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EUROPEAN COMMISSION Co-financed Sustainable Community Based Approaches to Livelihood Enhancement Project (SCALE)

Innovation Fund for Rural Development Call for Proposals

The Aga Khan Foundation invites applications for nomination of the Innovation Fund for Rural Development Award under the European Commission co-financed Sustainable Community- Based Approaches to Livelihood Enhancement (SCALE) Project for the theme Enhancing and sustaining rural livelihoods in an economic reform environment: Maximising benefits for the poor.

What is the Innovation Fund?
The Innovation Fund (I-Fund) initiated by the Aga Khan Foundation (AKF) offers NGOs an opportunity to try out innovative processes in rural livelihood generation in the states of Andhra Pradesh, Gujarat, Madhya Pradesh, Maharashtra and Rajasthan. Through this fund, it is hoped that NGOs will develop innovative proposals with untried approaches that enhance knowledge and have replication value. Submitted proposals are screened through an impartial multi-tiered process and ultimately presented to the National Committee of the AKF for final award.

What is the purpose of this Fund?
It is designed as a small but flexible fund to support experimental projects in the semi-arid regions of India that use new and/ or innovative approaches to community-based initiatives in rural livelihood enhancement. The purpose is to understand processes that are then documented and disseminated widely, to influence the knowledge of development institutions as well as bring about favourable policy change.

The goal is to:

• Facilitate the development of solutions to emerging key challenges for sustainable livelihoods in India;
• Introduce appropriate practices for natural resource management; and,
• Enhance livelihoods in the semi-arid, rain-fed areas of rural India.

Why is this theme chosen for the Fund?
Beginning in 1991, the Government of India launched a series of reforms in various sectors to propel economic development, marking a new phase in India's development strategy. These aim at reducing the extent of Government controls over various aspects of the domestic economy, increasing the role of the private sector, redirecting scarce public sector resources to areas where the private sector is unlikely to enter and opening up the economy to trade and foreign investment.

Some areas undergoing reform include banking, deregulation of markets allowing free trade, telecom and information technology, power, land, labour, agriculture and reforms in governance, rural education and rural healthcare.

As a result of these reforms, India is currently one of the ten fastest growing economies. While the poverty index ratio has been declining, in terms of absolute numbers, the number of unemployed continues to increase. While economic reform has benefited several, the challenge remains in the poor - especially those in rural areas - gaining from these reforms as well.

To ensure that the marginalised also benefit from policy changes that favour economic growth and to shield them if necessary, the I-Fund will focus on awarding the best of those projects that show the way to the rural poor so that they too can enhance their livelihoods in an ‘economic reform’ environment.

Who is eligible for the Fund?
The Fund will provide small grants to non-government organisations (NGOs) registered for at least three years under the Societies Act or the Trust Act in India with Foreign Contribution Regulation Act registration (FCRA), to support the implementation of innovative ideas through village federations, community groups, self help groups and public agencies.

What projects are eligible for funding?
In relation to economic reform, existing funds largely focus on researching the impact that economic reform has on poor and rural communities. Few focus on developing projects based on these economic reforms so as to enhance rural livelihoods, or, on putting systems in place to shield the poor and marginalised communities, including women. Moreover, many focus on technical products, such as a new structure to conserve soil and/ or moisture, a new agricultural tool, or a new process of farming to reduce costs or enhance production, though a few have also supported institutional innovations and sharing resources as well.

This Fund seeks to go beyond, and focus on systems and processes that have a larger relevance, particularly in the context of livelihood of rural communities in the semi-arid rain-fed regions of the country. As a policy, it will support agencies that are not currently involved in the European Commission co-financed SCALE programme, of which this Fund is a part, so as to broaden the base for generating lessons.

Thus, the proposals which are based on novel and innovative processes, institutions and systems are eligible for funding. These should be community-based and designed to either (a) take advantage of economic liberalisation, or, (b) protect the poor from the negative consequences.

The priority areas for which innovative proposals should be designed include:

1. Use of information and communication technology (ICT) in livelihood enhancement (such as through improved communication; use of internet for information and knowledge sharing, skill enhancement, market intelligence and access, disaster warning and preparedness; governance; etc.);

2. Making governance reform, especially those related to local governance, work for rural socio-economic development (such as mobilising the rural community about different acts and laws; information access to various government schemes so that these can be availed of; making local government bodies effective, accountable and transparent; etc. These include the 73rd Amendment of the Constitution, the Provisions of the Panchayats (Extension to Scheduled Areas) Act or PESA, Right to Information, the National Rural Employment Guarantee Act, Swajaldhara, Sarva Shiksha Abhiyan, National Rural Health Mission, Bharat Nirman, etc.);

3. Enhancing and protecting markets in the current national and international scenario (novel initiatives to access global markets for agro- and non-farm products; protection of farmers’ rights and seeds with reference to Trade Related Intellectual Property Rights (TRIPS) and other WTO implications; Convention on Biological Diversity etc.);

4. Innovative approaches to micro- enterprise development and microfinance access (novel initiatives for: access to micro-credit, crop insurance, etc., through informal/ community-based programmes and banks; resource development; farm and non-farm product diversification and marketing systems; forest produce, etc);

5. Innovative approaches to development communication (such as new methods of reaching the unreached; development of effective campaign strategies; demonstrable influence on government policies; etc.).

6. Grassroots development processes that foster and enhance pluralism and inclusiveness as a conscious working model (such as through common economic, social and cultural development activities in composite societies).
Only new proposals, which have not been considered by any other funding source, will be considered.

There is an element of risk in any innovation, often leading to an implementation strategy that involves only the relatively empowered sections in a community. The proposed projects should attempt to define such risks, analyse and reduce these at the implementation level. It will, therefore, be positively biased towards projects that address specific needs of the weaker sections of society. A few such groups, and their issues, have been listed below, as an illustration:

A. Under-served populations in geographically remote areas;

B. Livelihood of women, the very poor, under-privileged and marginalised people (such as senior citizens, physically challenged, weaker groups etc.);

C. Environmental health of rural communities (mainly women and children, who are particularly vulnerable to water-borne diseases, indoor air pollution and lack of focused health-care services).
Proposals will also be assessed for their significance in terms of replication and possible long term impact and reach.

What is the size of individual grants?
The grants would be determined by the needs of the selected projects and vary in size, with a ceiling of INR 2,500,000. The duration of the projects would be for a maximum of two years, extendable in exceptional cases by another year. Such extensions will need to be approved by the AKF National Committee and will have no financial implication.

What is the selection procedure?
AKF has empowered its National Committee to provide oversight to the Fund, whose decisions will be final and binding.

Only an approved list of at least five experts (the jury) has the authority to recommend suitable projects for consideration of support under the Fund. The recommendation is on the basis of (a) the innovation aspects of the proposed project, (b) the criteria laid down for accessing the Fund, and (c) its possibility of succeeding as a model. However, the recommendation itself is on the basis of an objective evaluation forwarded by AKF after an initial screening process. The scores awarded this jury will be aggregated and the best 5-10 proposals qualitatively assessed for their technical and financial capacities based on field visits.

The National Committee will then review the evaluation of the recommended proposals and approve eligible and worthwhile projects each year for support under the I-Fund.

Only those proposals that are submitted strictly in the prescribed format will be considered for screening at the first level.

What is the time table?
Starting from 2005, the I-Fund will be available for the next 5-7 years, depending on the availability and use of funds. Proposals will be invited in the middle of every year and provisional awards will be announced in December. The Grant Contract will be signed thereafter with the successful NGOs.

What are the monitoring procedures?
AKF will require a Grant Contract to be counter-signed by the implementing FCRA approved NGO, setting out the terms and conditions of the engagement. A milestone-based mode of funding will be adopted whereby pre-determined amounts would be released on successful achievement of agreed milestones. The milestones are likely to be less tangible measures of institutional processes, necessitating advanced documentation skills. While this would provide an incentive for building capacities in documentation, it would also open up the project to wider technical scrutiny, through half-yearly and annual progress reports.

AKF or, in selected cases, the (FCRA registered) NGO will contract relevant services when required from third party organisations to a pre-determined terms of reference. Such partnerships and/ or twining arrangements with research institutions - for improved data collection, analysis and documentation - will also act as internal monitoring mechanisms.

In addition, strategic alliances will be encouraged with private organizations and local government (such as Panchayati Raj Institutions) for leveraging the gains of such projects. No funds will be provided to these agencies directly from the I-Fund.

> Please see Proposal Guidelines