Draft ToR for Nordic+ visits by mifei

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									Issues paper on Donor strategies for support of Civil Society and related administrative modalities Draft Country Paper: United Kingdom (UK)
1. Introduction The Ministry of Foreign Affairs has initiated an update of the existing strategy for Danish support to civil society in developing countries. As part of the update the ministry has requested that a study be undertaken of how selected Nordic+ donors approach support to civil society as part of their overall development cooperation efforts. Relative to the current Danish ‟model‟ the UK ‟civil society challenge fund‟ managed by DFID provides an interesting example. It seems appropriate to obtain assessments from DFID as well as from UK based NGOs on their experience. Likewise, DFID last year launched a ‟Governance and Transparency Fund‟. Finally, DFID initiated a review of its support to local CSOs (presented at the CIVICUS general assembly in May 2007). A visit to the UK will furthermore provide opportunities to meet with relevant resource persons (such as INTRAC) regarding current trends in the role of CSOs. This country paper assesses strategies and modalities of the UK as a like-minded donor to provide the Danish Ministry of Foreign Affairs with an overview of current and emerging trends as a relevant reference as well as a potential source of information and inspiration for the Danish update of its CS strategy. The paper has been prepared by Lisbet Fich, Konsulentnetværket aps. 2. Strategic Framework

Poverty and governance DFID‟s support to civil society is governed by the following documents:  The 2000 White Paper, „Making Globalisation Work for the Poor‟ (not available)  The 2002 International Development Act specifically empowered DFID to promote awareness of global poverty and methods for reducing it. (not available)  Civil Society and Development: How DFID works in partnership with civil society to deliver the Millenium Development Goals. Feb. 2006  The 2006 White Paper, „Making Governance Work for the Poor‟ (not available)  Briefing – A DFID practice paper: Civil society and good governance. Aug. 2007 The booklet Civil Society and Development was published before change of cabinet and before the issue of the report of the Auditor General. Due to these developments, substantial changes are expected.

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DFID is working with and through civil society. The booklet Civil Society and Development outlines three strategic focus areas, contributing to the overall aim of poverty reduction:  Building voice and accountability o Policy formulation o Monitoring services and budgets o Conflict resolution o Global advocacy  Providing humanitarian assistance and services o Provision of services o Humanitarian aid and service provision in difficult environments o Developing new approaches  Promoting awareness and understanding of development o Building support for development o Influencing British government policy o A knowledge base for international development o Skill development o Global fellowship and solidarity The booklet Civil Society and Development set out DFID‟s range of mechanisms for working with and supporting civil society:  Consultation and dialogue  Country offices  Conflict, Humanitarian Assistance and Security Department  Information and Civil Society Department  Other departments (e.g. Central Research) With the issuance of the 2006 White Paper followed by the Briefing practice paper in August 2007, a change in priority and approach to working with civil society emerges. The paper outlines why and how support to civil society organisations can help in:  Building state capability  Strengthening state accountability  Encouraging state responsiveness At a conceptual level, it seems that civil society work is being integrated within the governance agenda of DFID. Good governance is addressed by 1) public sector reforms, and 2) support to civil society. It is claimed by some that this trend seems to move the agenda away from direct poverty reduction (e.g. agriculture for the poor) towards governance (OD). Whether this is correct, is yet to be seen. But one thing is clear: the governance agenda is getting more pronounced (ref. later on DFID‟s organisational structure and changes). The approach to CS support is instrumental – DFID supports CSOs for an End, which is governance for poor people. So N-NGOs and CSOs are not funded for their own sake, or for the sake of a vibrant CS, but as a means to contribute to achievement of DFID‟s overall goal: Governance for the Poor.

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Country level Support to civil society by DFID takes place through the country programmes (managed by DFID‟s country offices (not embassies)), and through NGOs. The focus of the thinking is on strengthening the CS, not just the NGO funding channel. Country programmes are prepared within the frame of Country Assistance Plans (CAP), which are revised around every 5th year. Part of the CAPs is a contextual analysis of civil society, and as such civil society programmes are a prominent part of the country programmes. The Head office is involved in the revision of CAPs, which is claimed to ensure that civil society has been incorporated. A Country Governance Analysis (CGA) is prepared jointly with the Foreign Office (embassy/High Commission), since it is of use to both the diplomatic and the development wings. The intention of DFID (or at least the CS forces within DFID) is to promote CS for mainstreaming in Country Assistance Plans, Country Governance Analysis, etc. DFID Head office is optimistic about the mainstreaming agenda, since the country offices are keen to implement best practices and are interested in increased effectiveness. Intervention areas DFID states that there is a trend towards provision of more support to government functions within service delivery, carried out by CS; however, the point is not to provide SD in isolation, but to combine it with building effective dialogue mechanisms with the state. The theme at country level is accountability, and SD is only supported through the lenses of holding the state accountable. „Fragile states‟ is an area where DFID invests increasing resources and energy in addressing and managing. The list of fragile states is said to name 46 countries. DFID expects to soon start up more strategic development work on fragile states, and considers putting it to the Nordic+ group along the same lines as was done with the aid effectiveness agenda. In fragile states the approach to balance SD and advocacy is somewhat different due to the contextual dependency: Quoting Zimbabwe as a case, where the state has failed completely, there is sufficient justification to support CSOs in service delivery – and without conditions for complementary advocacy, since there is no room for CSOs to carry out effective advocacy work for service delivery with the government under the current regime. Another strategic focus that stands next in line to policy scrutiny is state building, including the role of CS. Politics … With the change of Cabinet from Blair to Brown, the political signals point to more emphasis on hard-core economic growth alike the World Bank, where CS clearly has lost in strategic priority – seems to have moved to something to play with at the edges, not core focus, though no explicit political statements have been yet as to the future ODA policy. The junior Minister for Development is an economist with a reputation for being a tough hardliner – having previously served at the board of Oxfam.

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DFID is now governed by 4 Ministers: 1 Secretary of State (Chief Minister, member of Cabinet), and 3 Junior Ministers in charge of: trade & growth, climate & energy and fragile states. This can be seen to signal the policy priorities of British ODA in the coming years. A change in language has been seen towards DFID being a Ministry for Development rather than an Aid Agency. Both at policy level and at administrative level, there are strong links to trade and private sector thinking. The Paris Agenda Within aid instruments, DFID has a reputation of being a keen champion lead on budget support. This is expected to continue within an accountability agenda of both domestic (UK) considerations and the role of the national CS. DFID buys completely into the Paris Agenda with all efforts towards harmonising bilateral programmes, and expects that this will have implications for the civil society support as well with an increasing trend towards outsourced basket funding at country level – DFID alone or jointly with other donors. However, a concern raised by DFID in relation to harmonisation is the fear that the joint operations will be guided by the lowest denominator instead of supporting necessary risk taking, innovation and learning, which is part of DFID‟s „brand‟ and on which they do not want to lose out. While the aid effectiveness attracts high attention on the political scene in UK, motivated by a desire to minimize transaction costs and increase value for money, the parallel challenge concerns the transaction costs of CSOs and how to avoid just transferring the burden to CSOs instead. Trends in funding patterns Particular to the British NGOs is the situation that the tradition of the public for charity is deeply rooted, meaning that the NGOs mainly are funded from private funds (individual contributions, inherited funds or private foundations). For Action Aid, private funding is around 70 % of the organisation‟s income, while 30 % originate from bilateral agencies, EU, strategic foundations, etc. Hence, DFID funding such as the PPAs often only constitutes a minor share of the organisation‟s total turn-over (Oxfam around 5%). Private co-financing is not a requirement for DFID support, and had it be, it would most probably not be an issue at all in the relationship to the back-donor. In the UK, the trends set by the Gates foundation, the Ford foundation, etc. are now taking root, in the way that affluent people and companies look for effective programmes to support, no longer leaving in their will their whole fortune to charity organisations, but wanting to fund programmes while still operational and alive. Finance and investment houses in the UK now employ advisors with a competitive edge in this specialty of investment. The Auditor General: Value for money Around 2-3 years ago a consultancy report (engaged by DFID itself) raised concerns as to the performance of the monitoring systems of NGOs (PPAs) and DFID. At the time the criticism

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was ignored by DFID, claiming that support to political change processes such as CS strengthening faces particular attribution problems in providing evidence-based results. In 2006 DFID was under scrutiny by the National Audit Office (NAO) and criticism was raised in particular with regards to monitoring and reporting on impact and effect of PPA funding (frames) – much like the case in DK, though the criticism seems to be perceived as more serious and damaging to DFID than it was the case in DK. This has lead to MPs questioning the policy of channelling huge amounts of money through the same frame organisations with almost automatic increases in budget, without explicit review and evaluation criteria. The arguments of attribution problems have not been politically accepted. DFID has reacted much the same way as in DK – pushing the burden for evidence downwards to the organisations. A self-assessment exercise has been initiated from the CS division, where each PPA has been requested to respond to questions on:  Review of objectives  Review of achievements  Lessons learnt  Relationship to DFID This is supposed to be followed by a peer review where PPAs in pairs will review the programmes and work of the other. Several organisations have objected to this, and there seems to be great resistance among the organisations against opening up to such learning methods, where they expose themselves to each other in a competitive funding situation. DFID is reported not to insist on going through with the peer review, unless the organisations volunteer to do so. In the year that has passed since the NAO report was issued in July 2006, a considerable change of staff of the CS division has been witnessed, incl. the head of division. There are only speculations to judge whether it has been caused by transfer of staff, or by staff „transferring‟ themselves due to disagreement of new upcoming trends. The background and profiles of new staff members is said to emphasize macro-economics and hard-core private sector growth orientation. In the context of the NAO report and the political change of government, major changes are expected by external stakeholders in the area of CS support and support modalities, but as yet nobody dares to predict the direction of the change. DFID /Civil Society Team has announced that a major consultation process will be undertaken, (as yet mainly based on email communication – which makes it difficult to really get the thrust of the agenda. Also DFID is said to have circulated a consultation document asking more questions than providing answers – much like the concept note on the DK updating process). BOND is said to be involved as facilitator of consultation events. However, BOND also seems to be the middle of a transformation, with considerable turnover of staff, and did not feel capable of entering into a discussion/interview.

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DFID has been an active and contributing member of the Nordic+ group, and anticipates that the Scanteam report is of great relevance to shaping DFID‟s future support modalities. They appreciate the joint approach, incl. the suggestion to prepare more committing management responses to the report. The Civil Society Team is at present working on a „How to‟ note on civil society support, and it has been indicated that it will draw on the Scanteam report. A certain slide of funding from DFID to FCO has appeared at country level – the Small Grant Scheme has been fully transferred from DFID to FCO management. This is by various sources interpreted as a result of DFID having problems in adhering to the 80:20 rule (80% of ODA to low income countries). DFID has closed down in several middle income countries, whereas at the same time the FCO seems to have opened up to more strategic programmes in middle income countries with a strong emphasis on Middle East, Arabic countries, North Africa. This should further be seen in the context of the FCO managing the GOF – Global Opportunities Fund – which provides funding for CS programmes and campaigns on anti-terror, peace building, intercultural interaction, etc. The GOF facility is accessible also to PPAs. It is difficult to assess whether this is a strategic and conscious change of power/status between FCO and DFID or mainly co-incidental, forced by circumstances (80:20). 3. Support Modalities DFID offers the following funding schemes: i) Partnership Programme Agreements (PPA) – frame funding ii) Civil Society Challenge Fund (CSCF) – single projects iii) Development Education iv) Global Transparency Fund (GTF) v) Country programmes vi) Humanitarian funding vii) FCO funding – GOF, Small Grant Scheme, training, etc. Each of the financing schemes has its own policy framework and operational guidelines (available on the web). PPAs There are presently 26 PPAs. The number has increased gradually over the years and jumped from 18 to 26 in 2006. The present batch of PPAs will expire in 2011, where changes are expected. PPAs are strategic core-funding, meaning that it is unrestricted funding, not programme funding. The funds can be utilised to as different purposes as campaigning on central issues of the organisation‟s agenda and office rent and electricity. The PPAs are praised by the organisations for the flexibility, freedom and degree of risk-taking for innovation and experimentation; also for making available substantial funds for development education, since this is an area where it is difficult to raise funds from other sources. Currently, there are also geographical/regional PPAs (Oxfam in Latin America) where the funding is slightly more targeted. Prior to the present system, similar funding was country

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specific. The regional PPAs are expected to be phased out. At present there are no geographical requirements to the major PPAs (since it is core-funding). For the same reason, the country offices have no say in or hearing right in the appropriation process. Previously, funds for humanitarian assistance have been part of the PPAs, but this has been phased out. In the PPAs the organisations select a few strategic areas (e.g. Oxfam: livelihoods, voice and accountability, development education), which is aligned with DFID‟s funding priorities and which they then “offer” to DFID for funding. The organisations may also select the strategic areas based on the individual organisation‟s comparative advantage, compared with what DFID funds through other organisations, their „competitors‟. They then report on selected outcome indicators. The reporting requirements are not completely clear – by some it is claimed that there is no particular reporting on the PPAs – the Annual Report of the organisation plays that role, since it is core-funding. The PPA proposal and agreement consists of very few pages: objectives, strategies and outcome indicators take up 1-2 pages only. The whole agreement may be just 10 pages (compared to the 450 pages in The Netherlands). No separate programme proposal is required. The PPA facility is presently going through a mid-term review: the agreement covers a 6-year period, while funding is secured for only 3 years. The level of funding for the second half will be determined based on the MTR. On both sides there is a desire to make the partnership and the dialogue more strategic, to go beyond the monitoring and reporting functions, to promote more horizontal connections. It is envisaged that by January/February 2008 the dialogue process will have been more institutionalised. PPA funding excludes funding from CSCF and for the special facility for development education, but not funds for humanitarian assistance or from country programmes. Overall, the organisations appreciate the PPAs, do not press for any changes and advocate for maintaining status quo. However, they expect changes after the NAO report – such as a stronger sector orientation in the PPAs, tighter appropriation and monitoring based on more specific indicators, etc. CSCF (the British ‘mini-project fund’) The CSCF funding scheme ahs an annual budget of around 150 mill £. Only UK based organisations can apply in partnership with S-CSOs. Funding is provided for max. 5 years, with no additional phases. Max. appropriation per project is £ 0.5 mill (like PRNGO). Projects are small – budgets as low as £ 2,700. The trend is bigger projects – among the most recent 158 projects, 78 % had a budget on more than £ x (DKK 2,8 mill). There is no requirement for cofinancing. It was nullified in 2002 (before it was 50 %). The management and administration has been completely outsourced to specialised agencies /consultancy houses, resulting in low transaction costs. In 2004-2006, 363 projects were

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approved, while 60 failed. There are 2 phases in the annual application round (concept note and full project proposal for appraisal). Development Awareness Fund Development education is a priority area to DFID with a strong backing in the policy documents. The budget is around £ 1-1.5 mill per year. The ceiling for appropriations is £ 100,000 per year. There is a requirement for 25 % co-financing, of which 10 % may be in kind. In 2006-07 33 appropriations were approved. Global Transparency Fund GTF is offering competitive funding through an open call. It is a one-off facility with appropriation to be completed by end 2007. It is a political flagship by the previous Minister, profiling DFID‟s governance and accountability agenda. It is open for UK, North and South CSOs, including S-S, N-S, S-N alliances at national, regional and global level. Around 300 proposals are being submitted, representing S, N, UK and regional consortia. It promotes governance in a broad sense across sectors: Trade, media, youth, parliamentary groups, etc. – a spread in focus, which is expected also to be reflected in the final appropriation, subject to the scoring of the proposals. Funding will be provided for 3-5 years with a ratio of N/S spending on 85:15. This has prevented some European organisations from taking the lead and instead participating as a consortium-member under South leadership. KPMG is contracted for the whole management process: appraisal, MER. The appropriation will be done by a DFID panel of staff, representing all continents. By some it is regarded as a test of cost-efficient management of large funds necessitated by the growth scenario. This view is not shared by DFID. Fund for Climate Change A fund similar to the GTF is expected to be set up in the near future with the theme Climate Change and similarly in the size of £ 100 mill. (confirmed by DFID). Country programmes: Baskets The modalities are open: basket funds may be outsourced to private sector agents (management and financial consultancy houses such as KPMG), to international NGOs (such as Care), to indigenous foundations (in place or being built up as part of the process). The outsourcing process may take the form of an organisation „pitching the idea‟ to DFID or through tender. There are examples of basket funding under country programmes as well as regional baskets, managed from Head office in London, since regional programmes pose a particular challenge to the CAPs and the country programme approach, narrowing down the focus to nations. This is an example of an aid structure that limits strategic thinking and excludes addressing policy or development issues of a more regional or global structural character.

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There are several examples on DFID funded programmes through e.g. Care which in course of a few years have been built up to establish themselves as independent foundations with considerable South ownership and accountability. In these cases the role of the N-NGO has been that of brokering, facilitation, capacity building – with funding from country programme allocations, not from central funds. There is a strong move towards indigenisation of baskets for reasons of legitimacy, ownership, etc. Examples of baskets are:  Foundation for Civil Society, Tanzania  Rights and Voice Initiative, Ghana  Ghana Research Advocacy Programme  Rapid Funding Envelope for HIV/AIDS  Iraqi Civil Society Challenge Fund  Iraq Political Participation Fund  Orissa Civil Society and Poverty Programme  India Poorest Areas Civil Society Programme There are no restrictions on British N-NGOs accessing funding at country level in addition to for instance PPA or similar funding. Country programme funding is by some regarded as having an important hooker/broker role in bringing people and organisations together. For Action Aid it is a strategic element of their brand to raise programme funds at national level for CSCF-like arrangements. In Kenya, AA was engaged in the mobilisation process for a national „CSCF‟. In Bangladesh, a 65 mio £ CSCF-fund is being set up, going through a tender process for contracting the management agent (4 organisations have bid). The „How to Note‟ which presently is being prepared by the Civil Society Team will provide guidelines for country offices on application of actual instruments. Networks – capacity building DFID does not provide funding for cross-learning outside the PPAs and CSCF. They are considering something under the GTF. 4. Division of Labour Two ministries are dealing with international issues: The Foreign and Commonwealth Office (FCO/Foreign Office/MFA) and DFID. Both are represented in Cabinet and at country level by each their own structure; by tradition the FCO has had the upperhand, but the budget of DFID is many times bigger than the FCO country budget, which somehow has shaken the „power balance‟ between the two. For the FCO represented by the High Commission/ the ambassador the funds available at country level are discretionary funds, more modest and more strategic, and may to a higher extent be utilised at the discretion of the ambassador to promote certain issues, as a broker for new initiatives, etc. The FCO funding is not governed by CS

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strategies, nor reporting to DFID, though development funding may be counted as official ODA. Due to the organisational structure of DFID and as a result of the comprehensive decentralisation of responsibilities and functions from Head office to the country offices, it is the country offices that are fully in charge of country programmes, including support to civil society. Policies and strategies based on identification of Best Practices, are developed at Head office level, but these are not mandatory to the country offices and only have a guiding nature. In reality, however, the Policy division of Head office has close linkages to the country offices, and it is felt that policies and Best Practices are appreciated by the country office staff, such as the Social Development Advisers. In Head office the Policy division (like BFT) is organised in Advisory Cadres:  Social development (100-150 advisors)  Governance (200 advisors)  Economics (200+++ advisors)  Livelihood (small no. of advisors)  Health (small no. of advisors)  Education (small no. of advisors) The NAO report of DFID included an assessment of the work at country level. A recommendation was to transfer CS-related policy work from the Civil Society Team, based in Glasgow, to the Policy division in Head office in London. This was caused by the National Audit report of 2006, and attempts to address a demand for closer integration of the policy aspects of civil society with other aid policies – in particular the governance and accountability agenda – as well as for more policy dialogue between e.g. the NGOs and DFID. The Civil Society Team in Glasgow remains with the managerial responsibilities for central funding modalities. The mechanism of the increased policy dialogue with the Head office and the 26 PPA organisations remains to be defined, in particular taking into account how to minimize the transaction costs on part of DFID. The question essentially is how the one and only Policy adviser (one out of around 100-150 advisers in the Social Development Cadre in Head office (similar to BFT)) with responsibility for civil society can possibly handle policy dialogues with 26 PPAs and still perform her other duties. The criticism from the NAO report has resulted in a head count and cut across the board. Staff decrease while the programme budget doubles – „do more with less‟! Being the most important level, still the country offices go through the same process of increasing efficiency: reduced number of budget lines, less staff. It is usually the Social Development Adviser at the country office, who is responsible for civil society programmes, sometimes assisted by a Governance officer or a Civil Society officer. With regards to civil society work, it seems that in future there will be no people to manage the relations with Southern CSOs /partner organisations; the SDAs will only be part time advisors on CS-issues; and since the CS work in general is only a small part of the overall programme (though to the S-CS it is big money), it may not be possible to give adequate attention with the present aid structures. It is envisaged that this can further promote outsourcing at country level.

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The SD/CS policy officer at head office is in regular contact with the SDAs at the country offices. 5. Funding levels Overall, British ODA is going through an immense increase in the coming years, due to growth in the British economy and a political commitment to raise the percentage rate of British ODA vis-á-vis the GNP. As a consequence, the agenda for support modalities is anticipated to a large extent to concern how to scale up funding levels while maintaining or improving aid effectiveness and minimizing transaction costs. It is expected that the share of British ODA going to effective and efficient multilateral organisations will increase at the expense of the bilateral country programmes. The CS support in general is expected to increase in absolute figures, though not in proportionate terms vis-á-vis the total ODA. 1) Trends in overall funding for CSOs – recent five years plus expectations / plans for the coming five years Not available – enquiry has been sent 2) Figures for CSO funding: amounts and relative size in relation to bilateral assistance or overall ODA. Not available – enquiry has been sent 3) Figures for CSO funding at HQ versus embassy level (if such statistics exist) Not available – enquiry has been sent 6. Relevant documents Documents 1) The 2000 White Paper, „Making Globalisation Work for the Poor‟ (not available) 2) The 2002 International Development Act specifically empowered DFID to promote awareness of global poverty and methods for reducing it. (not available) 3) Civil Society and Development: How DFID works in partnership with civil society to deliver the Millenium Development Goals. Feb. 2006 4) National Audit Office: DFID, July 2006 5) The 2006 White Paper, „Making Governance Work for the Poor‟ (not available) 6) Briefing – A DFID practice paper: Civil society and good governance. Aug. 2007 7) Care & Action Aid: Where to now? Implications of changing relations between DFID, recipient governments and NGOs in Malawi, Tanzania and Uganda. 8) Global Campaign for Education, Save the Children, Oxfam, Action Aid: National Civil Society Education Funds: A briefing paper. 9) Action Aid International: Grounded Advocacy: Donor funded projects and advocacy: A resource book for staff Web-sites 1) Dfid.gov.uk 2) Actionaid.org

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3) 4) 5) 6) 7) 7.
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Oxfam.org.uk Savethechildren.org.uk Bond.org.uk Christian-aid.org.uk Intrac.org List of persons consulted Emma Grant, DFID, London Audrey Bronstein, International Programme Development Director, Oxfam Amanda Burns, DFID Funding Manager, Programme funding, Oxfam Brian Pratt, Executive Director, INTRAC Feisal Hussein, Head of International Partnership Development, Action Aid

Suggestions for other informants  Peter Kerby, DFID, Civil Society Team, East Kilbride, Scotland  Mike Battcock, DFID, Civil Society Team, East Kilbride, Scotland  BOND – www.bond.uk  CSCF organisations
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Prof. Tony Bebbington (book later this year) anthonybebbington@yahoo.com Dr Kasturi Sen, INTRAC Jeremy Hobbs, Oxfam Save the Children, UK Christian Aid The War on Want Realityofaid.org Irish Aid: o Pronch Murray, Development specialist, pronch.murray@dfa.ie o Richard Daly, Higher Executive Officer, Richard.daly@dfa.ie Joint Voice and Accountability Evaluation covering 6 countries, case studies in Benin and Nicaragua

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