP, ASPPUK, FITRA) and an international partner (TIRI). Development of Integrity System and Accountability Process of Government Budget Utilization at Education, Agricultural and People Welfare Sectors”Patirro (Led by Patirro Jakarta and includes network of regional partners) AKUNTABILITAS! Promoting government accountability by improving coverage of reports and issues in the press-- Jawa Pos Institute for Proautonomy (JPIP) Cultivating the Culture of Accountability

All programs were ongoing at the time of fieldwork, unless otherwise indicated.

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through Utilization of the Participation Avenue in Public Services Administration – Yappika From a Culture of Corruption to a Culture of Accountability: Fostering Integrity in Sumatra's Forestry Sector”- From a Culture of Corruption to a Culture of Accountability: Fostering Integrity in Sumatra's Forestry Sector” IKAT-US (multiple awards)/DG (ongoing) facilitate partnerships among Indonesian, U.S., and regional civil society organizations in five areas critical to the development of democracy, good governance, and respect for human rights: (1) elections and political participation, (2) independent media and freedom of information, (3) peacebuilding and conflict resolution, (4) transparency and accountability, and (5) human rights monitoring and advocacy.

APS for Partnerships among Indonesian, US and SE Asian NGOs (May be led by US or Indonesian NGO.) 2-stage APS with concept note first

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For US led consortia, increasingly greater responsibility for local organizations over time. Some limited capacity development resources available in the program

The IKAT-US Component 1 Program implementers are: POWER: Political Women Representation Asia Calling: Strengthening Southeast Asian Media Partnerships to Promote Human Rights and Good Governance General Election Network for Disability Access (AGENDA) Tigers with Teeth: Strengthening Legal Advocacy Efforts to Build ASEAN’s Regional Human

Rights System Better Partnerships for Better Spending in Southeast Asia Better Governance in Extractive Industries

Kinerja/DG -- Improving Local Government Service Delivery

Cooperative Agreement with grants

Uses CSOs as Capacity Development Providers to local governments

US Partners: RTI, TAF, Social Impact, Smeru, Indonesian Partners: Kemitraan, University of Gadja Madah More than 50 small grants as intermediary services providers to local governments

Program to Extend Scholarships and Training to Achieve Sustainable Impacts (PRESTASI)

Award to Indonesian organization

sub-award with US organization

Indonesian International Education Foundation

Sumatra Forest Conservation Program Tropical Forest Sinking Fund/ENV

A debt for nature swap established as $29 million sinking fund.

Program Representasi (PROREP)/DG

Contract with Grants Under Contract

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Yayasan Kehati

grantees can access up to 30% of subgrant for capacity development training and services; expanded administrative monitoring

Chemonics

Civil Society Strengthening Program (CSSP)/DG (2000 – 2005)

Contract with Grants Under Contract

supported advocacy skills development, management and administration of more than 200 local CSOs. partner with local CSO training/service provider

Chemonics (US contractor)

Cocoa Value Chain Project/Economic Growth

Direct Grant (DGP)

award to local organization

Sajogyo Institute (SAINS) (local NGO)

Climate Change Adaptation and Disaster Management/Environment

Direct Grant (DGP)

award to local organization

Farmers’ Initiatives for Ecological Livelihoods and Democracy (FIELD) (local)

Agribusiness Market and Support Activity (Amarta) II

Cooperative Agreement to US Organization

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ACDI/VOCA (international)

Annex 2: Profile of Local Organizations Interviewed Kemitraan/The Partnership for Governance Reform (‘the Partnership’) is a multi-stakeholder organization established to promote governance reform. It works hand-in-hand with government agencies, CSOs, the private sector, and international development partners in Indonesia to bring about reform at both the national and local levels. The Partnership builds crucial links between all levels of government and civil society to sustainably promote good governance in Indonesia. Their origins can be traced back to the late 1990s when Indonesia was confronted with a devastating economic and political crisis. The Partnership was established in March 2000 as a United Nations Development Programme (UNDP) project designed to help Indonesia realize good governance at all levels of government. It became operational in May 2001 and by 2003 it was registered as a not-for-profit civil-law association. Over the last nine years, the Partnership has grown from its beginnings as a UNDP project into a trusted, independent and prominent Indonesian-managed organization. They are currently a direct recipient of two USAID grants and a sub-recipient of two additional grants. The "Women's Small Business Assistance Foundation" (ASPPUK) was founded in 1997. They are a sub-recpiient to Kemitraan under SIAP2. LSPP strives to enhance local media's ability to conduct investigative reporting. Improved investigative reporting in local media is especially important to ensuring the creation of a culture of transparency and disclosure that makes democratically elected governments more accountable. They are currently a sub-recipient of Kemitraan under SIAP2 . Yayasan Alfa Omega specializes in training and support to small business enterprise projects and local communities. In addition to training on agricultural techniques, Alfa Omega helps former refugee communities for East Timor. Founded by the local protestant church in 1985, activities also include health, village development, community development and training. Their approach is based on training people and organizations in rural areas to become change agents. They have trained over 40,000 motivators around NTT province. Their goal is to make the community groups they work with self-sustainable. They work with each group for a period of five years until they become independent and can “live on their own”. Alpha Omega participates as part of the ASPPUK network in SIAP-2 and receives direct funding from other donors and intermediaries. Center of Regional and Information Studies (PATTIRO) was established on April 17, 1999 to promote good governance and public participation in Indonesia, particularly at local level. Areas of activities include public service improvement, planning and budgeting system development, and capacity improvement of governance apparatus, legislative members and press, and citizen empowerment. To achieve these goals, they provide various services to NGOs, donor organizations, government institutions, and private sectors who share the same goals. Services include: research, training, assistance and model development. Under the SIAP 2 program, Pattiro received its first direct USAID grant. Patirro was recently selected as 26th of the Top Thirty Transparency and Good Governance Think Tanks in The World 2011 by a University of

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Pennsylvania program that evaluated over 5,000 think tanks from across the globe. Pattiro is currently a USAID direct grantee under SIAP 2 and sub-grantee under IKAT-US and WaterSMS. Yayasan Keanekaragaman Hayati Indonesia (Yayasan KEHATI) is a well known, independent, not for profit, self-sustained national grant-making foundation, acting as the Administrator of a Debt for Nature Swap (DNS) Program of Tropical Forest Conservation Program (TFCA) 2 for Kalimantan. With DNS funding, KEHATI manages a $58 million sinking fund that make grants to local CSOs. Established in 1994, from 1995 to 2005, KEHATI was the recipient of a $25 million USAID cooperative agreement, which included a $16.5 million endowment. Using the interest on the endowment only, KEHATI has made more than $20 million in small grants to Indonesian CSOs. In addition, they’ve been able to leverage private funds for environmental grant-making. YAPPIKA has its roots in Yayasan Persahabatan Indonesia Kanada (YAPIKA) or the IndonesiaCanada Forum (ICF) which was formed in 1991. At that time, YAPPIKA was an agency that distributed funds to non-governmental organizations (NGOs) in Indonesia, and was collectively managed by Indonesian and Canadian non-profit organizations. In 1997 YAPPIKA become a fully-fledged Indonesian agency, which would take a greater role in building the capacities of non-profit organizations and become active in national advocacy of various issues of interest. The abbreviation YAPPIKA evolved to become Yayasan Penguatan Partisipasi, Inisiatif dan Kemitraan Masyarakat Indonesia or the Indonesian Foundation to Strengthen Civil Society Participation, Initiatives and Partnerships. With the change in governance in the post-reform era, Yappika focused on strengthening its organizational capacities to guard the process of transition towards democracy in Indonesia. In 2000, Yappika established itself as the Civil Society Alliance for Democracy. Ever since, Yappika has not been an acronym, but the name of the organization. Yappika was the author of Civicus’ 2005 Analysis of Civil Society in Indonesia. CIDA continued to give them a block grant ($500,000 per year) until 2009. They are a direct USAID recipient of a SIAP2 award. PIAR was established in 2002 in Kupang with its roots working on human rights issues. Now, they are concentrating on anti-corruption, government spending and public services. Current work includes monitoring public services at local level. They are a sub-recipient under SIAP2 and IRI and collaborate with USAID’s PROREP program. Bandung Institute of Governance Studies (BIGS) started in 1999 and became a non-profit and non-government association in 2006. BIGS promotes a level playing field in Indonesia through civil society strengthening, democratization, and the development of transparent, participatory and accountable government institutions. They were previously a service provider/sub-contractor for USAID’s Local Governance Support Program and are now a subrecipient under IKAT-US. Bandung Trust Advisory Group (B-Trust) was established in 2001 to serve as an advisory non-government organization that provides experts, ideas, information, research and advocacy

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to assist civil society organizations, local governments and political parties in Indonesia in developing and enhancing programs and policies that will strengthen equality and justice. They have been a sub-recipient of USAID programs in the past and currently receive funding from CIDA, Ford Foundation and the Asia Foundation. Perkumpulan Inisiatif’s mission is to support public policy reform that contributes to improvement of marginal groups; to strengthen local initiatives to improve the lives of marginal groups; and to push for synergies between public policy reform and local initiatives. Located in Bandung, they are a sub-recipient under IKAT-US. Konsul LSM (NGO Council of Indonesia) is an organization founded by 93 NGOs and scattered in 13 provinces in Indonesia. Konsul LSM was established on July 28, 2010 at the National Congress of Indonesian NGOs in Jakarta which was attended by 54 members of the NGO representatives. Led by a prominent Indonesian NGO leader, their goal is to promote integrity and accountability with the NGO sector. They receive Ford Foundation funding and are currently a sub-recipient of USAID’s Kinerja program. Institute for Social and Economic Research, Education & Information (LP3ES) is a NonGovernment Organization (NGO), which is non-profit and autonomous. It was founded by a group of intellectuals and student activists on August 19, 1971. Its formation was sparked by the need for developing alternative thinking for national development. LP3ES’s mission is to increase people’s political awareness through education and the strengthening of people’s economy; strengthen the capacity of civil society organizations and strategic groups in struggles for democracy and human rights; conduct studies/research in social and economic fields; and develop international networks for disseminating information about Indonesia. They were the lead recipient of a USAID DG program in the 1990s in which they gave sub-grants to nine other organizations. They do not currently have any active USAID funding. Value Chain Center (Bandung) was established through joint cooperation between the Research and Community Service Institute of Padjadjaran University and USAID’s AMARTA Program. The main activities of the Center are to bridge information and communication gaps among business government and other supporting institutions, build farmers’ capacity and strengthen farmer groups and develop socio-economic and agribusiness data for West Java Province. A formal part of the University, the Value Chain Center- Bandung is a USAID subrecipient. Public Interest Research and Advocacy Center (PIRAC) is a non-profit organizations and independent resource that provides services in the form of research, training, advocacy, and dissemination of information in the field of philanthropy and strengthening civil society organizations in Indonesia. PIRAC was incorporated as a foundation in 1998. Their vision is for an empowered community, prosperous, and caring for others. They receive funding from donor agencies, community contributions, and independent businesses. They do not receive funding from USAID.

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Sajogyo Institute (SAINS) promotes women’s farmer groups, increase cocoa quality and productivity, and integrates female farmers into the cocoa value chain. A relatively small organization based in Bogor,they are currently a first-time USAID grantee under the DGP program. Indonesia Disabled Persons Association advocates for the full participation of and equal opportunities for persons with disabilities in all aspects of life. They are an active partner of the GoI in raising awareness and designing policy and program concepts for persons with disabilities. Founded in 1998, they are a subrecipient to IFES under IKAT Agenda. Center for Election Access of Citizens with disabilities was established in 2004 in response to concerns about the lack of attention, protection and equality for voters with disabilities. They are a sub-recipient to IFES under IKAT Agenda. The People’s Voter Education Network is focused on efforts to ensure high quality elections in Indonesia. It is a national network consisting of 38 agencies that grew out of a national voter education workshop in 1998. They are a sub-recipient to IFES under IKAT Agenda.

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Annex 3: Resources/References CIVICUS Civil Society Analysis for Indonesia, Yappika, 2005 NGO Accountability paper, Rustam Ibrahim, Hans Antlov, Peter van Tuijl CSSP Final Report PROREP Civil Society Assessment NGO Performance Management, PhD Dissertation, Yoke Sudharbo NGO law paper External Evaluation of Yayasan Kehati (http://pdf.usaid.gov/pdf_docs/PDABY903.pdf)

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