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President’s Report

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During fiscal 2002, the Inter-American Foundation awarded 50 new grants, worth $15 million, toward the support of a diverse group of social and economic development projects.

Beyond the energy, creativity and initiative displayed by the successful applicants in Latin America and the Caribbean, all projects funded in FY-2002 share two traits. First, in addition to addressing a specific issue, they are directed at building capacity. In considering proposals submitted during this funding cycle, the IAF looked for evidence that an award would strengthen the applicant’s ability to function more effectively on a sustainable basis once the support period is over. This year’s grantees are all focused on strengthening networks of producers, small NGOs or, through partnerships or improved organizational and fundraising skills, the recipient itself. Furthermore, this goal of building capacity almost always includes the grantee’s commitment to the promotion of better leadership in the community by reaching out to local governments.

Secondly, our grantees share a concern for improving their constituents’ well-being by engaging their efforts, resources and initiative. Crucial to a successful application has always been a showing that the IAF’s assistance will be directed at improving conditions with the grant beneficiaries’ participation. In this manner, IAF’s new grantees address a range of issues with a variety of activities, all fostering a tangible gain for people who struggle with a life of poverty.

It is difficult, if not impossible, to adequately classify IAF’s new projects in terms of traditional development sectors. Most represent a rich interaction of institutions striving to resolve complex problems. Some grantees are local nonprofit organizations or foundations dedicated to working with the poor. Others are the poor themselves, organized into cooperatives, producer groups, communities and other grassroots associations, acting on their own behalf. In approximately two-thirds of the grants supported with FY-2002 funding, municipal governments have acted as supporters, facilitators or promoters of grant activities, sometimes while building their own capacity to work effectively with their constituents on resolving urgent local problems. Partners include local businesses and chambers of commerce reaching out to their communities with resources and ideas.

Local Economic Development

At least 35 projects funded in FY-2002 focus primarily on local economic development. Their varied activities target specific populations in either rural or urban settings usually within municipal boundaries. Most attempt to help individual entrepreneurs or producers increase their income through better and more efficient practices as well as access to markets and credit. Some grants to cooperative businesses will be invested in improved technology, others in infrastructure. A review of these local economic development awards reveals the following:

•    Thirteen grants establish or reinforce a variety of credit programs for both urban and rural producers.
•    Twenty grants improve food security through access to credit, technical assistance, training, improved technologies, soil conservation and agricultural diversification.
•    Fourteen emphasize providing small producers and artisans better access to markets through storage technologies, product processing (for coffee or spices), information, roads, linkages or production for niche markets (for example, organic coffee).
•    Five single out women as principal beneficiaries of credit and marketing projects.
•    Fifteen target the urban poor for micro-enterprise credit, community improvement, assistance with recycling efforts, business development, housing, legal services, leadership training and partnership building.
•    Seven specifically focus on environmental issues, such as buffer zone and biosphere reserves management, soil conservation and improvement, and sanitation

Corporate Social Investment and Responsibility

At least half of IAF’s FY-2002 awards include the participation of local and international businesses, often in the form of counterpart financial resources provided to the grantee organization or the beneficiaries. Businesses and corporations are necessary partners in the development process; the involvement of chambers of commerce, corporate foundations or business associations can provide direct leadership. Six of these kinds of grants specifically target the stimulation of social investment and corporate social responsibility as part of a broader effort to assist poor people and grassroots organizations.

Learning and Evaluation

A final group of grants, representing approximately 4 percent of the year’s funding, was awarded in fiscal 2002 for the purpose of learning more about the local development process from grants of previous years. One supports the evaluation of a series of local development experiences in Uruguay and Chile. This has already produced a collection of best practices that has been published and disseminated in a series of workshops and seminars for development professionals throughout Latin America and the Caribbean. Additionally, the IAF joined forces with the Kettering Foundation to examine 10 development projects, five of them IAF-supported, to learn how communities come together to act collaboratively. Finally, with the intention of strengthening a Web-based communications system about best practices in local governance, the IAF approved a grant to a network of local development organizations with representation throughout Latin America and the Caribbean.

Building Democracy from the Grassroots

A principal IAF criterion for a successful proposal has always been the degree to which it reflects beneficiary involvement in its design and implementation. The IAF has always defined local development as a process whereby stakeholders in a community come together to identify a problem or need and work together toward a solution. Where needs are multiple, a process of prioritization involves all members of a community, especially those intended to benefit most immediately. The IAF has learned from experience that grass- roots development projects are more likely to succeed when beneficiaries claim ownership of this process, as they appear to do in all of our projects funded in 2002.

Another key to success and sustainable gains is cooperation among the various sectors in the community: local government, businesses, nonprofit service organizations and grassroots groups. The resulting dialogue creates the dynamism needed to overcome problems of poverty and exclusion. It also builds trust, fosters citizen participation and provides a vehicle for democratic expression. IAF studies and evaluations offer evidence of a direct cause-and-effect relationship between participatory development projects and the construction of democratic governance. We believe our 2002 grants will confirm this relationship.

Assessing the Investment

As always, IAF could support only a fraction of the creative ideas submitted for its consideration during the FY-2002 funding cycle. Many more were judged worthy and could have made a major difference in people’s lives and in conditions in their communities. The IAF, in assessing the effectiveness of its investment of fiscal 2002 funds, will not only seek to confirm that the successful applicants’ stated objectives were met. We will also look for achievements not contemplated at the outset of grant activities — new synergies, added capacities, opportunities seized, relationships built and a willingness to move beyond the initial proposal to address new, and possibly more important, challenges. We are confident the projects funded this year will be excellent examples of how organized individuals, working together to marshal resources along with their own ingenuity, can build a better future for themselves, their families and their communities.

David Valenzuela