evaluation of experience with conservation trust funds

G L O B A L E N V I R O N M E N T F A C I L I T Y

EVALUATION OFEXPERIENCE WITH

CONSERVATIONTRUST FUNDS

GEF SECRETARIATMONITORING AND EVALUATION TEAM

NOVEMBER 1998

ii GEF Evaluation of Experience with Conservation Trust Funds_______________________________________________________________________________________________________________________________________________

TABLE OF CONTENTS

GLOSSARY OF ACRONYMS USED IN THE EVALUATION REPORT IV

EXECUTIVE SUMMARY V

I. INTRODUCTION AND BACKGROUND 1

II. SUMMARY OF FUNDS INCLUDED IN THE EVALUATION 3

III. FINDINGS AND CONCLUSIONS 5

A. ACCOMPLISHMENTS AND IMPACT TO DATE 5

B. CONSERVATION TRUST FUNDS ARE MORE THAN FINANCIAL MECHANISMS 10

C. GEF PROGRAM LINKAGES AND MEETING GEF CRITERIA 12

D. STRATEGIC AND NATIONAL CONTEXT 16

E. THE GOVERNANCE OF CONSERVATION TRUST FUNDS 22

F. PROGRAM MANAGEMENT 26

G. ASSET AND FINANCIAL MANAGEMENT 30

IV. CROSS-CUTTING CONCLUSIONS 36

A. ADVANTAGES AND CHALLENGES OF CONSERVATION TRUST FUNDS 36

B. CONDITIONS FOR SUCCESS 39

C. DECIDING BETWEEN TRUST FUNDS OR TRADITIONAL PROJECTS 41

V. IMPLICATIONS FOR GEF AND RECOMMENDATIONS 44

ANNEXES 49

ANNEX A: Terms of Reference 49

ANNEX B: List of Contacts 56

ANNEX C: Descriptions of Funds Analyzed 63

ANNEX D: Comparative Advantages of Different Types of Funds 73

ANNEX E: Bibliography 75

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GLOSSARY OF ACRONYMS USED IN THE EVALUATION REPORT

BINP Bwindi Impenetrable Forest National ParkCBD Convention on Biological DiversityCITES Convention on International Trade in Endangered Species of Wild

Fauna and FloraCONABIO National Council for Knowledge and Use of Biodiversity (Mexico)CTFANP Technical Committee for the Natural Protected Areas Fund (Mexico)EAI Enterprise for the Americas InitiativeEFJ Environmental Foundation of JamaicaEU European UnionFANP Fund for Natural Protected Areas (Mexico)FCG Conservation Trust of GuatemalaFGV Getulio Vargas Foundation (Brazil)FMCN Mexican Nature Conservation FundFOCADES Central American Fund for Environment and DevelopmentFONAMA National Environment Fund (of Bolivia)FONANPE Fund for Natural Protected Areas Protected by the State (Peru)FPE Foundation for the Philippine EnvironmentFUNBIO Brazilian Biodiversity FundGEF Global Environment FacilityGEFSEC Global Environment Fund SecretariatGTZ German Agency for Technical CooperationINRENA Natural Resources Institute (Peru)IPG Inter-Agency Planning Group on Environmental FundsIUCN World Conservation UnionJCDT Jamaica Conservation and Development TrustJNPT Jamaica National Parks TrustLCSC Local Community Steering Committee (Uganda)MBIFCT Mgahinga-Bwindi Impenetrable Forest Conservation Trust (Uganda)MGNP Mgahinga Gorilla National ParkM&E Monitoring and evaluationNEF National Environment FundNGO Non-Governmental OrganizationOECD Organization for Economic Cooperation and DevelopmentPACT Protected Areas Conservation Trust (Belize)PIR Project Implementation ReviewPROBIO Brazilian Biodiversity ProjectPROFONANPE The Peruvian organization responsible for FONANPEQCBS Quality and Cost-Based SelectionRGOB Royal Government of BhutanSGP GEF Small Grants ProgrammeTMF Table Mountain Fund (South Africa)TNC The Nature ConservancyUNDP United Nations Development ProgramUNEP United Nations Environment ProgramUSAID United States Agency for International DevelopmentUWA Uganda Wildlife AuthorityWWF World Wide Fund for NatureWWF-SA World Wide Fund for Nature – South AfricaWWF-US World Wildlife Fund – United States

iv GEF Evaluation of Experience with Conservation Trust Funds_______________________________________________________________________________________________________________________________________________

EXECUTIVE SUMMARY

The GEF has supported conservation trust funds in several countries as a meansof providing long-term funding for biodiversity conservation. This evaluation wascarried out by the GEF Secretariat’s monitoring and evaluation unit in order to determineto what extent the potential advantages of these trust funds have been realized, how theconcerns expressed about them have been addressed, what conditions appear to benecessary for funds to function effectively, and what can be said from the experience todate about their impact on conservation and sustainable use of biological diversity.

The evaluation team analyzed the experience of 13 funds in an attempt to distilllessons learned and make recommendations to the GEF regarding future assistance toconservation trust funds. The evaluation focused on GEF-supported funds, as well as sixothers selected to give the portfolio geographical balance, provide opportunities toanalyze the relative advantages of funds of various sizes and types, and provide insightson particular aspects of interest, such as innovative funding mechanisms. It should benoted that the GEF experience to date is largely of trust funds implemented by the WorldBank.

This report is addressed specifically to the GEF, responding to concerns raised bythe GEF Council at its October 1996 meeting about the success of trust funds as a meansto achieve GEF purposes, that is, to finance the incremental costs of protecting globallysignificant biodiversity resources. There may be instances where a conservation trustfund is not appropriate in the GEF context but may still be a useful mechanism to addressnational conservation objectives. That notwithstanding, it is important to bear in mindthat the GEF is currently the major source of international funding available for thecapitalization of trust funds.

The evaluation showed clearly that there is no “typical” conservation trust fund.The funds’ structure, scope of activities, priorities, and procedures vary according to theirpurposes, and the situation of the country they serve. However, it was useful in analyzingthe funds’ experience to group them into two general categories. “Parks” funds supportspecific protected areas within a national protected areas system. (The majority of GEF-supported funds fall into this category.) “Grants” funds channel resources to targetgroups (typically NGOs and community-based organizations) for a broad range ofconservation and sustainable development projects, and often include the development ofcivil society institutions among their objectives. These two types of funds tend to havesignificant differences in their relation to national strategies, in their governancestructure, program management, and the ways and ease with which they meet GEFcriteria. This is discussed in detail in Annex D.

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SUMMARY OF FINDINGS AND CONCLUSIONS

The team found that conservation trust funds were often seen by their creatorsmainly as financial mechanisms that could take large amounts of money from debt swapsor international grants and “retail” them into smaller projects over long periods of time.Their boards of directors and staff reflected this emphasis. This indeed has been a majorrole played by the funds studied. But a key conclusion of the evaluation is that theoverall success of conservation trust funds depends on their ability to participate indeveloping national conservation strategies, to work with other public and privateagencies to develop agile and effective management approaches, and to nurturecommunity groups and other organizations becoming involved in biodiversityconservation for the first time. To succeed, trust funds need the governance structures,staff, and technical support to allow them proactively to influence their environment,monitor their results and learn from experience, maintain credible and transparentprocedures, and support participatory approaches to conservation and sustainabledevelopment.

The team found that trust funds have made impressive accomplishments in theareas of (a) supporting protected areas, including enabling the creation of new nationalparks, expansion of existing areas, and providing a basic “resource security” for theiroperations; (b) generating and managing financial resources; (c) enabling theparticipation of civil society institutions in resource conservation; (d) increasing the levelof scientific research applied to conservation issues; and (e) increasing public awarenessof conservation issues. Uncertainty remains, however, about trust funds’ ability todemonstrate long-term biodiversity conservation impact. In part, this is due to thedifficulty of measuring biodiversity impact, and of attributing impact to a particularintervention, especially over the short term. It is also true that trust funds generaterelatively small amounts of resources in relation to national conservation needs.

The two types of trust funds address these concerns in distinct ways. “Parks”funds have shown some ability to create a basic sense of “resource security” – theassurance that their basic operating costs and staff salaries will be covered – which, inturn, allows them to concentrate on conservation activities, attracting project funding, andcollaboration with communities and interested organizations. Several “grants” fundshave chosen a programmatic or geographic “niche” in which to focus their activities toachieve maximum impact.

The funds have generally met GEF criteria. Specifically,

• Most of the funds studied, and all of the GEF-supported funds, have focusedtheir programs to achieve global environmental benefits in the GEF’sbiodiversity focal area.

• All of the funds studied fit within GEF’s operational programs, usuallysupporting activities in several of the ecosystem types that define biodiversityoperational programs (forest ecosystems, mountain ecosystems, aridecosystems, freshwater and marine ecosystems).

vi GEF Evaluation of Experience with Conservation Trust Funds_______________________________________________________________________________________________________________________________________________

• All of the funds studied are country-driven (i.e., governments and othersectors show strong commitments to fund objectives), reflect broad publicinvolvement and participation, demonstrate innovation, and have leveragedadditional resources for global conservation.

• Although the funds examined were largely Pilot Phase projects not subject tothe incremental cost criteria, their programs illustrate ways that future fundscan meet these criteria: in the case of protected areas, through up-frontagreements on the percentage of support to be provided by the governmentand by the fund, and in the case of grants to NGOs and community-basedorganizations, through requirements for counterpart and matchingcontributions.

Trust funds have leveraged substantial additional funding for conservation. Thishas been true at the level of the fund itself – for example, the six GEF funds withoperating experience have raised more than $33 million in non-GEF contributions – andat the level of projects financed by the fund, which generally include substantialcounterpart contributions by the recipient organizations. However, only one of the fundsstudied has met its objectives for raising additional endowment funding. Most of themoney raised has been short-term project financing or 6-10 year sinking funds. This hasimportant implications for the design of future trust funds, as discussed in the team’srecommendations. (See especially recommendations 5, 6, and 7.)

The majority of the funds studied were set up as non-governmental institutionswith mixed public-private governing bodies. Non-governmental representatives on thegoverning body typically held the majority, with government often restricted to one ortwo seats. The team found several advantages of larger over smaller boards, in particular,the ability to establish working committees to deal with the diverse issues that funds mustaddress: financial management, fundraising, technical oversight, etc. Also, governingboards whose members are elected in their personal capacity, as opposed to formalrepresentation of organizations, agencies or sectors, tend to develop a stronger sense of“ownership” of the fund as an institution, and work more effectively to implement thefund’s mission. The more formally representative boards tend to see their role in terms ofallocating resources among their various agencies and sectors. Few of them do anadequate job of reporting back to their constituencies and keeping them involved.

Most of the funds studied have been able to keep their operating (non-program)costs in the 20-25 percent range (and some below 20 percent). However, there has beenno clear guidance from GEF or its implementing agencies on acceptable levels ofoperating costs, or the basis on which those costs are calculated. Most of the funds at thehigh end of the operating costs range were either (1) operating on such small endowmentincome that even minimal operating costs constituted a high percentage or (2) notsegregating different types of costs. Operating costs include both costs of anadministrative nature (project identification, selection, supervision) and the costsassociated with funds’ roles as institutions (e.g., costs of board operations, fundraising,constituency building, participation in policy dialogue). However, funds also incur costsfor program support such as technical assistance to grantees and institution building of

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the fund itself (staff training, technical support for development of policies andprocedures) that are not properly considered operating costs.

The GEF-supported funds have successfully applied an asset management andasset manager selection model developed by the World Bank. This includes developmentof investment guidelines that reflect a conservative risk strategy and portfoliodiversification; competitive, international selection of experienced, professional assetmanagers; and regular, active oversight by the fund’s board of directors of investmentperformance compared to standard benchmarks. The GEF-supported funds havegenerally established spending rules or practices that preserve capital over the long termby building cushions when returns are good for program support in times of marketdownturn.

The activities of all trust funds studied were consistent with nationalenvironmental or biodiversity strategies and/or action plans, and with the Convention onBiological Diversity. However, since the range of activities consistent with these broadguidelines is generally wide, it is difficult to imagine a trust fund supporting projectsoutside these frameworks. Trust funds in countries with participative strategies andplanning processes generally had good links, while other trust funds had limited contact,often due to the planning process being inaccessible, stalled, overturned by a succeedinggovernment, or otherwise of limited relevance.

Some countries have established a single, national trust fund; others, one or moretrust funds of limited geographical or programmatic scope. Where there is a clear needand strong local support (Uganda, South Africa) the site-specific funds have beeneffective. In general, except in the largest countries, the team observed a limited pool ofnational talent available to be tapped for governance, asset management, and policyoversight, and a limited pool of potential financial supporters for whom multiple fundswould compete. There appear to be significant advantages of scale in combining multiplepurposes or “windows” in a single fund.

Finally, trust funds are only one of an array of financial mechanisms andinstitutional arrangements used to address biodiversity issues. The team identified keyconditions indicating when a trust fund is likely to be the appropriate mechanism, andinfluencing the fund’s ability to function as an institution and carry out its mission(Chapter IV). In particular, the team identified several factors that affect calculations ofthe “opportunity cost” of establishing a trust fund, and when other approaches might bemore suitable (Box 10). It bears repeating, in conclusion, that trust funds are more thanfinancial mechanisms, and are generally appropriate when the issue to be addressed islong-term in nature. Where threats to biodiversity are serious and immediate, and can beeffectively addressed by the rapid mobilization of relatively large amounts of funding,traditional project funding may be more appropriate.

The recommendations arising from these findings and conclusions aresummarized in Box 1.

viii GEF Evaluation of Experience with Conservation Trust Funds_______________________________________________________________________________________________________________________________________________

Box 1: Recommendations

GEF FINANCING OF TRUST FUNDS

GEF should continue to finance conservation trust funds when the necessary circumstances aremet.

Four conditions are essential:Ø The issue to be addressed requires a commitment of at least 10-15 years;Ø There is active government support for a public-private sector mechanism outside direct

government control;Ø A critical mass of people from diverse sectors of society can work together to achieve

biodiversity conservation and sustainable development; andØ There is a basic fabric of legal and financial practices and supporting institutions (including

banking, auditing and contracting) in which people have confidence.

The initial capitalization, together with other resources available on a recurrent basis, shouldallow a meaningful program in the chosen area of focus, over a significant period, keepingoperating costs within a range of 20-25%. Trust funds should not be created withoutcommitments for this minimum amount of capital from the outset.

GEF support should be structured to provide incentives to encourage raising additional capitaland assistance in developing innovative capitalization approaches.

GEF and its implementing agencies should explore ways in which they could provide resourcesto sustain partnerships with trust fund “graduates” beyond the supervision period.

DESIGN ISSUES

The concept of conservation trust funds as independent organizations that are more thanfinancial mechanisms should be reflected in staffing patterns, governance structures, recruitmentcriteria for board members and staff, and technical support provided by outside donors andpartners.

GEF projects supporting trust funds should make provision for training and technical assistance.

GEF support for recurrent costs of protected areas through “parks” funds should include astrategy for increasing other resources for these costs and seeking ways certain activities orareas could become self-financed. Individual conservation, sustainable use, and educationprojects supported by “grants” funds should have prospects for sustainability and/or achievingtheir objectives in a reasonable period with no need for continuing funding.

GEF’s implementing agencies should apply clearer and more consistent guidance on operatingcosts.

GEF’s implementing agencies should consider the impact on trust fund agility andresponsiveness, as well as operating costs, of prescribing complex procurement or administrativeprocedures.

The GEF should continue to apply as standard practice for its capital contributions to trust fundsthe successful asset management and asset manager selection model developed by the WorldBank.

GEF support for conservation trust funds, especially for the creation of new funds, shouldencourage the development of partnerships with international NGOs with experience andrecognized abilities in this area, as well as the exchange of information among trust funds.

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Box 1: RecommendationsGEF and its implementing agencies should provide increased support to help trust funds definetheir intended impacts on biodiversity conservation and sustainable use and to developperformance indicators and simple, useful monitoring and evaluation systems to measureprogress toward these objectives and feed back experience into program improvements andmanagement decisions.

I. INTRODUCTION AND BACKGROUND

1. More than thirty environment funds havebeen created over the past decade. Sevenhave received GEF support and assistance; 15more are under design or active consideration.Generally, these funds aim to provide a long-term source of funding for biodiversityconservation and sustainable development.They are often seen as vehicles for bringingmany stakeholders together to prioritizeconservation actions that respond to localneeds. The Study of GEF’s OverallPerformance and the Study of GEF ProjectLessons, both conducted in 1997 as part of theSecretariat’s monitoring and evaluationprogram, recommended increased GEFsupport for conservation trust funds. 2. Others have raised questions about GEFfinancing of conservation trust funds.Concerns include the extent to which trustfund-supported activities meet GEF’s criteriaon global environmental impacts andincremental costs, the “opportunity cost” ofproviding relatively large sums of GEF grantsto capitalize endowment funds, and how toassure the performance of the funds isadequately monitored and evaluated. TheGEF Council in October 1996 requested theSecretariat to prepare a paper examiningissues related to trust funds and the experienceof World Bank-supported funds. Thisevaluation was designed to inform that paperand the further discussion on this topic by theCouncil at its October 1998 meeting. 3. This evaluation examined the experienceof 13 conservation trust funds, seven of whichreceived GEF support (in Bhutan, Brazil,Mexico, Peru, South Africa, Uganda, and theEastern Carpathians region of Poland,Slovakia and Ukraine). GEF projects inBhutan and central Europe have recently beencompleted, the projects in Uganda and Peruare approximately at the mid-point of theirimplementation, the project in Brazil has beenin operation for about two years, the Mexicoproject has just begun (in January 1998) to

operate under a restructured design whichinvolves a trust fund, and GEF activities havenot yet begun in the Table Mountain Fund inSouth Africa (approved in early 1998).Except in South Africa, these projects arefrom the GEF Pilot Phase. The other sixfunds were selected to complement thesample of GEF-supported funds with respectto size, type of program, sources of financing,and geographic distribution. 4. The evaluation was designed to answerthe following questions:

• to what extent have the potentialadvantages of environment trust fundsbeen realized in practice, and have theconcerns expressed about them beenminimized or overcome?

• what conditions are needed forconservation trust funds to succeedand what conditions are likely tohinder success?

• what evidence is there to date of theimpact of these funds on conservationand sustainable use of biologicaldiversity?

• what lessons and good practices canbe identified from this experience thatcould usefully be applied by othercurrent or future funds?

• what recommendations for GEFpolicies result from a review of thisfirst generation of conservation trustfunds that would help guide futureassistance to conservation trust funds?

5. To help answer these questions, theevaluation team looked at the strategic andnational context within which conservationtrust funds operate, their governance andmanagement structures, how funds set theirprogram objectives and manage their

2 GEF Evaluation of Experience with Conservation Trust Funds________________________________________________________________________________________________________________________________________________

activities to achieve them, and their asset andfinancial administration performance. Theteam also looked at disbursements and visitedprojects financed by trust funds. Thecomplete Terms of Reference for theevaluation is included as Annex A to thisreport. 6. The evaluation was carried out under thedirection of the GEF Secretariat’s monitoringand evaluation team. Scott E. Smith was theteam leader. The evaluation team includedthree GEF staff from the two implementingagencies that have supported conservationtrust funds--Martin Krause and Kevin Hillfrom UNDP and Kathleen Mikitin from theWorld Bank, Walter Lusigi from the GEFSecretariat biodiversity/international watersteam, and two outside consultantsindependent of the GEF, Ruth Norris andJohn Pielemeier. In addition, a referencegroup was formed to provide guidance to theevaluation team. Its 17 members includedtask managers and other implementing agencystaff who have experience with trust fundprojects, NGO representatives, current andformer officers of environment funds, amember of the World Bank’s evaluation staff,a member of the Convention on BiologicalDiversity secretariat, and representatives ofother donors with an interest in conservationtrust funds. 7. The evaluation team conductedinterviews with task managers and revieweddocuments (evaluations, supervision reports,project implementation reviews, projectdesigns and related analyses, other articlesand reports) on projects which include GEF-supported conservation trust funds. They alsoreviewed reports from international andregional fora on environment funds and otherdocuments relating to the experience withGEF-supported and other environment funds,and interviewed people knowledgeable aboutthis experience. Seven funds were visited insix countries: Brazil, Jamaica, Mexico, Peru,Slovakia (Eastern Carpathians) and Uganda.Local consultants participated in these field

visits in four countries: Lovelette Brooks inJamaica; Maria Allegretti in Brazil; SilviaCharpentier in Peru; and Maria Hajnalova inSlovakia. Following the fieldwork, the teammet to synthesize its findings, discussed themwith the reference group, and prepared a draftof the evaluation report. The draft report wasthen reviewed with the GEF implementingagencies and secretariat, the NGOcommunity, and others. Their input isreflected in this final report. 8. Chapter II of this report provides anoverview of the 13 trust funds included in theevaluation. (Summary descriptions of thefunds can be found in Annex C.) Chapters IIIand IV present the findings and conclusions ofthe evaluation team. Chapter V describes theimplications of these findings and conclusionsfor GEF and includes the team’s 13recommendations. 9. A list of the many people contactedduring the evaluation is contained in AnnexB. The evaluation team recognizes thevaluable inputs made to this study by all ofthese people, and wishes to warmly thankthem -– especially the extremely busy boardmembers, directors and staff of the sevenfunds visited for giving of their time tocontribute to our understanding and learning. 10. It is our hope that this evaluation reportwill be but one step in a continuing process oflearning about and from conservation trustfunds and the contributions they are making tothe conservation and sustainable use ofbiological diversity in their countries. Thisreport is only one of a series of productsenvisioned from this evaluation. Weencourage feedback from readers, yoursuggestions on the kind of information andcommunication media that would be mosthelpful to you, and/or additional experienceyou would like to pass on related toconservation trust funds. You can contact theGEF Secretariat’s monitoring and evaluationteam at [email protected].

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II. SUMMARY OF FUNDS INCLUDED IN THE EVALUATION

KEY POINTS

Generalizations about trust funds are difficult because the funds vary considerably inscope, size, and purpose.

It is, however, useful to divide the funds into two general categories: “parks” funds thatsupport protected areas, and “grants” funds that channel resources to target audiencesfor conservation activities. These two types differ in their relationships to nationalconservation strategies; their governance structures; the importance of representativeinvolvement of stakeholders; grant management procedures, financial managementstrategies, and the ways and ease with which they meet GEF criteria.

11. There are various types of environmentfunds. Those supported by the GEF havebeen set up as trust funds (in countries whoselegal systems are based on British or USmodels) or (in most civil law countries) asfoundations. In either case, these fundslegally set aside assets (e.g., GEF grants)whose use is restricted to the specificpurposes set out in a legal trust instrument.They can be structured financially in threeways. When an endowment is created, thefinancial assets of the fund are invested toearn income and only that income is used tofinance agreed-upon activities. Sinking fundsare designed to disburse their entire principaland investment income over a fixed period oftime, usually a relatively long period, e.g., 15years. Revolving funds provide for thereceipt of new resources on a regular basis forexample, proceeds of special taxes designatedto pay for conservation programs which canreplenish or augment the original capital ofthe fund and provide a continuing source ofmoney for specific activities. Anyenvironment fund can combine these featuresdepending on its sources of capital.

12. The evaluation showed very clearly thatthere is no “typical” trust fund. The funds’structure, scope of activities, and proceduresvary according to the purposes for which theywere set up and the situation of the countrythey serve. Some are national, some regional,some dedicated to a particular biodiversity

resource. Only two of the funds studied areactually national environmental funds (NEFs)in the sense of having a mandate to supportthe full range of activities, governmental andnon-governmental, included in nationalconservation plans or strategies – althoughmany conservation trust funds have quitebroad mandates and the definingcharacteristics that would qualify a fund as anNEF have not been agreed upon. The teamdid not visit any environmental fundscovering both “brown” and “green” agendas.

13. In describing the main features of thefunds studied, the team found it useful todivide the funds into two groups, according tothe types of activities they support, sinceseveral of the findings and conclusions applyparticularly to one group or the other. “Parks”funds support either national protected areassystems, or a specific protected area or groupof protected areas. “Grants” funds channelresources to target groups (typically NGOsand community-based organizations) for abroad range of conservation and sustainabledevelopment projects, not limited to protectedareas.

14. There are several important ways inwhich these two types of funds often differ.Annex D analyzes them in more depth, butgenerally they include:

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• their role within a national biodiversity orenvironment strategy;

• governance: the extent of governmentinvolvement and the importance ofrepresentative involvement ofstakeholders;

• grant management procedures foractivities financed;

• the ways and ease with which funds meetGEF criteria; and

• financial issues such as the fund’sstructure, life expectancy and resourcemobilization strategy.

15. Box 2 shows the typology of the fundsstudied -- at best an approximation, sinceseveral of the funds actually span the twogroupings -- together with information abouttheir founding dates and GEF funding. Abrief description of each of the funds studiedcan be found in Annex C.

Box 2: Funds Included in the Evaluation

Fund Name, Country Established Type of Fund GEF Funding Received

Mexican Nature Conservation Fund(FMCN)

1994 (parksfund 1997)

Initially grants,parks fund added

endowment ($16.5 million)

Fund for Natural Areas Protected by theState (FONANPE/PROFONANPE), Peru

1992 Parks endowment ($5.2 million)

Jamaica National Parks Trust (JNPT) 1991 Parks none

Mgahinga-Bwindi Impenetrable ForestConservation Trust (MBIFCT), Uganda

1995 Parks (grantswindow for bufferzones)

endowment ($4.3 million)

Foundation for Eastern CarpathianBiodiversity Conservation (Poland,Slovakia, Ukraine)

1994 Parks endowment ($300,000)

Protected Areas Conservation Trust, Belize 1995 Parks none

Table Mountain Fund, South Africa 1993 Parks endowment ($5 million)

Bhutan Trust Fund for EnvironmentalConservation

1991 Primarily parks fund endowment ($10 million)

Foundation for the Philippine Environment 1992 Grants none

National Environment Fund (FONAMA),Bolivia

1990 Grants fund withinlarger agency

project

Environmental Foundation of Jamaica (EFJ) 1992 Grants none

Brazilian Biodiversity Fund (FUNBIO) 1995 Grants sinking fund ($10 milliondisbursed; additional $10million committed)

Conservation Trust of Guatemala (FCG) 1991 Grants none

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III. FINDINGS AND CONCLUSIONS

16. To address the five key questions in itsterms of reference (see paragraph 4 above),the evaluation team examined several aspectsof conservation trust fund performance.These included the strategic and nationalcontext in which funds operate, theirgovernance structures, program management,financial and asset management, activitiesfinanced, and their relationship to GEF

programs, implementing agencies, andapplication of GEF criteria. This sectionbegins with a review of trust fundaccomplishments overall, and then presentsfindings and conclusions on each of thesetopics. Lessons, best practices, and otherpoints of special interest are highlighted inboxes.

A. ACCOMPLISHMENTS AND IMPACT TO DATE

KEY POINTS

Trust funds’ main accomplishments include:

Ø Supporting protected areas, including enabling the creation of new national parks,expansion of existing areas, and providing a basic “resource security” for theiroperations;Ø generating and managing financial resources;Ø encouraging the participation of civil society institutions in resource conservation;Ø increasing scientific research applied to conservation issues; andØ increasing public awareness of conservation issues.

Uncertainty remains about trust funds’ long-term conservation impact. Successful“parks” funds are catalytic in nature; successful “grants” funds have focused on programniches. Trust funds generate relatively small amounts of resources relative toconservation needs.

Biodiversity impact is closely correlated with effective demand for resources.

17. Conservation trust funds have recordedimpressive accomplishments during the first2-3 years that most of them have been inoperation. At the same time, their long termsuccess, and in particular their impact onbiodiversity conservation, is still not assured,and several of the funds examined havesuffered setbacks and disappointments.

18. Although conservation trust funds aregenerally seen as vehicles for achievingpositive impact on biodiversity conservationand sustainable use, the objectives describedin project documents for the first generationof GEF-supported trust funds often lacked

specifics about conservation outcomes. Box3 lists these objectives for the six GEFprojects for which there is significantimplementation experience. In each case, theoriginal project objectives focused, in oneform or another, on the establishment of thetrust fund mechanism itself. References tobiodiversity impact are in most cases indirect.

19. Two of these projects, in Bhutan andthe Eastern Carpathians, are now completed.In Bhutan, objectives have been formallyachieved as all key benchmarks were met.Most of the activities supported by the fundsince its inception were those designed as part

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of the original project. There has been littletesting yet of the ability of this trust fund toserve as a grant mechanism to supportconservation field activities. Given the abilityof the fund to attract endowment capital froma variety of sources and the attention that isnow being given to developing programmanagement procedures, the prospects forachieving this appear promising, however. Inthe Eastern Carpathians, project objectiveshave been only partially achieved. Althoughthe mechanism itself has been established, thefund’s extremely limited capital has notallowed it to become operational in more thanthe most basic sense. The trust fund hasrecently decided to hire a limited staff andmake a major fundraising effort. If this effortproves successful, prospects will improve.

20. Two other projects – in Uganda and Peru– are basically at the midpoint of theirimplementation period. The stated projectobjective for the MBIFCT in Uganda appearsto have been achieved, at least to the extentthat grants to community groups and supportfor park management and research have beenfunded and the trust fund’s capital has grownsubstantially through reinvestment of interestincome. In Peru, PROFONANPE has beenextremely successful at serving as amechanism for debt swaps. With the benefitof hindsight, the objective of strengtheningthe capacity of the government NaturalResources Institute (INRENA) through aprivate trust fund appears to have been overlyambitious, and is not likely to be achievedunder present circumstances. The viability ofPROFONANPE as a long term andpredictable source of financing themanagement of priority protected areas hasbeen partially achieved, although limited byits inability to date to attract more endowmentcapital, and by government domination of itsgoverning board and a difficult transitionbetween executive directors. However,PROFONANPE now seems poised to moveforward effectively, with recent legislationchanging the composition of the government’srepresentatives on the board and a newdirector who is actively building bridges tothe private sector and seeking to diversify itsprograms.

21. The remaining GEF conservation trustfund projects, FMCN/FANP in Mexico andFUNBIO in Brazil, appear to be off to anexcellent start after a major restructuringaway from government execution toimplementation through the fund (Mexico) ora protracted design period (Brazil). Both ofthese projects have more specific biodiversityconservation objectives, and in this area therehas been less measurable progress to date.

22. Beyond their specific objectives, theevaluation team noted a number of significantaccomplishments achieved by these GEF-supported conservation trust funds and theothers included in the study:

• National, permanent civil societyinstitutions focused on biodiversity havebeen created and gained credibility,bridging the public and private sectors(most funds).

• There has been broad participation ofstakeholders in the design and operationsof trust funds, and they demonstratestrong “ownership” of the funds (mostfunds). However, continuing to get thisinput on a systematic basis will requirework.

• A successful model for asset managementcharacterized by good returns oninvestments, transparency and integrity isused by most funds.

• Very highly qualified people have beenattracted to lead trust funds (boards andstaff). The excellent reputations of boardmembers, from all sectors, havestrengthened a generally positive publicimage of most trust funds.

• Additional financial resources have beendirected to biodiversity conservationactivities. Funding has come fromcontributions to endowment or sinkingfunds (especially in Bhutan and Peru),complementary project financing, and insome cases through additionalgovernment funding (Mexico).

• New national parks have been created andpark systems expanded. The reliability offinancing from trust funds has encouraged

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even budget-strapped governments toauthorize new protected areas (one newpark in Ukraine, creation/expansion ofpark system in Jamaica).

• A basic sense of “resource security” hasbegun to be felt by managers in someimportant protected areas. This allowsthem to focus on broader conservationissues (and additional sources of support)beyond just trying to meet basic staff andoperating costs. It also leads to greaterstaff continuity, an important ingredient tobuilding relationships with stakeholdersessential to participative management.(Mexico, Jamaica, Uganda).

• Trust funds have established effective,efficient and transparent mechanisms fortransferring resources to field activities,and have encouraged new managementregimes (NGO partnerships) in protectedareas (Mexico, Bolivia, Jamaica, Belize).

• Trust funds have helped governmentagencies and NGOs improve their abilityto carry out field activities and get projectfunding. (Mexico, Jamaica, Uganda).

• Scientific work has been carried out,including resource inventories, zoningand mapping, that help measure changesin biodiversity (Uganda, Brazil, Mexico,Eastern Carpathians).

• New NGOs have been established and theroles of existing NGOs expanded. Thefunding opportunities provided by theBhutan fund stimulated the creation andexpansion of that country’s first twoNGOs. EFJ is the main source of projectfunding for most young environmentalNGOs in Jamaica.

• Certain types of biodiversity projects havehad access to grant funding for the firsttime. This is especially true for projectswhich tend to fall between sectoral cracksor are new areas of endeavor. In Brazil,FUNBIO has funded agro-biodiversityprojects which the agriculture and

environment ministries saw as beyondtheir responsibility, and has helped findfunding for medicinal plant projectswhich the ministry of health would notfund.

• Environmental education activities havebeen financed. In Jamaica, whereconservation awareness was low, this hasalmost certainly had a cumulative positiveimpact on community involvement asreflected in the growing number of smallNGOs which now embrace environmentamong their objectives.

23. In addition, the team observed a fewinitial examples of how conservation trustfunds have had upstream impact on policy orinstitutional operations:

• FMCN/FANP (Mexico) participates in thereview of protected area annual operatingplans. Along with the Mexican parkservice, it receives and assesses fieldreports and makes recommendations forimprovements. It is using its financialrole to advocate for more participatorypark management. FMCN also helpedfinance and participated in a process thatresulted in the identification of thepriority areas for biodiversityconservation in Mexico. Funds inGuatemala and Bolivia have participatedin national biodiversity strategydevelopment.

• Although FUNBIO in Brazil is arelatively new institution, some of itsinstitutional procedures are already beingreplicated. A government fund useselements of FUNBIO’s grant reviewprocess. NGO board members are tryingto replicate the rigorous and efficientsystem of operations established by theFUNBIO board.


Box 3: Objectives of GEF Conservation Trust Fund Projects

A. FUNDS INCLUDED AS COMPONENTS OF LARGER PROJECTS

BRAZILIAN BIODIVERSITY FUND (FUNBIO)

1. Provide long-term and sustainable support for conservation and sustainable use ofbiological diversity in Brazil.

2. Support the establishment and development of a Brazilian Biodiversity Fund thatwould administer a long-term grants program to promote conservation andsustainable use of biodiversity.

FOUNDATION FOR EASTERN CARPATHIAN BIODIVERSITY CONSERVATION (POLAND,SLOVAKIA, UKRAINE)

Establish a three-country mechanism through the development of an international trustfor biodiversity protection whose income would be used to protect the biodiversity of thistransboundary area.

B. “STAND-ALONE” FUNDS

BHUTAN TRUST FUND FOR ENVIRONMENTAL CONSERVATION

1. Assist government of Bhutan in conserving its forestry and preserving rich biologicaldiversity.

2. Test the feasibility of trust funds as a mechanism for providing long-term andsustainable support for conservation of biological diversity

MEXICAN NATURE CONSERVATION FUND (FMCN)

1. Protect unique biodiversity in eligible biosphere and special biosphere reserves2. Strengthen protected areas management at the reserve level3. Promote local participation, including indigenous communities, in the implementation

of protected areas operating and management plans4. Ensure long-term recurrent cost financing for core protection and conservation

activities

FUND FOR NATURAL AREAS PROTECTED BY THE STATE (FONANPE), Peru

1. Provide a long-term and predictable sources of funding for the protection of Peru’sbiodiversity through the establishment of a trust fund, the income of which would beused for financing the management of priority protected areas

2. Improve the Natural Resource Institute’s (INRENA’s) capacity to protect andmanage Peru’s protected areas

3. Provide the country with a reliable institutional mechanism to channel debt donationsfor sustainable development and conservation through bilateral and commercialdebt-for-nature swap agreements

4. Test the viability of trust funds as mechanisms for providing long term andsustainable funding for biodiversity conservation

MGAHINGA-BWINDI IMPENETRABLE FOREST CONSERVATION TRUST (MBIFCT), UGANDA

Support biodiversity conservation in the BINP and MGNP both directly, by providingincremental support for park management and related research activities, and indirectly,by funding grants to help local community groups develop economic activities which willprovide alternative means of meeting needs which were traditionally met by harvestingforest resources.


24. These accomplishments are reasonablyimpressive, especially for new organizations.But is this enough? At what cost were theyachieved? Approximately $56 million hasbeen committed by the GEF to the six trustfunds with implementation experience,although $10 million of this amount (inBrazil) has not yet been disbursed. That said,at least this amount is actually still availablein endowments or sinking funds in these sixinstitutions from the GEF grants, as areadditional contributions (some $33 million tothose six funds) made by other donors.

25. Comparisons of the success ofconservation trust funds with other GEFprojects were beyond the scope of thisevaluation. The cost-efficiency of donorinvestments in conservation trust funds isparticularly difficult to measure because thestream of benefits from trust fund investmentsgoes on for long periods, or in the case ofendowments, potentially forever. However,the evaluation team found that the sample ofGEF trust funds projects has performed atleast as well as the overall GEF biodiversityportfolio, as summarized in the 1997 ProjectImplementation Review. 26. It is clear, nevertheless, that very littlecan be said about the impact funds are havingon actual conservation or sustainable use ofbiodiversity on the ground. Clear definitionin project design of the problems addressedwould have been helpful. Also, measuring thebiodiversity impact of any program is difficultprimarily because indicators of biodiversitystatus are hard to measure and typicallychange very gradually over long periods oftime. Finally, it is very hard to attributebiodiversity impacts to a particular activity inmany cases, so the impact of a fund’sprograms may not be distinguishable from theimpact of others. So far, with the exception ofFMCN in Mexico, addressing the issue ofbiodiversity impact has not been a priority forthe funds examined. Most have not definedspecific biodiversity impact objectives,indicators, or monitoring and evaluationsystems.

27. In general, even the resources of well-endowed conservation trust funds are smallrelative to the broad challenges of biodiversityconservation. “Parks” funds typically do nothave enough resources to fully address themanagement and conservation problems ofthe protected areas on which they focus. Thenational “parks” funds examined are, at best,able to reach only a small portion of theircountries’ protected areas with significantbiodiversity resources. And while ensuringthat a basic level of staff and operating costsare provided annually is important, it is notenough to guarantee long-term conservation. 28. For “parks” funds to have significantimpact, their resources must be regarded ascatalytic, not just a reliable, continuing sourceof funding for recurrent costs. Their supportneeds to be framed within the broadermanagement plans for the protected area orsystem, and needs to actively seek to bringother resources to bear on conservationactivities. Most of the “parks” funds includedin the evaluation have not yet reached thispoint. In fact some, such as PROFONANPEin Peru, have been deliberately discouragedby the government from looking at how theirfunding relates to and supports the broadermanagement and operating plans of the parksit supports. 29. The biodiversity impact of “grants”funds appears to be a function of the fund’sfocus on a specific set of problems or programareas. All of the “grants” funds studied havevery modest resources compared to the hugechallenges that they might address. Most wereoverwhelmed by responses to initial requestsfor proposals, and have gone through asequence of events leading to a greater focusof their limited resources on one or moreprogram “niches.” This process occurredafter four years of EFJ operations and onefunding cycle in Brazil, and began in thesecond year of FMCN’s grant program inMexico. Program focus has not yet occurredin Bhutan and is still quite broad in thePhilippines. As mentioned above, even“grants” funds that have tightened programfocus still have not defined indicators forconservation impact, although several are


beginning to employ the logical frameworkmethodology.

30. The evaluation also found that thebiodiversity impact of conservation trustfunds is closely correlated with the effectivedemand for resources. The operationalcapacity of NGOs, businesses, academic andgovernment institutions is limited in allcountries studied. To achieve impact, most

“grants” funds need to adopt (a) a long-rangestrategy of building the capacity of usergroups through small grants and technicalsupport; (b) a more immediate strategy ofproviding fewer grants, to institutions alreadyrelatively strong, or (c) a combination of thetwo approaches. The long-term strategyrequires that institution-building activitieslead to a defined biodiversity impact.

B. CONSERVATION TRUST FUNDS ARE MORE THAN FINANCIAL MECHANISMS

KEY POINTS

Trust funds are not simply financial mechanisms, but must be viewed as institutions thathave several roles to play, in addition to channeling funds. These include roles as:

Ø key actors in the development of national conservation strategies;Ø technical experts who can work with public and private agencies to develop agile and

effective management approaches; andØ in some countries, capacity-builders and nurturers of an emerging group of non-

governmental organizations becoming involved in biodiversity conservation.

To succeed, trust funds need more than financial management systems and skills. Theyneed governance structures, staff, and technical support to enable them to proactivelyinfluence the environment in which they work, and to maintain transparency and supportfor participatory approaches to conservation and sustainable development.

31. Conservation trust funds were initiallyestablished in the late 1980s when relativelylarge amounts of money became availablethrough debt swaps. They were seen asinnovative financial mechanisms to absorbthese “lumps” of capital, invest and managethe resources wisely, and disburse appropriateamounts to cover recurrent costs of nationalparks or small grants to NGOs. The designfocus was primarily on establishing thenecessary financial and legal mechanisms andasset management systems, and ensuringadequate flows of resources to coveradministration and program activities.

32. It was generally assumed that otherissues were secondary or would need lessattention: (a) funds would follow nationalstrategic and policy directives, (b) necessarygovernance structures could be established,

(c) effective demand for grants would existand grant-making procedures could be easilyestablished; and (d) highly skilled personnelcould be attracted to the board and staff of thetrust fund.

33. The evaluation team found that thefinancial management aspects of GEF trustfunds have been almost universallysuccessful. Asset mangers are achievinginvestment results above their benchmarks,and revenues are being efficiently passedalong in small amounts. However, theexperience of the past decade has clearlydemonstrated that trust funds have alsoneeded to focus their attention on the otheringredients noted above.

34. National environment or biodiversitystrategies, or master protected area


management plans, did not exist in manycountries (Mexico, Jamaica, Peru, Bolivia,Brazil) and trust funds had to establish theirown strategic priorities and interact regularlywith government and other organizations tohelp focus their programs.

35. Some of the boards established for theearly conservation trust funds wereconstructed more to allocate resources amongvarious stakeholders than to governindependent institutions. As a consequence,they did not have the membership needed forthis broader role. In all countries,governments had little experience workingwith independent institutions such as trustfunds. Most trust funds were governed byrepresentatives from several sectors of society(the NGO community, the private businesssector, government and academia) in acompletely new arrangement. Governancedemanded a good deal of time and creativityfrom all concerned parties: the board, theexecutive secretariat, and the donors.

36. Many funds found that effectivedemand for their grants did not meetexpectations. “Parks” funds initially had towork with government administrativeprocedures that were not appropriate for fieldactivities involving a large number of small,difficult-to-invoice purchases. The number ofNGOs that could prepare and manage goodproject proposals was limited (Jamaica,Bhutan, Mexico), and trust funds often had toprovide or arrange for technical support topotential grant recipients. Establishingefficient grant application and review

procedures did not come easily. Severalfunds (Jamaica, Brazil, Mexico, Uganda,Philippines) were initially overwhelmed withpoorly written proposals. Transparentprocedures to review and approve grants werenot commonly available for simple replicationand needed to be established. An overlay ofdonor requirements regarding procedures alsocomplicated the project selection process.

37. Many funds were not adequatelystaffed to carry out their many functions.Typical staffs were largely administrative andfinancial personnel. Most funds found theyalso needed technical capacity to establish aprogram strategy, direct project selection,monitoring and evaluation, and have a voicein national policy. Staff also neededknowledge and skills related to working witha multisectoral board, fundraising, andcommunications.

38. In summary, trust funds set upprimarily as financial channels tended to beinadequate to respond to the range ofchallenges they encountered. Trust funds arecomplex institutions that must carry out avariety of functions simultaneously. Theymust function as self-governing institutions,as grant-making organizations, and asparticipants in the conservation policy arena.In addition, conservation trust funds haveoften had to strengthen the capacity ofrecipient organizations. To succeed,conservation trust funds need to be more thanjust financial mechanisms.


C. GEF PROGRAM LINKAGES AND MEETING GEF CRITERIA

KEY POINTS

Most of the funds studied, and all of the GEF-supported funds, have focused theirprograms to achieve global environmental benefits in the GEF’s biodiversity focal area.

All of the funds studied fit within GEF’s operational programs, usually supportingactivities in several of the ecosystem types that define biodiversity operational programs(forest ecosystems, mountain ecosystems, arid ecosystems, freshwater and marineecosystems).

All of the funds studied are country-driven, reflect broad public involvement andparticipation, demonstrate innovation, and have leveraged additional resources forglobal conservation.

Although the funds examined were largely Pilot Phase projects, their programs illustrateways that future funds can meet GEF’s incremental cost criteria: in the case of protectedareas, through up-front agreements on the percentage of support to be provided by thegovernment and by the fund, and in the case of grants to NGOs and community-basedorganizations, through requirements for counterpart and matching contributions.

39. This section presents the findings andconclusions of the evaluation team on threeareas related to GEF financing and support forconservation trust funds: (a) how well trustfunds fit with the special nature and criteria ofthe GEF; (b) how trust funds relate to otherGEF-financed activities; and (c)implementing agency oversight andsupervision of trust fund projects. GEF CRITERIA 40. GEF has defined a number of specificcriteria which projects must meet to beeligible for financing. GEF projects, bydefinition, support the agreed incrementalcosts of projects designed to have globalenvironmental benefits in one of four focalareas, in this case conservation andsustainable use of biological diversity. GEFhas described ten operational programswithin which its projects must generally fit.In addition, GEF emphasizes that its projectsmust be country-driven and reflect broadpublic involvement and participation. As anew financial mechanism with limitedresources relative to the problems it addresses,GEF places a premium on projects which are

innovative and ideally leverage substantialadditional resources for global environmentalobjectives as a result of GEF support. 41. Of the 13 trust funds studied for thisevaluation, seven have received GEF support(in Bhutan, Brazil, Eastern Carpathians,Mexico, Peru, South Africa and Uganda).Implementation of all of these projectsappears to be generally consistent with GEF’sobjectives and criteria. However, except inSouth Africa, these projects were approvedduring GEF’s Pilot Phase, before the fullelaboration of operational programs andcurrent policies and procedures, especiallywith respect to defining global environmentalbenefits and incremental costs. Therefore, itis not appropriate to evaluate them againstthese standards. Nevertheless,implementation of these projects, and theactivities supported by them and otherconservation trust funds, provide insights intohow well GEF’s current eligibility criteriamight be applied to similar funds in the future. 42. With respect to achieving globalenvironmental benefits, “parks” funds whichaim directly to support specific protected


areas or protected area systems easily meetthis standard as long as the global significanceof biodiversity is a selection criterion for theareas which the fund supports with GEFresources. The GEF projects which capitalize“parks” funds--Eastern Carpathians, Mexico,Peru, South Africa, Bhutan, Uganda--all meetthis test. One potential issue with funds ofthis type regards support for projects whichrespond to community initiatives in andaround protected areas. As the team observedin Uganda, community priorities are notalways clearly for those activities whichproduce global environmental benefitsdirectly. Therefore, there may be sometension in the short term between local andglobal priorities when funds are responsive tostakeholder input. 43. For “grants” funds, meeting the globalbenefits criterion is more challenging, andrequires that the types of activities for whichgrants are made, or the geographic areas inwhich they will be carried out, are determinedto be of global significance in terms ofbiodiversity. This is clearly possible.FUNBIO in Brazil, the only “grants” fund inthe current GEF portfolio of trust fundprojects, has defined five categories for itsgrants, all of which are consistent withpriorities identified in the Convention onBiological Diversity, including sustainableuse and agrobiodiversity. In addition, FMCNin Mexico, using non-GEF resources, operatesa major grants program which is focused onareas determined to be of high priority forbiodiversity conservation. The Foundationfor the Philippine Environment also focusesgrants in priority conservation areas. 44. A simple, common-sense approach toincremental costs can also be appliedrelatively easily to activities supported by“parks” funds. This would require that trustfund contributions be additional to, and notsubstitute for, resources that others (includingthe government) have already been providingfor the management of globally significantprotected areas. That this can be done isdemonstrated by experience in Mexico, wherethe government is financing five core staffand an increasing share of basic operating

costs of the ten protected areas receivingassistance from FMCN/FANP, supported byGEF. Experience to date in Peru and Ugandais not as clear, however. There is someevidence that PROFONANPE resources inPeru are financing activities previouslysupported by government and others in someprotected areas. In Uganda, resourcesgenerated by MBIFCT are actually less thanthe amount of visitor fees generated by thetwo parks where its activities are focused. Allof these fees are treated as general revenue bythe parastatal wildlife agency. Only a verylimited amount finds its way back intobudgets for park management andsurrounding community development inMgahinga and Bwindi parks. As with theglobal environmental benefits criterion,incremental costs are likely to be moredifficult to define for activities supported by“grants” funds. 45. Ideally, these basic GEF criteria relatingto global significance of biodiversity andassessment of incremental costs would besatisfied in advance for the entire program ofactivities to be financed by a GEF-supportedconservation trust fund as part of the projectdesign. The fund’s operational manual(which describes its objectives and theeligibility and selection criteria for activities itsupports) should reflect the focus on globallysignificant biodiversity and projects in whichthe GEF resources were matched by local ornational contributions in cash or in kind. Ifthis could not be done, and if either of thesetests would have to be applied for individualfund-supported activities, then simple,straightforward and understandableprocedures would be essential. The trustfund would also require resources beyondGEF contributions to finance complementaryand/or “baseline” activities not eligible forGEF financing. 46. All of the conservation trust funds studiedare very much country-driven. Thegovernance structures of trust funds reinforcecountry ownership in a way that traditionalproject implementation arrangements often donot. Similarly, trust funds have generallybeen very good vehicles for advocating for


greater stakeholder involvement andparticipation. In two Latin Americancountries where the GEF has supported“parks” funds, these funds have been effectivein encouraging government agencies toconsult more actively and widely withcommunity groups and others with a stake inthe management of protected areas, often inthe face of government reluctance. While inboth cases improvements are still possible,significant if gradual progress is being madeand, in the process, government attitudesmore generally may be changing. 47. While some of the conservation trustfunds studied have a focus on one or a fewspecific protected areas that would fit one ofGEF’s four biodiversity operationalprograms, most support activities in manyecosystems. Examples include several“parks” funds that support park systemswhose individual protected areas includemountain, forest, and wetland ecosystems;and “grants” funds that have chosen thematicniches such as agro-biodiversity or medicinalplants, that encompass many ecosystems.Therefore, strict application of a policy thatGEF projects must fit only one operationalprogram, rather than the entire biodiversityoperational strategy, would distort thecountry-driven project selection process andadd another layer to already complex programadministration, and therefore not beappropriate for trust fund projects. 48. The evaluation found that conservationtrust funds are mechanisms that arepotentially innovative and flexible, able torespond to local conditions with agility.However, as noted in the programmanagement section (III. F), in practice muchof this potential is not yet being realized, astrust funds struggle under the burden ofcomplex administrative and accountingprocedures, some of them imposed by theGEF implementing agencies and other donors.The funds studied for this evaluation,particularly in Bhutan, Peru and Uganda, havedone very well at attracting additional fundingfor biodiversity conservation as a direct resultof GEF support, even if much of it has notgone into permanent endowments. In fact, the

evaluation team has documented an additional$33 million in resources that have beenmobilized beyond the $46 million in GEFdisbursements to date to six funds (excludingSouth Africa, which has just begunimplementation). LINKAGES TO OTHER GEF ACTIVITIES 49. Most GEF conservation trust fundprojects to date have been implementedthrough the World Bank, although UNDPplayed an important role in the design of theBhutan trust fund; a UNDP project helpedestablish another conservation trust fund, andUNDP has several new trust fund projectsunder design. UNDP’s GEF CoordinationUnit was instrumental in forming theInteragency Planning Group onEnvironmental Funds in 1993 and hasprovided leadership and services to this groupsince that time. The IPG is a broad-basedgroup representing multilaterals, bilaterals,foundations, and NGOs which (a) promotescommunication among environmental fundsand donors and (b) sponsors capacity-buildingactivities for funds. GEF resources from bothUNDP and the World Bank have supportedIPG activities.

50. In general, GEF-supported conservationtrust funds appear to have only limitedlinkages to other GEF programs or enablingactivities in their countries. Sometimes theyare the only regular GEF biodiversity projectin implementation. Knowledge of the fundsby GEF national focal points and in-countryUNDP offices varies considerably. In oneLatin American country, UNDP has recentlyhad a number of productive contacts with theGEF-supported fund, while in another thelocal UNDP office seemed basicallyunacquainted with the fund even though itwas considering new GEF projects in thesame area in which the fund was working. InPoland and Ukraine, the Eastern Carpathiansfund was basically ignored by the GEFimplementing agencies from birth. 51. An exception to this general picture is afrequent linkage observed between trust fundsand the GEF Small Grants Programme. In at


least four of the funds studied--in Mexico,Belize, Guatemala and the Philippines--thereare on-going relationships. They includeSGP-funded activities carried out inconjunction with protected area managementactivities supported by the trust fund, andcoordinated support and/or co-financing tocommunity organizations and NGOs fromboth SGP and the fund. There is a formalagreement between the Foundation for thePhilippine Environment and the Small GrantsProgramme whereby the SGP screens andselects projects for FPE funding. PACT inBelize and MBIFCT in Uganda arerepresented on SGP national steeringcommittees. Conservation trust funds are alsoincreasingly involved in discussions withorganizations interested in submittingmedium-sized grant proposals for GEFconsideration. These proposals oftencomplement fund-supported activities.

IMPLEMENTING AGENCY OVERSIGHT ANDSUPERVISION

52. The approach of the implementing agencyto monitoring, overseeing and supervisingconservation trust funds has a significanteffect on a fund’s success. Task managerscannot be expected to be trust fund specialists.Furthermore, trust fund projects are complexand involve many different elements, and noone task manager is likely to be able tobackstop them adequately alone. Therefore,those who bring in specialized expertise insupervision in a context of mutualcommitment by the fund and the donor tobuild expertise and find solutions have beenmore successful. Supervision which the fundfinds facilitative and supportive of theachievement of program objectives, whichhelps the fund operate flexibly but responsiblyas an independent organization, and whichreinforces the leadership and accountability

role of its governing body, brings positiveresults. Examples of this approach areillustrated in Box 4 below. Indeed,“supervision” missions have sometimes beena primary source of guidance on importantissues confronting a fund, such as assetmanagement or fundraising. On the otherhand, an approach in which task managersinvolve themselves in the details ofaccounting, compliance with implementingagency procurement procedures, and routinereporting--which was also reported to theevaluation team in some cases--has been lessproductive.

53. The evaluation team concluded that, inmost cases, if trust funds are given adequateorganizational support, a supervision periodof five years is likely to be enough to assurethat a functioning governance system is inplace, that several grant cycles have beencompleted, and that the fund is able tocontinue to manage its program and financesadequately on its own. Devoting moreexplicit attention and resources to institutionalstrengthening of GEF-supported funds thanhas been provided to date would increase thechances that this supervision period would besufficient.

54. Several of the funds visited expressed adesire to maintain a continuing partnershiprelation with the implementing agency beyondthe “official” supervision period, focused onsharing of experience and lessons learned.There would also be value for the GEF inestablishing an ongoing monitoringrelationship with conservation trust funds,since the time required to documentbiodiversity conservation impacts generallyexceeds the normal supervision period.


Box 4: Best Practices in Implementing Agency Oversight andSupervision

The tasks involved in managing a trust fund are varied and complex, and usually atleast some are outside the scope of the task manager’s own expertise. Several WorldBank task managers have responded to this challenge by using the supervisionprocess to bring in experts from a variety of disciplines to assist the trust fund.Examples:

• Luis Constantino, task manager for the Mexico Natural Protected Areas Fund,included consultants experienced in fundraising and ecotourism in the firstsupervision mission, and experts on mining and fisheries for the second mission.These consultants helped the fund analyze the potential costs, benefits, feasibility,and probable outcomes of activities under consideration. In some cases, theysuggested modifications to projects or different types of projects better suited toachieve similar objectives. The fund considered their reports and briefings veryvaluable to its decision making process.

• Agi Kiss, task manager for the Mgahinga-Bwindi Impenetrable ForestConservation Trust in Uganda, brought in a financial management expert fromWWF-US who had been involved in the design of the Bhutan fund, to assistMBIFCT develop its asset management guidelines and supervision procedures.The same expert joined the midterm review team, and during the review,presented a workshop on asset management for members of the MBIFCT board.

D. STRATEGIC AND NATIONAL CONTEXT

KEY POINTS

The driving forces for setting up trust funds have included national governments, localconservation leaders, international conservation NGOs, and donors. Success ininvolving the business sector has been modest.

Trust funds are generally consistent with national environmental plans and strategies or,when no strategy exists, with the Biodiversity Convention. They vary in the degree ofdirect linkage.

Some trust funds have contributed significantly to the development of nationalconservation policies and strategies.

Trust funds’ overall contribution to biodiversity funding in their country or region isgenerally small in relation to the need, but targeted to priority areas or problems.Financial leveraging opportunities have rarely been fully realized.


DRIVING FORCES

55. The international conservationcommunity, particularly NGOs, have beenstrong advocates of trust funds. But nationalgovernments, local conservation leaders, anddonors have also proposed and helped set uptrust funds. In Bhutan, a government officialinitiated the idea of a fund (using thePhilippines as a model), and quickly receivedsupport from a leading NGO and UNDP. TheBolivian government invited an internationalNGO to assist in establishing a fund. InBrazil, the availability of GEF fundsencouraged government and the nationalNGO community to work together to establisha fund. Donors have played a key role inensuring that trust funds received initialcapital through direct provision of resources(GEF, several European donors, USAID) andby negotiating national governmentcontributions linked to debt reduction (USTreasury Department, GTZ). Local NGO andgovernment officials, as well as businessleaders, participate in trust funds as boardmembers. In some countries (Jamaica, Brazil,Mexico), representatives of the academiccommunity are also included.

56. The key supporters of “parks” fundsinclude government and NGOs closelyinvolved in elements of the protected areasystem (e.g., park management, programs inbuffer zones). The critics of “parks” fundstend to be NGOs and other groups associatedwith protected areas not benefiting. Anexample is the Jamaica National Parks Trust,whose only NGO board members representorganizations managing two existing nationalparks. Several NGOs with plans to managenew national parks hope to establish new,park-specific trust funds rather than beminority members of the JNPT board.

57. The main supporters of “grants” funds arethe potential users. Often a “grants” fund isthe only flexible source of funds accessible tolocal and national NGOs, over which they canexert policy and management influence. Theteam observed two cases in whichgovernment views a “grants” fund as “the

NGO fund” and tends not to play an activerole. Critics also include NGOs not benefitingfrom the fund, and environmentalists whowould prefer to see resources concentrated toachieve impact on a priority problem.

58. The business sector has played an activerole in many trust funds, mostly ingovernance and as a source of expertise forfinancial management. Most funds have hadno trouble in recruiting business leaders andrepresentatives of business organizations(Chamber of Commerce, national businesscouncil, tourism industry association) to theirboards. These representatives have playedeffective leadership roles on board investmentcommittees. Except in Guatemala, they havebeen less effective in establishing fundraisingstrategies and in raising funds among theircolleagues.

59. In two cases, this basic business sectorrole was amplified. In Belize, the tourismindustry association was an initial supporterof establishing a new trust fund and currentlyserves on the board, although there was aperiod when its support was withdrawn overthe issue of the level of the tourist tax.FUNBIO was established in Brazil with anexplicit objective of encouraging participationof the business sector in biodiversityconservation. Four board seats (of 18) are setaside for business representatives. The boardchairman is a highly respected banker. Thefirst call for proposals encouraged projectswhich demonstrated a partnership between thebusiness sector and government, an NGO, oran academic institution. Much of the businesssector (including larger enterprises whichFUNBIO hopes to target) has, however, foundFUNBIO grants too small and the FUNBIObureaucracy too heavy to warrant theirinterest. FUNBIO is now designing a newpartnership program to attract this targetgroup.

60. Trust funds proposed in several countriesin the late 1980s were seen primarily asfinancial mechanisms to channel proceedsfrom innovative fundraising strategies such asdebt-for-nature swaps into protected areas. In


the period leading up to the UN Conferenceon Environment and Development, trust fundswere proposed as means to provide resourcesfor the implementation of nationalenvironmental plans and Agenda 21. Most ofthe conservation trust funds reviewed in theevaluation were established as integral partsof broader strategies. Examples of theselinkages include:

• The Bhutan fund is virtually synonymouswith that country’s nationalenvironmental strategy, having financedmany of the key components.

• FONAMA (Bolivia) provided bothintellectual leadership and financialsupport to a consultative process for anational environmental strategy –although the strategy was not adopted bythe government succeeding the one thatcreated the fund.

• Jamaica’s national parks trust fund wasdesigned as an element of a broad USAIDproject that supported a national protectedareas strategy and strengthening theconservation NGO community.

• The Belize fund was conceived as afinancial mechanism to provide recurrentcosts of a national protected areas system,and retains that objective among others –all consistent with national environmentalpriorities – developed during design.

• FUNBIO in Brazil was funded by GEFthrough the same project which supportedthe development of a national biodiversitystrategy, although the synergy betweenthe two components has not been as greatas expected.

61. There are some differences between“parks” funds and “grants” funds in linkagesto national strategies. Since the governmentowns the land where “parks” funds operate, itis essential that the fund work cooperativelywith government and support a nationalstrategy when it exists. Advantages includeincreased legitimacy, complementary fundingfrom government budgets, and sometimessupport in fundraising. Working within such anational strategy also provides opportunities

for trust funds to have upstream impact. InMexico, for example, FMCN participates inthe review of protected area annual operatingplans, and has worked with the park agency todevelop a more participatory mode of parkmanagement, adopted in the entire nationalsystem.

62. Experience in Peru demonstrates,however, that “parks” fund operations can beaffected adversely by government officialsunwilling to allow the fund to play ameaningful role in broader managementissues, and by the absence of a strategicframework for protected area management.The Eastern Carpathians fund has also beendisadvantaged by the failure of one of thethree governments to participate actively.

63. “Grants” funds are typically less directlytied to national strategies. However, some“grants” funds find it beneficial to focus onone or more elements of a national strategy, asthey define “niches” in which they canmaximize impact. In Mexico, a government-led prioritization process, which FMCNhelped finance, has enabled the fund to focusits grants on priority areas for biodiversityconservation. In Brazil, FUNBIO hopes totake the lead in linking the business sector to anew national biodiversity strategy. In Jamaica,EFJ plans to concentrate its environmentresources on conservation “hot spots.”

64. The “grants” funds studied include high-ranking government officials on their boardsand generally, the activities they support fallwithin the range of whatever national strategyhas been adopted. However, most nationalstrategies are quite broadly written; aconservation trust fund with a coherentstrategy outside such objectives would bedifficult to imagine.

FINANCIAL CONTRIBUTION TOBIODIVERSITY CONSERVATION

65. Most trust funds were established with theintention to leverage additional funds forconservation. In most countries studied,NGOs and businesses had no access tonational sources of grants for environmental


activities prior to establishment of a trustfund. So, for private sector conservationactivities, trust funds represent a significantnew source of funding, at a level that almostcertainly exceeds $10 million per year on aglobal basis.66. Most initial “parks” fund designsanticipated that the funds would eventuallyraise enough capital to assure the basicfinancial viability of a national park system orselected key components. The design processin many cases provided an opportunity for afull discussion of the issue of financialsustainability for protected areas andsustainable development priorities --including issues such as capturing user feesfor management activities; revisions in taxpolicies to allow for the collection of specialtaxes and to provide incentives for personaland corporate contributions to nonprofitconservation organizations; governmentsupport to fundraising efforts, particularly byfacilitating support from international donors;and policies for “graduating” certain areasfrom full trust fund support to a mix of fees,appropriations, and other sources. With theexception of Mexico, these kinds of far-reaching discussions were rarely held.

However, in two cases (Bhutan and Brazil),GEF contributions were set up to encouragethe establishment of enabling policies or thegeneration of additional funding, bydisbursing in tranches, with the seconddisbursement dependent upon theachievement of benchmarks.

67. To date, the GEF has committed $61million to conservation trust funds (anddisbursed $46 million to the six withoperating experience). These six establishedfunds have raised or secured commitments foran additional $33 million that flows throughthe trust fund budget. Most trust fund-supported projects also include a cash or in-kind contribution from the recipient. Sometrust funds, notably the Foundation for thePhilippine Environment, have formedpartnerships with other funding organizationsin an effort to increase the flow of funding toconservation. The team was not able todocument the specific total amounts ofadditional funding leveraged by these means,but estimates that trust fund disbursements intotal are increased in value by at least 50percent by other contributions.

Box 5: Summary of Additional Funds Raised

Country GEF $ Other $ (sources)

Jamaica JNPT 0 $437,000 (USAID, debt swaps).

Jamaica EFJ 0 $9.2 million (US Enterprise for the Americas)

Belize PACT 0 $500,000/year (tourist tax)

Eastern Carpathians $300,000 $300,000 (MacArthur Foundation)

Uganda MBIFCT $4.3 million $4 million (USAID, Dutch bilateral)

Peru PROFONANPE $5.2 million $17 million (debt reductions and directbilateral assistance; $500,00 inendowment capital from Canada, Finland,Netherlands)

Brazil FUNBIO $10 million disbursed$10 million more

FUNBIO must raise $5 million to “trigger”second tranche


committed

Mexico $16.5 million FMCN has committed to raise $5 millionfor endowment; park funding requiresgovernment to expend certain basicamounts to qualify for trust fund funding

Bhutan $10 million $11.4 million

South Africa $5 million none to date (just starting)

TOTAL $61.3 million $52.5 million

68. Government contributions to grants fundshave been provided in different forms.Mexico agreed during preparation of theoriginal FMCN project to provide $10 millionto the fund over a period of years, with $1million given the first year. Belize allocatesfunds from its tourist tax to PACT. Othergovernments have not contributed fundingexcept through payments linked to debtreduction agreements, which channel anobligation that the government formerly owedto a bank or foreign government to theconservation fund.

69. The record is mixed on whethergovernment contributions to biodiversityconservation and protected areas systems haveincreased or decreased since the establishmentof funds. In most countries, governmentsprovide some budget resources to nationalparks. In Mexico the government sharesfinancing of the operating costs of 10 parkswith the trust fund based on a formulaestablished during project design, assuringthat the baseline does not diminish. The Perufund finances some budget items previouslypaid by government, while the governmenthas increased spending on other park-relatedcosts. In Jamaica, the trust fund has financedmost costs for the country’s first two parks.The government has not met its commitmentto provide annual contributions to theendowment, but it has provided someoperating costs of two parks. In Uganda,biodiversity funding has recently increased,but mostly due to the large number of GEFand other external donor projects.

RELATIONSHIPS WITH OTHER FUNDS

70. The majority of GEF trust funds havebeen “stand-alone” projects. Exceptions are(a) Brazil, where the trust fund is one of twocomponents; and (b) the Eastern Carpathians,where all three countries had largerbiodiversity projects (the trust fund wasadministratively a component of the Slovakiaproject). In the latter case, the trust fund wasdesigned with clear linkages to other GEFactivities. The GEF Slovak RepublicBiodiversity Project finances managementactivities in the Slovak portion of theBiosphere Reserve, and the projectcoordinator served as president of the trustfund. The Ukraine project also supports theUkrainian portion of the reserve.

71. In most countries, the GEF-supportedtrust fund is the only fund of its nature. InPeru and Uganda, there are governmentNational Environment Funds that exist onpaper, but do not have capital. In Mexico andBrazil, a national biodiversity councilmanages a small, non-endowed grant fund.CONABIO in Mexico finances biodiversityresearch and pilot projects. In Brazil,PROBIO’s GEF-supported small grants fundmay also finance biodiversity pilot projects. Intheory, both of these funds could financesome of the same activities as the trust funds.In practice, demand far exceeds supply, andinformal coordination between the funds hasavoided any competition or confusion. InBrazil, several government-managed projectfunds provide grants to state and local entities,including NGOs and community-basedorganizations, but they do not invest and


manage capital as endowment or sinkingfunds.

72. Another example of cooperationbetween two funds is the Foundation for thePhilippine Environment and the Foundation

for Sustainable Society’s formalmemorandum of understanding encouragingco-financing and information exchange.


E. THE GOVERNANCE OF CONSERVATION TRUST FUNDS

KEY POINTS

The majority of experience indicates that funds are appropriately set up as non-governmental institutions with mixed public-private governing bodies, with non-governmental representatives in the majority.

There are several advantages of larger over smaller boards, in particular, the ability toestablish working committees to deal with the diverse issues that funds must address:financial management, fundraising, technical oversight, and others.

Governing boards whose members are elected in their personal capacity, as opposedto formal representation of organizations, agencies or sectors, tend to develop astronger sense of “ownership” of the fund as an institution, and work more effectively toimplement the fund’s mission. The more formally representative boards tend to seetheir role in terms of allocating resources among their agencies and sectors. Few ofthem do an adequate job of reporting to their constituencies and keeping theminvolved.

73. Building a strong, influential, cohesiveboard of directors that is representative of aconservation trust fund’s diverseconstituencies, that can serve as an influentialvoice for biodiversity conservation, and thatcan provide strong, sound direction andoversight for the fund is perhaps the singlemost important element in a trust fund’s long-term viability and success. For this reason,the evaluation team examined closely howtrust funds are governed, and how theirgoverning systems have worked in practice. 74. Conservation trust funds are typicallygoverned by boards of directors or a group oftrustees, depending on their legal basis. Evenin the few that have general assemblies orother broader bodies (e.g., Mexico,Guatemala, Jamaica EFJ), the boards are theprincipal decision-making bodies. Theseboards vary in size, between relatively largeones in Mexico, Brazil, and the EasternCarpathians (14-18 members) to smaller ones(5-9 members) in Bhutan, Peru, Uganda,Guatemala, Belize, South Africa and JNPTand EFJ.

75. Who is involved in the governance oftrust funds? Except for the funds in Bhutanand Bolivia, which are governmentorganizations, the funds studied are privateinstitutions and have governing bodies withmembers from the public and private sectors.Even the government funds have taken, or areplanning to take, steps to bring non-governmental groups into their governingstructures: FONAMA’s administrativecommittees (which oversee its various“windows”) include NGOs, and the Bhutanfund board will include business and nationalNGO members by 2001. Of the fundsevaluated, only FCG in Guatemala has nogovernment representatives on its governingbody (administrative committee). 76. Government members of boardsrepresent specific positions, e.g., the ministerof environment, director of the protected areassystem. Even though they are privateorganizations, two of the “parks” fundsevaluated (Peru, Uganda) require that theboard president be one of the governmentrepresentatives, although the government doesnot make up a majority of the boardmembership. Government officials formally


name all fund board members in Belize, EFJand Peru. In Mexico and Brazil, however,government representation is limited to one ortwo members of relatively large boards. InSouth Africa, the trustees of the TableMountain Fund include governmentrepresentatives although they serve in theirindividual capacity. 77. Non-governmental members sometimesformally represent NGOs, business, academiaor other sectors (for example in Peru, EFJ andUganda), and are often elected by theirconstituency organizations. In other funds,however, board members are individualsserving in a personal capacity, selected toreflect the needs of the fund and the diversityof its constituencies (e.g., Mexico, Brazil,JNPT and the Eastern Carpathians). Most ofthe funds studied also include at least onerepresentative of a donor agency, although notalways with voting power. 78. In addition to governing boards, theteam observed a variety of other mechanismsused by conservation trust funds to involvekey actors and stakeholders. Boardcommittees that focus on specific aspects of afund’s program or management often includeoutside members. Several funds, includingthose in Mexico, Uganda and Brazil, involve anumber of people within the conservationcommunity in the review and evaluation ofgrant proposals. The MBIFCT in Ugandareceives input from local steering andadvisory committees that include broadrepresentation of communities and academicorganizations with a stake in conservation andprotected area management. PROFONANPEin Peru has a technical committee whichmakes input on its annual work plan. FMCNin Mexico has an “international committee,”which serves as a vehicle for exchange ofinformation between the fund andinternational NGOs and donors, and a sourceof support to the fund from theseorganizations. 79. The evaluation team found that for aconservation trust fund to realize its potential,it is important that its board see itself as thedirectors of an independent organization with

institutional objectives, not just a forum fordeciding how to divide the fund’s resources.The team concluded that boards made up ofindividuals reflecting the needs of the fundand the diversity of its constituencies – butserving with a primary obligation to the funditself, and not to the sectors they represent –work better than boards whose members areelected to formally represent the interests ofthe sectors or constituencies that nominatethem. The latter can increase politicalinfluences and decrease the board members’sense of ownership in the fund itself. 80. A key attribute for successful boards isthe integrity of its members and the respectwithin the community that comes from this.The team also found that boards made up ofmembers drawn from diverse sectors (e.g.,Mexico, Brazil) are able to cover within theboard membership a wider range of functionsthan boards with limited sectoral expertise.This diversity of membership is a key factorin establishing effective specializedcommittees that are linked directly to thefund’s governing body. This has beenespecially important in the area of financialand administrative oversight. Some fundshave tried to put in place other mechanisms(e.g., technical committees) to provide accessto a broader range of expertise. While thishas been important in relieving pressures onotherwise very busy board members and inexpanding the pool of talent on which thefunds can draw, the absence of formallinkages to the governing structure hassometimes limited their effectiveness. Theactive participation and leadership ofprominent business people who bring aprivate-sector management perspective hasproven extremely important for the successfuloperation of conservation trust funds. 81. Although trust funds are generallyprivate organizations, the government remainsa significant actor in almost all of the fundsexamined by the team. This has been animportant way that trust funds havemaintained linkages to public policies andprograms. On the other hand, several fundshave been adversely affected by the nature ofgovernment participation in their governing


bodies. In Peru, a fund originally intended tosupport both government and NGO activitiesrelated to protected area management hasbeen dominated by the governmentmembership on its board. Funding duringPROFONANPE’s first two years of operationhas gone almost entirely to activities carriedout by the government agency headed by itsboard president. In some cases, governmentrepresentatives on trust fund boards haveshown little interest in the fund and theirresponsibilities as board members, or havechanged frequently as different individualswere assigned to the positions represented onthe board. 82. The boards of several funds evaluatedinclude formal representatives of non-governmental groups. Even where this is notthe case, at least the initial board membershipwas selected as a result of broad consultativeprocesses with a large number ofstakeholders, often carried out across thecountry or area of focus of the fund. Mostfunds also reach out beyond their boards ofdirectors to include others in technicalcommittees or their project selectionprocesses. Nowhere did the evaluation teamobserve, however, a governing structure of aconservation trust fund explicitly functioningas a forum for continuous discussion amongvarious stakeholder groups as a means ofcreating better understanding around issuesrelated to biodiversity conservation andsustainable use. Several of the funds give animportant emphasis in their programs toeducation and awareness, and to involvingcommunity and other groups in conservationand management activities, but there is littleevidence of the funds’ governing bodiesthemselves playing this role in an active way.In fact, in those cases where boards do operateon a representative basis, in general moreattention by these board members is needed toproviding feedback to, and receiving inputfrom, the constituencies they represent. 83. Because most of the funds studied arestill relatively young, they have not yetexperienced transitions in leadership. Basedon the experience of some other funds, thiswould appear to be an area where continued

attention is warranted. EFJ in Jamaica andMBIFCT in Uganda have new executivedirectors, and their experience will provideinsight into how transitions affectachievement of objectives, and interestinglessons for other trust funds. Wheretransitions have occurred in board leadershipor in the executive management of the fundsincluded in the evaluation, they appear tohave gone smoothly. The exception was inPeru, where a difficult transition betweenexecutive directors set the fund back by atleast a year. PROFONANPE also faces amajor change in almost all of the members ofits board of directors this year. 84. One particularly important factoraffecting the ability of boards to make smoothtransitions is the planned frequency ofrotation of (non-governmental) members andthe ways new members are selected. Bringingnew people onto boards at regular intervals isan important way to build awareness of and“ownership” in a fund, as well as to get freshperspectives and ideas into the leadership ofthe organization. However, care needs to betaken to provide continuity by staggeringterms. Based on the experience of the fundsexamined by the evaluation team, it appearsthat boards which themselves nominate newmembers based on the fund’s needs andcriteria reflecting the diversity of theirconstituencies are more able to weathermembership transitions than those whosemembers are formally elected by specificorganizations or networks (and/or whoseboards include many governmentrepresentatives whose tenure is notpredictable). Funds that have variouscommittees with a role in governance issuesare often able to draw on these groups forcandidates for board membership, ascommittee members who are not on the boardhave an opportunity to develop relationshipswith the trust fund and demonstrate what theycan contribute. 85. Donor agencies have generally played ahelpful and facilitating role when representedon the boards of conservation trust funds.However, it is important that donorrepresentatives have the fund’s interest


foremost in mind when serving as a boardmember. The team observed a situation inwhich a donor agency’s own interests inprograms implemented through or associatedwith the fund, and with beneficiaries of thefund’s programs, reportedly influenced itsrepresentative to vote in a manner that wasnot necessarily in the interests of the fund’slong term mission and objectives. Periodicrotation of donor representatives also wouldappear to be a good idea, although to date thishas not occurred in the funds observed.Finally, the extent to which donors exercisecontrol over key decisions about how a fund’sresources are used affects the ability of boardsto become true leadership bodies for theirorganizations. 86. The leadership and management skillsthat boards and executive directors havebrought to conservation trust funds havevaried greatly. It probably goes withoutsaying, but the relationship between the boardand staff, especially the executive director, isextremely important to the effectivefunctioning of a trust fund. Where aharmonious and synergistic relationship hasbeen present, the fund has excelled; where ithas not, the fund has floundered. Aningredient that is essential for this relationshipto work well is a clearly-articulated set ofresponsibilities for each which reflects abalancing of the leadership and managementworkload between the two. This does notcome easily, but it greatly helps define theskills needed by both the board and theexecutive leadership of the fund. In thisregard, the experience of the funds examinedfor this evaluation indicates that management

skills are more important for fund executivedirectors than technical background inbiodiversity conservation. That said, it hasproven to be very important for a fund to havetechnical people on its staff.

87. The funds with larger boards made upof individuals (rather than electedrepresentatives) in countries with diverse androbust economies, e.g., Mexico and Brazil,have tended to have within their boardmembership the skills and resources needed tooversee the complex variety of fund activitiesand governance responsibilities. Funds withsmaller boards and in countries where there isless diversity of expertise to call on have hadmore difficulty in this area.

88. In several of the funds studied (EFJ,PROFONANPE, FONAMA’s EAI fund)boards have limited their focus to oversight ofthe grant selection process, or in otherrespects have not fully developed their policyor strategic planning roles. Most of theboards studied have yet to take, or were justbeginning to take, an active role infundraising. Board development, focused onbuilding governing bodies that carry out thefull extent of their roles and responsibilities, isa capacity-building need expressed by severalof the funds. However, there has been little inthe way of training or technical assistanceprovided to boards as part of GEF or othersupport to conservation trust funds, eventhough the explicit objectives of these projectswere often to support the establishment of thefund. This is an area in need of moreattention in the future.


F. PROGRAM MANAGEMENT

KEY POINTS

It is easier for a “parks” fund than a “grants” fund to establish a strategic focus becauseof the “parks” fund’s direct link to selected protected areas and strategic planning for theprotected area system. However, “grants” funds have in several cases demonstrated anability to select program “niches” in which to focus for biodiversity impact.

Trust funds have made major achievements in establishing transparent selectionprocesses. Agile administrative procedures have been difficult to establish in severalcases, often due to donor requirements.

Trust funds have attracted highly qualified personnel but still require capacity-buildingassistance to develop their potential as institutions.

Most funds have been able to keep operating costs in the 20-25 percent range.However, there has been no clear, consistent guidance from the GEF on what is anacceptable level and what costs are included in the calculation.

The overwhelming majority of the funds studied do not include analysis of biodiversityimpact in their monitoring and evaluation activities.

STRATEGIC FOCUS

89. Generally, “parks” funds are betterequipped than “grants” funds to targetprogram activities on biodiversityconservation impacts, because they have apre-defined geographic focus and links tomaster plans for protected areas or protectedarea systems. On the other hand, “grants”funds are more likely to finance innovationand catalytic activities, and have theadvantage of reaching a more diverseconstituency of recipients. “Grants” fundshave in several cases demonstrated an abilityto select program “niches” in which to focusfor biodiversity impact. Mexico, Uganda, andBrazil provide examples.

90. Factors that make it difficult for fundsto proactively seek out activities that helpadvance their biodiversity strategy includeweaknesses in national strategies that leavethe fund without clear guidance; under-staffing due to limits on overhead costs,resulting in lack of time to support the boardin strategic planning or spend time in the fieldseeking out potential partners and projects;

reliance on a limited “universe” of capablerecipients that have their own priorities; andthe nature of their design (multi-stakeholderparticipation in governance and selectionprocesses). Participative processes often setthe fund up for “dividing the pie” such that allprogram stakeholders get a piece, with consequent fragmentation of program emphasis.

ADMINISTRATION OF GRANT PROGRAMS

91. Trust funds have made majorachievements in establishing transparentprocesses for developing program prioritiesand selection of project activities. TheMexican Nature Conservation Fund is anoutstanding example, and several others,including funds in Uganda, Belize, Bolivia,Brazil, and Jamaica, have made substantialstrides in developing transparent processes,surpassing the normal procedures ofgovernment agencies and privateorganizations in their respective countries.


Box 6: Creating a Strategic Focus for a Grant-Making Program

The Mexican Nature Conservation Fund has a broad mission – “to conserve thebiodiversity of Mexico and ensure the sustainable use of natural resources through thepromotion of strategic actions and medium to long-term financial support.” Civil societyorganizations compete for grant awards on an annual basis, with a single call forproposals issued each April. The evolution of this trust fund’s strategic focus throughthree funding cycles provides an example of how a fund can refine its criteria andprocedures to give its program coherence and increase the chances of achievingimpact.

The first call for proposals (1996) brought in more than twice as many proposals fromresearch institutions as from NGOs and community groups, which FMCN wanted tosupport. In part, this reflected ambiguous eligibility criteria and the fact that researchinstitutions had more access to the media used to announce the grants program. Inaddition, proposals received from NGOs and community groups often fell short ofFMCN’s standards. To change this balance, the second call focused on field-levelactivities and looked for linkages to conservation priorities established in a nationalprocess partially funded by FMCN and led by the National Council for Knowledge andUse of Biodiversity (CONABIO). FMCN also funded organizations who could assistNGOs and community organizations in the design and preparation of projects in priorityareas.

When the third call for proposals was issued in 1998, FMCN had increased the linkageof its funding to the CONABIO process; had developed a strategic plan; had usedfeedback from the first two cycles to refine both the call for proposals and the selectionprocess; was working on a logical framework for the grants program identifyingbiodiversity conservation and institutional strengthening objectives and how to measureresults; and was coordinating with CONABIO and other organizations that financeprojects to avoid duplication of projects and share information about proposingorganizations.

92. In general, the more focused programshave more efficient selection processes, whilebroader-purpose funds that maintain “opendoor” policies to any qualified projectproposer often struggle to process largenumbers of applications. Several of the fundsvisited were considering limits on the numberof new projects to take on (i.e., focusing onfewer, larger projects rather than many smallones) due to limited staff for supervision andmonitoring.

93. Several of the funds studied haveexceedingly burdensome and bureaucraticadministrative procedures, of a type moresuitable for large government agencies thanfor the agile private institutions funds wereenvisioned to be. These procedures increaseadministrative costs, as well as transactioncosts for potential recipients. In some cases

they are a barrier to access by potentialrecipients. Sometimes extremely closesupervision and insistence on application ofWorld Bank procurement and disbursementmanagement policies may be necessarybecause of the situation in the country, but insome cases these procedures have beenadopted at the insistence of the donor whennational conditions did not seem to warrantsuch action. Brazil is an example of a fundestablished in an existing institution, where itwould have been appropriate for theimplementing agency (World Bank) to reviewand certify that institution’s administrative,financial management, grant management,and procurement procedures, rather thanimposing its own. In some countries, ratherthan establish grant-making procedures “denovo,” trust funds have the opportunity toadopt elements of small-grant making


procedures successfully used by privatefoundations and donors (e.g., Jamaica’s Green

Fund and the Boticario Foundation in Brazil).

Box 7: The Grant-Making Cycle

“Parks” fund• Protected area staff prepare annual operating plans and budgets, involving

stakeholders in consultations.• Trust fund determines eligible activities and allocates resources according to

priorities for each protected areas (may be determined at design or by board inongoing oversight).

• Disbursement schedule agreed; disbursements made according to schedule, withreceipt/review of financial and technical reports generally required before eachsubsequent disbursement.

“Grants” fund• Board determines funding priorities and amount available for current cycle. Call for

proposals issued.• Concept papers or full proposals reviewed by technical committee;

recommendations made to board• If concept papers were reviewed/approved, proposing organizations prepare full

proposals, technical review and recommendations step repeated. Some fundsprovide technical or financial assistance to organizations preparing full proposalsfrom approved concept papers.

• Board approves projects. Grant agreements or contracts prepared; fundingdisbursed according to schedule, with periodic review of financial and technicalreports.

SKILLS AND TRAINING

94. Generally funds have been able to recruitlocally for technically qualified professionalstaff (although external assistance has beenimportant in some cases to help them developtheir roles as institutional leaders). Funds needto strike an appropriate balance betweenpaying enough to attract good people andcreating conditions in which their own staffexhibit dedication and commitmentcommensurate with that of their grantees.This is a difficult balance to strike, and a fewfunds have experienced image problems whengrantees (financially struggling localorganizations) perceive that a large share ofavailable funding is spent on the salaries ofcapital-city staff.

95. The GEF has not systematicallyprovided training and capacity-building fortrust funds, and the helpfulness of taskmanagers has varied. Uganda’s task

managers were, together with in-countryUSAID staff, the primary source of technicalassistance, while in the Eastern Carpathians,frequent turnover in project management andlack of coordination among the threeGEF/World Bank projects meant that theFoundation got little help or advice on itsmanagement and development. The fundsvisited expressed a strong desire for additionaltraining and networking to build their owncapacities in such areas as board development,fundraising, project appraisal, monitoring andevaluation, and capacity-building amonggrantees. OPERATING COSTS 96. Most funds have been able to keep theiroperating costs in the 20-25 percent range(and some below 20 percent) but this hascome at some cost to the funds as institutions,particularly in their ability to developtechnical expertise. The range among the


funds studied was 10 percent (JamaicaNational Parks Trust, which pays anadministrative fee of 10 percent of trustincome to its home institution, the JamaicaConservation and Development Trust) tomore than 30 percent (Uganda’s MBIFCT,which operates essentially as an intermediaryNGO itself, providing extensive projectsupport to recipients; the Eastern CarpathiansFoundation, whose tiny endowment generatesonly $30,000 in revenues per year; andBolivia’s FONAMA, whose operating costswere running at $850,000 per year in 1995).In general, the smaller the endowment, themore difficult it has been to stay withinoperating cost ceilings.

97. The analysis of operating costs wascomplicated by the lack of clear, consistentguidance from the GEF on the issue.Different “ceilings,” as well as differentcriteria for setting those rates, have beenapplied to different funds. In addition, thedefinition of what is counted as administrativeor operating costs has varied.

98. The evaluation team applied thefollowing criteria:

• Operating costs are the day-to-day “costsof doing business” for a trust fund. Thesetypically include the annual costs associatedwith basic trust fund operations: staffsalaries, board meetings, office expenses,equipment and maintenance, costs associatedwith managing the endowment, and programmanagement (project selection, supervision,and evaluation). Operating costs also includethe costs associated with a fund’s role as aninstitution. These include participating in thedevelopment of biodiversity strategies andpolicies, constituency building forbiodiversity conservation, coordination withother funds and biodiversity projects,dissemination of experience and lessonslearned, networking, and fundraising.

• Institution building costs are generallystart-up costs incurred primarily in the fund’sfirst year or two, although training andconsultations may continue even as the fundmatures. These costs include training of thetrust fund’s own personnel, development of an

operations manual and other key documents,legal fees related to applications for taxexemption, orientation for board members,and similar activities.

• Program support costs are the servicesprovided to build capacity of recipientorganizations, share technical expertise, andsupport recipients and potential recipients inways other than direct supervision. In somecases, development of the absorptive capacityof NGOs or other potential grant recipients isthe role of institutions other than the trustfund (e.g., an umbrella NGO organization inJamaica). When a trust fund decides toprovide support for increasing recipientcapacity, it typically does so either (a) throughproject funding, making grants or enteringinto contracts with organizations skilled inthat area (an approach used by FMCN inMexico) or (b) through direct technicalassistance (Uganda, Philippines) provided bytrust fund staff.

MONITORING AND EVALUATION

99. Trust funds generally carry out projectmonitoring by reviewing periodic reports,making field visits and, in some cases,requiring approval of even minor changesfrom original plans. Report requirements arequite detailed and focus on trackingexpenditures and meeting target dates as setout in proposals and project plans. Reportingrequirements generally are standard, whetherthe recipient is a young, small organizationreceiving $50,000, or an experiencedorganization receiving a much larger grant.Several representatives of seasonedorganizations interviewed by the team felt thatthe administrative burden of trust fundreporting requirements was excessive.

100. Few funds conduct technicalmonitoring of activities or focus theirmonitoring on outputs and overall objectives.The ability of funds to visit project sites is afunction of staff size and the number ofprojects financed.

101. Comprehensive project evaluations arerare. End-of-project reports are normallyprepared by the grantee. Of the trust funds


studied, only FMCN (Mexico) uses a logicalframework to provide a consistent basis forproject appraisal, monitoring and evaluation.The Bhutan fund established and metbenchmarks for establishing “the legal,institutional, and technical framework [forconservation] and expanding implementationcapacity” in its first five years of operation;however, during these years, it was financinga detailed program of activities spelled out atdesign, rather than selecting projects andactivities proposed by government or private

organizations. FONAMA (Bolivia) designeda technical monitoring system, but it has notfunctioned well. PROFONANPE (Peru)contracted independent evaluations of threeNGO pilot projects funded by Germany, buthas no system for monitoring impacts in thepark system. Among the funds visited, onlyFMCN had detailed plans to carry out impactevaluation, building impact indicators intoboth NGO projects and protected area activityplans.

G. ASSET AND FINANCIAL MANAGEMENT

KEY POINTS

Trust funds (including four of the six mature GEF-supported funds) have leveragedsubstantial additional funding for conservation. However, there is little diversity in thedonor base and few contributions have been made as endowment capital.

Future fundraising prospects are mixed.

The GEF-supported funds have successfully applied an asset management and assetmanager selection model developed by the World Bank. All but one of the GEF-supported funds have met investment return objectives through 1997. Professionalasset managers have performed as well or better than benchmark indices againstwhich funds monitor their performance.

Few funds have all the necessary financial expertise in-house and thus need (a)financial expertise in addition to asset managers, and (b) technical assistance andtraining to ensure that key staff and boards understand the principles guidinginvestment strategies and make informed decisions.

FUNDRAISING AND GENERATION OF ASSETS

102. Four of the GEF-financedconservation trust funds have raisedsubstantial financing from other sources (seeBox 5), but except in Bhutan, very little ofthis is endowment capital that willcontribute to their long-term sustainabilityas trust funds. PROFONANPE (Peru), forexample, received $5.2 million from theGEF and has raised an additional $17million, primarily through debt reductionagreements and direct bilateral assistance.This funding would not have been availablefor conservation if PROFONANPE had notpioneered the debt swap mechanism forconservation in Peru. However, less than

$500,000 of the additional fundinggenerated has been added to the endowment(FONANPE). The remainder comprisessinking funds with 6-10 year horizons.

103. The fund most successful to date inraising endowment capital from sources inaddition to the GEF has been Bhutan, whichreceived $10 million from the GEF andraised additional endowment capital of$11.4 million from WWF, Switzerland, theNetherlands, Norway, Finland, andDenmark. Although many factors wereinvolved in this fundraising success,including the Royal Government ofBhutan’s integrity in managing the trust, aclear set of achievable conservation


objectives, and existing links withScandinavian aid agencies, it was also usefulthat the World Bank’s grant agreementestablished the GEF disbursements intranches. Release of the first tranche wasconditioned upon, among otherconsiderations, securing $2 million in otherdonor contributions. (The second paymentwas conditioned upon meeting policy andpark establishment targets.)

104. There is not much diversity in thedonor base. Half a dozen bilateral donors(US, Canada, Germany, Netherlands,Switzerland, Finland) have provided fundingprimarily through debt reductionagreements, although some have provideddirect donations. The John D. and CatherineT. MacArthur Foundation has contributedendowment capital to one fund and funding

to expand the project portfolio of severalothers.

105. Future fundraising prospects aremixed. Few donors are willing to provideendowment capital, although funds and theirdonors hope that if it is demonstrated thatfunds are sound mechanisms for achievingconservation, some donors who havepreviously adopted a “wait and see” attitudemay support endowments. There areprospects for additional debt negotiations insome countries (particularly in theAsia/Pacific region) that could generateendowment capital. The most promisingareas at present are innovative local sourcessuch as tourist taxes and user fees, andstructuring non-endowment co-financing sothat it returns interest to the endowment (seeBox 8).

Box 8: Fundraising Innovations

The Protected Area Conservation Trust of Belize raises $500,000 per year through a$3.75 tax on tourists entering the country by plane or cruise ship.

The Mgahinga-Bwindi Impenetrable Forest Trust of Uganda raised project funding frombilateral donors to support its operations and grant portfolio during its first seven years, sothat income on the endowment capital provided by the GEF could be added to theendowment rather than spent. The initial GEF endowment capital has grown from $4.3million to $5.6 million (expected to reach $7.5 million by the time the bilateral fundingconcludes).

The Foundation for Eastern Carpathian Biodiversity Conservation and the Foundation forthe Philippine Environment raised funds from the US-based John D. and Catherine T.MacArthur Foundation to support operations during the start-up phase and to fund anearly tranche of projects, which enabled them to have a more diverse portfolio and build abetter track record early than they would have been able to accomplish living solely onearnings from endowment.

PROFONANPE in Peru agreed with two of its donors to capitalize interest income fromdebt swaps and traditional projects. In part to offset an unexpected devaluation appliedto a debt swap, Finland agreed to provide PROFONANPE a small grant contribution to itsendowment and to allocate all interest earned on the swap proceeds to the endowment.Similarly, GTZ agreed to disburse up-front the entire amount of a 6-year project and toinvest it, in effect, as a sinking fund. PROFONANPE expects this will allow projectactivities to be extended to 10 years and still leave substantial interest income for itspermanent endowment.

Funding innovations outside the group of funds examined but brought to the team’sattention by reference group members and others included a new fund starting inEcuador that will conserve the watershed that supplies the capital city, using funds raisedfrom a fee added to water bills.


ANNUAL FLOW OF FUNDING GENERATED:INVESTMENTS AND RETURNS 106. Generally, investment income of GEFsupported funds has been adequate to coveradministrative costs and initiate programactivities. Every GEF fund except the EasternCarpathians met its targeted annual totalreturn objectives through 1997. Part of thenon-GEF portion of the Mexico portfolio,however, has been a low performer for severalyears, and the (non-GEF) Jamaica funds, afterinitially receiving high returns, are currentlysuffering from the downturn in the Jamaicaneconomy and stock market. It is important tobear in mind, in the analysis of two to fiveyears of returns, that the past three years havebeen exceptional in terms of performance forinternational financial markets and that USinflation, an important factor in targetingreturns for GEF-supported funds, has beenvery low. Investing substantial amounts inemerging markets – a practice not usuallyconsistent with the conservative investmentprinciples of the World Bank model -- is anissue particularly for PROFONANPE (Peru),both Jamaica funds, and the Table MountainFund (South Africa).1

107. Professional asset managers, drawn inall GEF cases except Peru from majorinternational investment firms, haveperformed as well or better than thebenchmark indices against which fundsmonitor their performance.

108. Early investment strategies (Bhutan,Uganda, Peru) were designed in large part bythe asset management firms. The general 1 Current volatility in international financial markets willfurther test the validity of the conservative investment strategywith active portfolio management approach adopted by manyof the GEF-supported funds. Under this approach, funds canmeet their program objectives by achieving a total return in the8 percent range: asset manager performance is monitoredagainst a simulated low-risk portfolio, creating a strongincentive for investment managers to promptly correct coursein light of the current situation. Funds’ short term programs areunlikely to be affected by the current volatility since the funds(1) are not yet spending their endowment income and/or (2)have accumulated reserves either because of slow spendingstart-up or investment performance exceeding objectivesthrough early 1998.

indices (broad world or local indices) forevaluating performance were usually chosenby the asset manager. Initially, reporting byinvestment firms was selective and did notalways facilitate performance monitoring byfunds. Funds were often slow to respond toadvice from asset managers, generallybecause they did not fully understandinvestment performance and the value of assetmanagement services. Nevertheless, fundswere generally satisfied with the level of theirinvestment earnings.

109. There were several instances ofinappropriate initial investment strategies(Bhutan, Eastern Carpathians, Philippines).In some cases, overly conservative strategiesresulted in insufficient revenue to carry outfull program activities (Bhutan is the notableexample, although the Bhutan fund had anadequate alternative source of funding tocarry out its programs during the period whenendowment income was low.) Other fundsdid not diversify their portfolios, or exposedtheir assets to high risk, particularly byconcentrating investments in the fund’s owncountry or region (e.g., Latin America). Itwas necessary for the World Bank to provideconsiderable financial expertise to Peru’sPROFONANPE and its asset manager, in partbecause the investment profession was newlyformed following privatization of thePeruvian banking sector and because of thehigher risk inherent in emerging markets.

110. In 1996, a review2 of funds’ investmentstrategies and selection of asset managersconcluded that while fund investments hadachieved their target total return, and assetmanagers had attained their contractualperformance indices, better performance ispossible when (a) investment strategies areexplicit in setting goals appropriate to long-term investors; (b) initial and annual cashneeds (net income) are rigorously determined;(c) benchmarks or simulated portfolios withmarket and asset class specific indices (ratherthan a general world index) are used tomonitor performance; (d) asset manager

2 Financed by Canada through the Consultant Trust Fundmanaged by the World Bank for the global environment.


contracts and reporting address funds’ specificsituations and monitoring needs; and (e) targetperformance is set above the benchmarkresults. These principles of “activemanagement” were applied to the Brazil andMexico GEF portfolios with excellent results.Those portfolios have outperformed theirbenchmarks and market performance overall.

111. A lesson highlighted by the case ofPeru is that investment strategies should berevisited regularly, particularly in high-riskmarkets, and action taken promptly by thefund’s board when conditions change. Peru’sinvestment strategy, which placed hardcurrency capital in an emerging market, wasconsidered during design to be lower risk thanthe possible attachment of its capital bycreditors of the insolvent government. WhenPeru came under the Brady Plan, risk factorsshould have been revisited. PROFONANPEhesitated to make changes (and the WorldBank did not emphasize the urgency ofrevisiting the strategy in its supervision of theproject), due in part to continuing high localmarket returns. This proved costly when thePeruvian market suffered a downturn in 1997.This has significantly lowered annual returns.Liquidation to reinvest in lower risk financialmarkets of OECD countries will lead tolosses.

SELECTION OF ASSET MANAGERS

112. World Bank-supported funds investingin major international financial markets(Mexico, Bhutan, Uganda, Brazil) haveselected asset managers based on competitiveproposals sought from a nationality-diversified list of internationally recognizedinvestment firms. Both industry standard andthe World Bank’s QCBS (Quality and Cost-Based Selection) practices have been usedwith equally satisfying results.

113. Funds investing locally have used localcompetitive searches (South Africa, EasternCarpathians, Peru). For local currencyendowments, in the absence of deep capitalmarkets and a fully functioning investmentprofession in the home country, funds oftenrely on banks (generally identified through

relations with board members) for advice andtend to invest in short-term instruments suchas treasury bills (Guatemala). In the case ofPeru, a nascent private banking sector limitedthe number of candidates for asset manager.The three candidate banks/investment firmswere so dissimilar that there was no basis forcomparison.

TECHNICAL ASSISTANCE AND CAPACITY-BUILDING

114. Bhutan, Brazil, Uganda, South Africa,and Mexico all benefited from internationalfinancial expertise to assist with preparationof initial investment strategies and guidelinesas well as selection of an asset manager.Assistance was provided to the EasternCarpathians Foundation by WWF and theMacArthur Foundation but was limited toselecting a bank to invest the foundation’scapital. Given the small size of the capital,the focus was on fee minimization rather thana strategy to achieve a targeted return with anacceptable level of risk.

115. Funds in several cases have a limitedpool of in-country expertise upon which theycan draw to ensure a sophisticated level ofinvestment knowledge at the board, funddirector, or staff levels. Several funds havehad to rely on outside advice to monitorinvestment and asset manager performance,with little expertise of their own to evaluatethe advice or to analyze investment strategiesin the face of dynamic market situations.Their ability to monitor effectively is limitednot only by their own expertise, but also inseveral cases by less than full responsivenessby asset managers. The World Bank providedinitial assistance with establishing guidelinesbut made no provision to continue financialcounseling as part of fund operations. Mexicoand Brazil, however (the two funds able tocall on the most sophisticated pool ofknowledge from their board, staff, andadvisors), have engaged at their own expenseprofessional financial advisors to supplementtheir in-house expertise.


Box 9: Investments and Returns (GEF Funds Only)

Fund Target Return Markets Asset ManagerLocation

Total Return(1997 annual)

Bhutan US Inflation + 6% 80% US20% Int’l(non-emerging)

Netherlands/US 16.35%

Peru Average dollarizedreturn over 3-yearperiod: 5% above USinflation

80% local(Peru dollarized)20% US

Peru 9.2%

EasternCarpathian

6.6% total return US Switzerland 5.43%

Brazil US Inflation + 6% 95% US5% Brazil**

UK 10.8%

Uganda US Inflation + 6% Int’l (non-US)US*

UK/Channel Islands

7.96%

Mexico US Inflation + 6.5% US US 13.6%***

Note: US inflation for 1997 was about 2%* As of 1998, investments in the US markets were growing as a share of the total portfolio.** FUNBIO’s investment guidelines permit up to 15 percent of assets to be invested in Brazil.***GEF funds were first invested 8/97; returns shown through 6/98.

116. In the case of Mexico, the World Bankprovided technical assistance to reviewFMCN’s investment management practices atthe time the Mexico Protected Areas Projectwas restructured to operate through a fund.FMCN, a fund whose board includesconsiderable financial expertise, recognizedthe value of professional counsel and hired afinancial advisor to help with the re-structuring of its portfolios, guide investing ofUSAID funds ($19.5 million), prepareinvestment guidelines for the GEF capital($16.5 million), monitor performance ofFMCN’s three asset managers, keep itsinvestment strategy current, and assist withdebt swaps. This same approach couldprovide a cost-effective solution for any fundthat cannot maintain the required level ofexpertise on its board or staff. Normally, thisassistance should be considered a legitimatecost of doing business, and operating cost

targets should not be so restrictive as topreclude it. 117. Donor-provided technical assistance toprepare an investment strategy and select anasset manager has generally provided littlelasting knowledge of asset managementwithin the fund, because it focused on theprocess of preparing guidelines and selectingan asset manager, and assumed all investmentneeds would be met by the asset manager.Client responsiveness of asset managers hasbeen less than expected and levels ofknowledge in funds very limited in general.This points to a need in most funds for (a)financial expertise in addition to assetmanagers; and (b) financial training for keystaff and board members to ensure they arewell informed in making decisions andunderstand principles guiding their investmentstrategy.


RESPONSIBLE INVESTING

118. The evaluation team noted that many ofthe funds analyzed are interested in“responsible” or “green” investing, but havelimited capacity to develop such a strategy.This is due to several factors:

• There is little actual experience with thisconcept, beyond in a few cases specifying tothe asset manager certain stocks or categoriesof stocks in which they did not wish to invest(logging, toxic wastes).

• In the early years, most funds mustmaximize income (for a given level of risk) toensure operating funds, making restrictiveguidelines counter-productive.

• Practical guidelines for establishing andimplementing a “responsible” investmentstrategy are not available. Principles and

implementation of responsible investingpractices have been noted as a priority forcapacity-building by national environmentalfunds participating in Interagency PlanningGroup workshops in both Latin America andAsia/Pacific.

119. Bhutan and Mexico have specificclauses in their investment guidelines toensure their investment philosophy isconsistent with their institutional mission.Bhutan’s board is charged with developingresponsible investment guidelines for use bythe asset manager. FMCN’s guidelinesminimize investments in companies with poorsocial and environmental records and delegateindividual investing decisions to theinvestment manager.

36_______________________________________________________________________________________________________________________________________________

IV. CROSS-CUTTING CONCLUSIONS

A. ADVANTAGES AND CHALLENGES OF CONSERVATION TRUST FUNDS

120. The terms of reference for theevaluation listed a series of advantages anddrawbacks or challenges often attributed toconservation trust funds. This sectionpresents the team’s findings on each of thosehypotheses.

121. Of the frequently cited strengths andadvantages, the evaluation generallyconfirmed that:

• Funds can absorb major amounts offunding and disburse it over timeconsistent with the absorptive capacity ofrecipient organizations. In virtually all ofthe “grants” funds studied, the ability totime and size grants to meet – and build –absorptive capacity of governmental andnon-governmental organizations was citedas an advantage over traditional ways ofimplementing projects.

• Funds often have participatory structures

that involve a wide range of stakeholders–e.g.., governing boards, technicaladvisory committees, and/or projectselection committees that includerepresentatives from indigenous peoplesgroups, community organizations, localand national government agencies,private businesses, the academiccommunity, and international donor orNGO representatives. Even thegovernment or government-dominatedfunds (Bolivia, Bhutan, Peru) hadestablished some level of participatorystructure – technical advisory committees,sub-account administrative councils,requirements for participatory planningprocesses by grantees. Uganda’sMBIFCT, the Environmental Foundationof Jamaica, and the Mexican NatureConservation Fund are outstandingexamples of meaningful stakeholderparticipation in decision makingprocesses.

• Funds can be politically independent ofparticular administrations or parties, andcan provide continuity from onegovernment to another. Not all of thecountries studied had experienced achange of administrations or parties. Inonly one case – Bolivia, a governmentfund – was a turnover of governmentdisastrous to the fund’s ability to continueits programs, and in that case, the problemis being addressed in part by setting upthe major grant-making account as aseparate, private foundation.

122. There was limited evidence in supportof the following:

• Funds can provide a stable, long-termsource of funding for biodiversityconservation, not only to cover recurrentcosts, but also to smooth out year-to-yearfluctuations in project funding. This canalso provide a better basis for long-termplanning and strategy implementation. Ingeneral, the team concluded that it wastoo early to tell whether this advantagewill be borne out over the long term,although it appears to be the case for most“parks” funds. (Mexico and Bhutan, anda probable outcome in Uganda andBelize.)

• Funds are able to attract a diverse rangeof national and international fundingsources. The funds studied tended to haveone to four sources of funding. A few –notably Peru – had attracted non-endowment funding from a variety ofsources (but largely a single mechanism,i.e. debt reduction agreements). There areexamples of funds capturing funding frominnovative and national sources (notablyBelize) but none of a fund fully tappingthe diverse range of sources theoreticallyavailable, particularly for endowmentcapital.

IV Cross-Cutting Conclusions 37________________________________________________________________________________________________________________________________________________

• Environment funds can operate quicklyand responsively to a variety oforganizations that have relatively limitedinstitutional capacity, avoiding much ofthe bureaucracy of large donor orfinancial agencies. Several funds havehighly bureaucratic administrativeprocedures, often at the insistence of thedonor. However, there are also examplesof funds that have been highly responsiveto NGOs and local communities, inparticular, the Mgahinga-BwindiImpenetrable Forest Conservation Trustand the Foundation for the PhilippineEnvironment.

• Funds can provide a vehicle for

collaboration among government andnon-governmental organizations indefining funding priorities, and forconstructive engagement with the privatecommercial sector. Mexico, Brazil,Guatemala, South Africa, and the EasternCarpathians are examples of funds that dofacilitate such collaboration andconstructive engagement. The twogovernment funds and one government-dominated fund studied did not achievethis result.

123. Of the most frequently cited challengesand potential drawbacks, the team found thatthree are significant problems, at least in somefunds. These are: • Trust funds can tie up substantial amounts

of scarce resources for conservation anddevelopment to generate often modestamounts of income, some of which, inturn, is spent on administering the fund.In applying this question to each of thefunds studied, the most common answerwas “Yes, but...” (a) most funds haveinvested their endowment capital wiselyand have generated returns nearlyequivalent to the opportunity cost ofcapital; (b) operating costs vary but areprobably not substantially greater than thetrue administrative costs of projectmanagement; and (c) tying up this capitalextends the benefit stream for many moreyears than a project benefit stream.

• The additional and steady flow ofresources from environment funds canrelieve pressure for continuing orincreased government or donorexpenditures on conservation andsustainable development, resulting indecreased government or donor spendingand commitment in these areas. This is aproblem in the Jamaica National ParksTrust, and potentially a problem in Peru.Mexico provides a case study where thetrust fund has actually leveragedincreased government commitments toprotected areas. In Uganda, MBIFCT has“picked up” some communitydevelopment projects that the governmenthad planned to support but dropped whenit reduced the amount of funds availablefor community revenue sharing.

• In the GEF context, it may be difficult inpractice to pass on to individual activitiesfinanced by trust funds GEF-specificcriteria such as incremental costs andachieving global environmental benefits.As discussed in Chapter III.C, “parks”funds have an easier time of meeting thisstandard than “grants” funds. However,all of the GEF-financed “parks” funds, aswell as the Brazil “grants” fund, were infact focusing their programs on areasidentified by the Convention onBiological Diversity as global priorities.

124. Challenges and drawbacks that have inpractice proved to be surmountableinclude:

• Funds require highly technical andsophisticated management skills tosafeguard the fund’s capital, provide apredictable income stream in sometimesvolatile economic environments, andcreate a participative and transparentgovernance structure involving multiplestakeholders. There are two dimensionsto this issue. On the one hand, the fundsstudied have generally been able to recruitnationally for staffs, boards, and advisorycommittees with good technicalqualifications. On the other hand, fundshave needed technical and capacity-


building assistance related to theirfunctioning as institutions – governance,fundraising, capacity-building forrecipients, and investment oversight. Thisassistance has been available to someextent, but the demand still exceeds whatis available.

• There can be enormous pressure to

disburse funds, particularly after lengthystart-up phases, which can lead to anerosion of capital assets and excessiveproject-focus, financing a profusion ofactivities without developing clearstrategies. There are no documentedcases of erosion of assets due to pressureto disburse. However, the “grants” fundsin particular often struggle with aprofusion of proposed activities anddifficulty in developing clear strategies.The Mexican Nature Conservation Fundis an example of a trust fund addressingthe “profusion” problem by iteration ofincreasingly strategic program priorities,linked to conservation outcomes (see Box6). Another example is the Foundationfor the Philippine Environment, whichconcentrates a large percentage of itsactivities in geographical areas selectedfor their biodiversity importance in orderto maximize impact. Belize’s ProtectedAreas Conservation Trust is an exampleof a fund that has focused thematically, onactivities such as protected areas, eco-cultural tourism, and archeological sites.

• Funds can be overwhelmed with demands

for resources from a variety of sources(often well beyond the environmentalgroups originally involved), and withefforts to effectively accommodate theinvolvement of a large number of diversestakeholders. This, too, is more of aproblem for “grants” funds than for“parks” funds. Several funds initiallyoverwhelmed by demands have developedeffective measures to define a niche andstructure participation and selectioncriteria. In addition to the examplesdiscussed in the preceding paragraph, theMgahinga-Bwindi Impenetrable ForestConservation Trust – which received

4,750 applications in response to its firstcall for community proposals, when it hadintended to fund 50 – demonstrated anadaptive response. The trust fund’s LocalCommunity Steering Committee, whichwas charged with recommending to theboard which projects to fund, respondedby deciding on a thematic focus for thegrant cycle, notifying proponents thatonly those types of activities would beconsidered in the first round, andproceeding to short-list 150 for fullconsideration. In the second round, thecommittee has proposed setting upscreening processes at the parish level sothat local councils select three prioritycommunity projects to submit.

• Funds give direction and control of

potentially large sums of resources toindependent organizations (althoughgovernments and donors may berepresented on their boards), andactivities financed can lack coordinationwith national environment strategies andpriorities. Funds have generally donewell in managing large sums of moneywith integrity and transparency. “Parks”funds generally take direction from parksystem master plans and protected areaunit plans. “Grants” funds in two cases(Guatemala and Bolivia) have been activesupporters of national environmentalstrategies, providing both funding andtechnical expertise. The fund’s degree ofcoordination with national environmentalstrategies depends to a great extent onwhether a coherent national strategyexists, or whether there are competingstrategies and a broader lack ofcoordination at the national level.


B. CONDITIONS FOR SUCCESS

125. Taking all of the findings into account,the evaluation team concluded that it ispossible to identify certain key factorsassociated with trust fund success. Some ofthese factors determine whether theconservation objective is best addressed by atrust fund or another approach. Some affectthe fund’s prospects of becoming a viableinstitution. While it is not necessary for all theconditions to be met, some “critical mass”appears to be a prerequisite for success, andthe absence of more than a few would greatlyincrease the risk of delays, difficulties, andfailure to meet objectives. The “critical mass”will vary according to the type, size, scope,and objectives of the fund in question.However, when any of the key factors ismissing or only partially achieved, there arerisks that need to be clearly addressed in thedesign process.

FACTORS IMPORTANT FOR ESTABLISHING ATRUST FUND

a) Existence of a valuable, globallysignificant biodiversity resource whoseconservation is politically, technically,economically, and socially feasible. Absenceof major, urgent threats requiring mobilizationof large amounts of resources in a short timeperiod (i.e., the conservation action required islong term and addressable with the flows atrust fund could produce). The importance ofthe resource on a global scale affects thefund’s ability to attract internationalfinancing.

b) Government support of the concept ofa fund outside government control, thatbridges the public and private sectors. Thesupport should be active and broad-based,from the President to regional and localbodies, extending beyond environmentalministries and departments to includeministries of finance and planning. Areasonable financial contribution fromgovernment, if not directly to the fund, then toco-financing of project activities. Thiscondition often takes a long period of

advocacy during the design and start-upphases.

c) A legal framework that permitsestablishing a trust fund, foundation, orsimilar organization. Tax laws allowing sucha fund to be tax exempt, and providingincentives for donations from privatecontributors.

d) A critical mass of people with acommon vision. People from NGOs, theacademic and private sector, and donoragencies -- the environment community” --who can work together despite their differentapproaches to biodiversity conservation. Thesupport and involvement of business leadersis crucial to bring in private sectormanagement skills, especially skills infinancial management.

e) A basic fabric of legal and financialpractices and supporting institutions(including banking, auditing and contracting)in which people have confidence.

f) Mechanisms to involve a broad set ofstakeholders during the design process, andwillingness of stakeholders to use thesemechanisms.

g) Availability of one or more mentors –a donor agency with good program support, apartnership with an international NGO,“twinning” with another, more experiencedtrust fund – who can provide both moral andtechnical support to the fund during the start-up and program implementation phases.

h) Realistic prospects for attracting alevel of capital adequate for the fund tosupport a significant program while keepingadministrative costs to a reasonablepercentage. In most cases this means havingclear commitments from other donors beyondthe GEF, or debt swap mechanismsestablished, before starting the fund.

i) An effective demand for the fund’sproduct, i.e. a client community interested inand capable of carrying out biodiversityconservation activities on the scale


envisioned, and sufficient to achievesignificant impact.

FACTORS IMPORTANT FOR SUCCESSFULTRUST FUND OPERATIONS

j) Clear and measurable goals andobjectives. A “learning organization”mentality and environment, oriented towardresults and achieving objectives, andflexibility to make adjustments in objectives orapproach based on feedback and experience.FMCN (Mexico) provides the best example ofthe benefits of this approach. The teamconcluded that most funds would havebenefited from more detailed attention to thearticulation of goals, objectives, andindicators in operating manuals during design.

k) A governance structure withappropriate checks and balances, conflict ofinterest provisions, and successionprocedures. “Ownership” of the fund by itsboard and other governing bodies, indicatedby members’ commitment of time, engagementin policy and leadership, and building supportof the fund with varied constituencies. TheFoundation for the Philippine Environment,FUNBIO (Brazil), FMCN (Mexico), andPACT (Belize) provide the clearest evidenceof what can be achieved when this conditionis met, while PROFONANPE (Peru)illustrates the difficulties that can arise whenit is not.

l) Linkage between the trust fund and theleadership of any national biodiversitystrategy or environmental action plan. Mostof the “parks” funds organize and focus theirfunding priorities through participation in orguidance from planning processes of theirpartner agencies. FMCN’s ability to focus its“grants” program through linkages withnational priority-setting processes bestillustrates the advantage of this factor.

m) Ability to attract dedicated, competentstaff, particularly a strong executive director.Harmonious and productive board-staffrelationships. The best examples of thebenefits of highly qualified, strong leaders inthe executive position working well withdiverse, supportive, influential boards are

FMCN (Mexico), FUNBIO (Brazil), and theFoundation for the Philippine Environment.

n) Basic technical and other capabilitiesthat permit the fund to become a respectedand independent actor in the community.Access to, and constructive use of, training,mentoring, and technical assistance programsto build capacity. The Mexico and Ugandafunds illustrate this point. Bolivia alsoprovides an object lesson: althoughFONAMA’s loss of influence in 1993-95 wasprimarily due to political changes, the factthat those political changes also caused theorganization to lose its technical capacity waswhat precipitated a crisis of donor confidence.

o) Constructive relationships withrelevant government agencies, withintermediary organizations that provideservices to grantees, and with otherorganizations in the community. The fundshould avoid becoming an executing agencyitself. MBIFCT’s ability to rely on CARE asa technical assistance provider to grantees inUganda has been essential to the communitygrants program’s progress. FMCN (Mexico)and the Foundation for the PhilippineEnvironment are examples of other trust fundsthat have made it a priority to developpartnerships and working relationships withkey organizations to extend their reach andassure greater local acceptance of activities.

p) Financial/administrative disciplinecombined with program flexibility andtransparency; and procedures that supportthis and are consistently applied. Most of thefunds studied exhibited this attribute to someextent. Again, FMCN is the best example of afund that sets a high standard of financialdiscipline, while still maintaining theflexibility to deal with extraordinarycircumstances -- both in adapting to thecircumstances of its grantees and in makingfunds available to cover unforeseen butcrucial needs. MBIFCT in Uganda is anothergood illustration.

q) Mechanisms for continuing to involve awide range of stakeholders in the fund’sprograms and direction, with enough clearvision and leadership to avoid being pulled in


many directions and program fragmentation.FMCN (Mexico) and MBIFCT (Uganda) areexamples of funds demonstrating thisattribute. Recently, FONAMA has providedan example of the problems a trust fund thatdoes not pay attention to this priority canencounter.

r) Asset management competitivelyselected; diversified portfolio of investments;

financial expert to provide regular reportingand oversight/comparison to benchmarks. Asdiscussed in Chapter III.G, most of the GEF-supported trust funds have adopted thismodel.

s) A supportive, nurturing ImplementingAgency task manager, able to bring in theresources and expertise needed. This isdiscussed in Chapter III.C.

C. DECIDING BETWEEN TRUST FUNDS OR TRADITIONAL PROJECTS

126. The GEF is sometimes faced with thedecision of whether to support a conservationtrust fund or to finance biodiversity activitiesthrough a more traditional project mechanism.Although this evaluation only studied GEF(and other) projects which financed trustfunds and does not include a comparativeview of both funding modalities, a projectapproach was seriously considered during theproject design phase in Brazil and the GEF-funded Mexico trust fund replaced anineffective traditional project. In addition, keyinformants were asked to provide theirassessments of the advantages of both trustfunds and traditional projects. Our findingssuggest several factors which should becarefully considered when the GEF isreviewing alternatives for financingbiodiversity conservation projects. Thesefactors are closely associated with theconditions for success discussed in theprevious section.

127. A primary concern expressed by someabout trust funds is that they tie up substantialamounts of scarce donor resources forconservation and development in endowmentswhich generate only modest amounts ofincome. From a purely financial perspective,the primary question is whether trust funds arethe best use of capital, given its opportunitycost. Several factors influence the answer tothis question. First, although it is very

difficult to compare the benefits from trustfunds and those from projects, in theory trustfunds should generate more benefits, ceterisparibus, because the benefit stream from aninvestment in a trust fund is much longer thanfrom a 5-year project, and will potentiallycontinue forever if the endowment is wellmanaged. Second, the costs of trust funds maybe higher than traditional projects over theshort-run (3-5 years). However, endowmentcapital is invested and generates revenueswhich are equivalent to at least a portion ofthe opportunity cost of capital. In 1997, forexample, three of the six GEF trust fundsgenerated endowment revenues larger than the10 percent opportunity cost of capitalnormally used in World Bank financialanalyses. While these gains from endowmentinvestment may not continue at similar levelsover the life of the trust fund, they are usuallysignificant and must be considered incomparative analyses.

128. This evaluation found that trust fundscan normally be administered with operatingcosts between 20-25 percent of the annualrevenues generated from the endowment.However, these costs are probably onlymodestly greater than the real administrativecosts of traditional projects if all costs areincluded, and have the advantage ofgenerating much longer-term benefit streams.


Box 10: Factors Influencing the Trust Fund/Project Choice

Trust Fund Project

Threat tobiodiversity

Threat is long-term. Best addressedover 10-15 year period

Immediate and strong. Best addressedover a 3-5 year time frame.

Funding needs Problem best addressed throughmodest amounts of funding providedover many years in periodicincrements

Funding needs are large and/or lumpy.Level of activity can be sustained onceproject funding ends in 3-5 years.

Recipientabsorptivecapacity

Can only effectively manage modestamounts in periodic increments withgradual increase over time

Can efficiently manage and effectivelyspend major infusion of funds over 3-5years.

Common vision Critical mass of people with commonvision for biodiversity objectives andwillingness to participate in trust fundgovernance

Lack of common vision regarding trustfund. Collaborative management ofbiodiversity program less efficient thanmanagement by a less complex institution.

Programefficiency

Need to create more efficient fundingand operational mechanisms in lieu ofexisting bureaucracy.

Bureaucracy functions efficiently and doesnot constrain achievement of biodiversityobjectives

Enablingconditions

Legal basis and other conditions fortrust fund operations (e.g. incentivesfor fund raising) exist or can be quicklyestablished.

Basic fabric of legal and financialpractices allows for transparency.

Legal and other conditions for fundoperation do not exist and are unlikely tobe quickly established.

More direct donor supervision of resourcesrequired to ensure appropriate use offunds.

Collaboration Desirable to create a vehicle forgovernment and non-government(NGO, private sector) collaboration

Such opportunities for collaboration alreadyexist or are not appropriate.

Demand for“grants” fundresources

NGOs and other user groups havecapacity or can gradually buildcapacity to use annual fundsgenerated from endowment.

1) Effective grant-funding mechanismexists 2) NGOs and other user groups havevery limited capacity to manage even smallamounts of funding. Project to buildcapacity may be prerequisite.

Demand for“parks” fundresources

Framework of national parks systemestablished, some parks exist withreasonable degree of governmentsupport

1) Nascent national parks system.2) Recurrent costs assured by governmentor other sources. Parks need capitalimprovements.

129. Financial analysis is only one factorthat should be considered in choosing whetherto finance a trust fund or a traditional project.In many ways discussed in this report, trustfunds provide the opportunity to generatelong-term benefits which are more systemicand sustainable than benefits from traditional

projects. For trust funds included in this study,the decision to use a trust fund modalityfocused heavily on non-financial factors.These include (a) the time frame needed toaddress threats to biodiversity (often long-term); (b) the absorptive capacity of recipientorganizations (often limited); (c) the


incentives to spend large amounts of moneyquickly that are often associated with projectsand the frequent difficulty of sustaining thislevel of expenditure following projectcompletion; (d) the value and need to providea venue for non-government entities such aslocal NGOs and the business community towork in harmony with government to addressbiodiversity issues; and (e) whether usingprivate sector procedures, rather thangovernment procedures, will improve theefficiency of conservation funding. The

additional benefits from trust funds clearlymust be weighed against the risks and costsassociated with establishing or expanding acomplex institution. For the vast majority ofindividuals interviewed as part of thisevaluation – people involved directly withtrust funds and independent observers – thetrust fund experience is assessed verypositively, and viewed as bringing many long-term and systemic benefits that have not beenavailable from traditional projects.

44_______________________________________________________________________________________________________________________________________________

V. IMPLICATIONS FOR GEF AND RECOMMENDATIONS

GEF FINANCING OF CONSERVATIONTRUST FUNDS

131. While most of the conservation trustfunds examined have had three years or lessof full program operation and several haveexperienced setbacks and growing pains--some of them serious--the basic conclusionthat emerges from this evaluation is that,under certain circumstances, trust fundshave proven to be effective mechanisms forsupport to activities designed to achieveglobal environmental benefits. 132. Recommendation 1: GEF shouldcontinue to finance conservation trustfunds when the necessary circumstancesare met. GEF is one of the few significantsources of capital for conservation trustfunds today. Its leadership in financingfunds has catalyzed substantial additionalresources--both financial and intellectual.Trust funds, particularly those that focus onprotected areas, show great promise ofevening out the typical “boom-bust” cycle oftraditional projects and the related perverseincentives to spend large quantities ofmoney quickly. They are providingresources through transparent, participativeprocesses to groups and for importantactivities that have not previously had accessto financing. Trust funds supported by GEFand others are making tangible progress inincreasing involvement of communitygroups, NGOs, private businesses and othersin decision-making on conservation issues inwhich they have a stake. Some arecontributing to policy discussions onconservation and sustainable use based ontheir program experience. The prospects fordoing this in other places beyond thehandful supported to date appear to be good. CONDITIONS FOR GEF SUPPORT 133. Conservation trust funds are notalways the most appropriate response to the

issues of biodiversity conservation. In somecircumstances, a more traditional projectapproach may be appropriate. In ChapterIV.B. above, the evaluation team outlinedthe factors it has found to be conducive forconservation trust funds to succeed. Thesecan be used as a checklist for projectdesigners or reviewers when new trust fundprojects are considered. Where a criticalmass of these factors is not present, otherapproaches which have a shorter-termperspective and imply a more limitedcommitment to a specific approach orinstitutional arrangement are indicated. 134. Recommendation 2: The teambelieves that four conditions are essentialfor the creation and/or capitalization ofconservation trust funds, and recommendsGEF support only when they are met:

• The biodiversity conservation issue to beaddressed requires a long termcommitment--at least 10-15 years;

• There is active government support--notjust agreement--for creating a mixed,public-private sector mechanism thatwill function beyond direct governmentcontrol;

• There is a critical mass of people fromdiverse sectors of society who can worktogether despite their differentapproaches to biodiversity conservationand sustainable development; and

• There is a basic fabric of legal andfinancial practices and supportinginstitutions (including banking, auditingand contracting) in which people haveconfidence.

135. Recommendation 3: The concept ofconservation trust funds as independentorganizations that are more than financialmechanisms should be reflected from the

V Implications for GEF and Recommendations 45________________________________________________________________________________________________________________________________________________

outset in staffing patterns, governancestructures, recruitment criteria for boardmembers and staff, and technical supportprovided by outside donors and partners.This evaluation has shown that conservationtrust funds are complex and demanding toestablish and sustain. The effort to createand support them is justified only if they areviewed from the beginning as independentinstitutions that have a long-term role toplay. Although most trust funds supportedby GEF have been seen primarily asfinancial mechanisms, the evaluation teamfound that they are more than that. Tosucceed, they need more than financialmanagement and accounting systems andskills. They need to be able to monitor theperformance of their programs; to feed backexperience into strategic plans, programimprovements and broader policydiscussions; and to work closely withrecipients and other organizations to ensurea quality portfolio that complements otheractivities in their areas of focus. In short,they need to proactively influence theirenvironment and adjust their programs to fit. 136. Recommendation 4: GEF projectsin support of trust funds should makeprovision for training and technicalassistance, or assure that they are providedby other partners. Trust funds need to givemore explicit attention than has been givento date to training and technical assistance tohelp build the abilities they need to operateeffectively as independent, long-terminstitutions. This need not be throughseparate grant funding; in fact, in at leasttwo cases observed during the evaluation,this kind of assistance was effectivelyprovided as part of implementing agencysupervision missions. FINANCIAL SUSTAINABILITY 137. This concept of conservation trustfunds has implications for the minimumamount of resources needed for a fund to befinancially viable. The evaluation teamfound that, in general, trust funds have so farbeen unable to raise sizable additionalcapital contributions beyond those provided

by the original donor. Most of the resourcesthey have been able to attract are for specificproject activities which, while consistentwith their objectives, often do not providethem with the financial security or degree offlexibility needed to achieve their long-termorganizational goals. 138. One dimension of this issue iswhether a permanent endowment is neededto accomplish a trust fund’s mission, orwhether a sinking fund (that could bereplenished at some future point based onexperience) is adequate for this purpose. Ingeneral, the evaluation team concluded thatpermanent endowments are more likelywarranted for “parks” funds, while a sinkingfund that disburses over 10-20 years may beappropriate for “grants” funds. In looking atthis issue, it is important to consider notonly large capital contributions from donororganizations, but also government policiesenabling flows to the fund of locally-generated resources (e.g., from tourist taxes,park entrance feeds, concession fees or otheruser charges), as well as tax laws regardingcharitable giving by the private sector. 139. Recommendation 5: The initialcapitalization of a conservation trust fund,together with other resources available ona recurrent basis (e.g., proceeds fromtourist taxes or park entrance fees) shouldbe large enough to allow a meaningfulprogram in the fund’s chosen area offocus, over a significant period of time,while keeping operating (non-program)costs within a range of 20-25%. Trustfunds should not be created unless thereare tangible commitments for thisminimum amount of capital from theoutset. 140. Four variables interact to define theminimum amount of capital needed:

• the amount of money needed on anannual basis to carry out a significantprogram in whatever area the fundfocuses on;


• the amount of other (non-endowment)funding regularly available;

• the expected return on investment, andwhether the fund can draw down thecapital to meet current expenses (sinkingfund) or uses only returns (endowment);and

• the minimum level of operating costsneeded for the fund to function.

141. Recommendation 6: Beyond theminimum amount, GEF support should bestructured to provide incentives toencourage raising additional capital (e.g.,through tranching or matching provisions)and assistance in developing innovativecapitalization approaches. Ultimately, atrust fund’s best fundraising tool is a recordof success with its initial project cycles. Insome cases, the best strategy may be toprovide bridge financing or allow a firsttranche of financing to be used as a sinkingfund, with endowment capital provided oncea track-record is established. 142. Recommendation 7: GEF supportfor recurrent costs of protected areamanagement through “parks” fundsshould include a strategy for increasing theprovision of other resources for these costsand for looking for ways certain activitiesor areas could become self-financed.Individual conservation, sustainable use,and environmental education projectssupported by “grants” funds should haveprospects for their own sustainabilityand/or achieving their objectives in areasonable period of time with no need forcontinuing funding. Establishing aconservation trust fund that is itselffinancially viable does not guarantee thefinancial sustainability of the activities itsupports. Even if a fund has an assured,long-term source of funding, it is importantthat its resources be used in strategic andcatalytic ways, filling gaps and leveragingother contributions through the choice ofactivities it supports.

OPERATING PROCEDURES AND COSTS 143. Recommendation 8: GEF’simplementing agencies should applyclearer and more consistent guidance onoperating costs for the conservation trustfunds it supports. Operating costs shouldbe defined as the “cost of doing business,”including board operations; maintenance ofan office and basic financial, accounting andtechnical staff; program planning;constituency relations; fundraising; projectselection and supervision; and programmonitoring and evaluation. Program supportcosts, such as technical and capacity-building assistance to grantees, should becalculated in separate line items andexcluded from “operating” costs. Normally,the trust fund should seek to externalizethese program support costs by contractingor providing grants to other organizationswho would provide the service, if suchorganizations are available. Based on thisdefinition, a ceiling of 20-25% of netrevenues for operating costs appears to be areasonable target for trust funds to meet.Generally, funds with larger endowmentsand/or program activities should be able tooperate at the lower end of this range, whilefunds with smaller endowments and/orprograms may be at the high end. Projectsshould include parallel financing (not drawnfrom endowment earnings, but provided byGEF or other donors) for initial institution-building costs, including boarddevelopment, staff training, consultantassistance, and design of monitoring andevaluation systems. 144. Recommendation 9: GEF’simplementing agencies should give greaterconsideration to the impact on trust fundagility and responsiveness, as well as onoperating costs, of prescribing complex andelaborate procurement or administrativeprocedures. They should generally seek tohelp develop, and then certify, a fund’sown procedures that are appropriate to theenvironment in which it operates, ratherthan impose the implementing agency’sstandard procedures, which were developedfor very different circumstances. This is

V Implications for GEF and Recommendations 47________________________________________________________________________________________________________________________________________________

especially true when a trust fund is createdwithin another, established organization.Any specific criteria that trust funds arerequired to apply to determine the eligibilityof specific projects or activities for GEFfinancing (i.e., with respect to incrementalcosts or global environmental benefits)should specifically bear in mind theirimplications on administrative costs andfund responsiveness, and be as simple,straightforward and understandable aspossible. ASSET MANAGEMENT 145. Recommendation 10: The GEFshould continue to apply as standardpractice for its capital contributions to trustfunds the successful asset management andasset manager selection model developedby the World Bank. This includesdevelopment of investment guidelines thatreflect a conservative risk strategy andportfolio diversification; competitive,international selection of experienced,professional asset managers; and regular,active oversight of investment performancecompared to standard benchmarks by afund’s board of directors, preferably withthe benefit of periodic, expert advice.

PARTNERSHIPS 146. Recommendation 11: GEF supportfor conservation trust funds, especially forthe creation of new funds, shouldencourage the development of partnershipswith international NGOs with experienceand recognized abilities in this area, as wellas the exchange of information amongtrust funds. The evaluation demonstratedthe benefits to a trust fund of havingrelationships with other funds, internationalNGOs, and more than one donor agency. 147. Recommendation 12: In addition tosupport provided through individualprojects to information exchange andnetworking among conservation trustfunds, GEF and its implementing agenciesshould explore ways in which they couldprovide a small amount of resources to

permit their staff to sustain ongoingpartnerships with trust fund “graduates”beyond the normal supervision period. Anongoing relationship between trust fundsand the GEF and its implementing agenciesbeyond the normal 4-5 year period ofsupervision would also be beneficial. Thiswould allow GEF and its implementingagencies to gain a richer knowledge of trustfund experience and conditions for success,to apply lessons learned to future projects,and to verify that trust funds are achievingconservation impact and continue to supportGEF priority activities over the long run. MONITORING BIODIVERSITY IMPACT 148. Recommendation 13: GEF and itsimplementing agencies should provideincreased support to help trust funds definetheir intended impacts on biodiversityconservation and sustainable use and todevelop performance indicators and simple,useful monitoring and evaluation systemsto measure progress toward these objectivesand feed back experience into programimprovements and management decisions.As part of this process, GEF should insistthat all current and future conservationtrust fund projects have fully developedlogical frameworks. At the same time, GEFcould benefit from--and therefore shouldactively seek out and apply--the experienceof some trust funds, e.g., FMCN in Mexico,in defining its own biodiversity program-level performance indicators. Given thegenerally nascent state of the art ofperformance and results measurement forbiodiversity programs, this is an ideal areafor partnership between the GEF andconservation trust funds.

49_______________________________________________________________________________________________________________________________________________

ANNEXES

Annex A

TERMS OF REFERENCEGEF EVALUATION OF EXPERIENCE WITH

CONSERVATION TRUST FUNDS

Background and Rationale

The FY98 work program for the GEFSEC’s monitoring and evaluation team includes an evaluation ofGEF’s biodiversity activities. One specific set of biodiversity projects has received considerable attention withinthe GEF, including in the Overall Performance study and the 1997 PIR. These are projects which have supportedand/or established conservation trust funds. An evaluation of GEF’s experience to date with such funds wouldbe timely and would meet an expressed need of the Council, implementing agencies, and the NGO communityinterested in the GEF.

More than thirty environment funds have been created over the past decade, and twelve have receivedGEF support. Generally, they aim to provide a long-term source of funding for biodiversity conservation andsustainable development. They have often also served as vehicles for bringing multiple stakeholders together toprioritize conservation actions that respond to community and other local needs. The Biodiversity Conventionand the NGO community have strongly endorsed this approach and encouraged GEF to expand its financing ofsuch funds. The Overall Performance Study also recommended increased GEF support for conservation trustfunds, and suggested that GEF’s comparative advantage might be in providing technical assistance and initialseed capital to get funds started, while leveraging other resources for the funds’ capital itself.

Others have raised questions about the merits of this mechanism, however. Some Council members havevoiced concerns, in particular about the extent to which GEF’s eligibility criteria related to global environmentalimpacts are met for activities financed by environment funds, the “opportunity cost” of providing relatively largesums of GEF grants to capitalize endowment funds, and how to assure the performance of the funds is adequatelymonitored and evaluated. The Council requested the secretariat to prepare a paper examining these and otherissues related to environment funds. That paper is now planned to be submitted to the Council at its meeting inOctober 1998. This evaluation will make a direct input to this policy paper. It will also contribute to the 1998PIR and provide the basis for an issue of the GEF Lessons Notes series.

There are various types of environment funds. Those supported by the GEF have sometimes been set upas trust funds (in countries whose legal systems are based on British or U.S. models) and sometimes (in mostcivil law countries) as foundations. In either case, these funds legally set aside assets (e.g., GEF grants) whoseuse is restricted to the specific purposes set out in a legal trust instrument. (In the balance of these Terms ofReference, both types of funds are referred to as “trust funds”.) They can be structured financially in three ways.When an endowment is created, the financial assets of the fund are invested to earn income and only that incomeis used to finance specifically agreed-upon activities. Sinking funds are designed to disburse their entireprincipal and investment income for agreed-upon activities over a fixed period of time, although this could be arelatively long period, i.e., 15 years. Revolving funds provide for the receipt of new resources on a regular basis--for example, proceeds of special taxes designated to pay for conservation programs--which can replenish oraugment the original capital of the fund and provide a continuing source of money for specific activities. Anyparticular environment fund can combine these features depending on its source of capital.

Advantages and Potential Drawbacks of Trust Funds

Environment trust funds offer a number of potential strengths and advantages. Among them are:

• Funds can provide a stable, long-term source of funding for biodiversity conservation, not only to coverrecurrent costs, but also to smooth out year-to-year fluctuations in project funding. This can also provide abetter basis for long-term planning and strategy implementation.

• Funds are able to attract a diverse range of national and international funding sources.

Annex A 49________________________________________________________________________________________________________________________________________________

• They can absorb major amounts of funding and disburse it over time consistent with the absorptive capacity

of recipient organizations. • Environment funds can operate quickly and responsively to a variety of organizations that have relatively

limited institutional capacity, avoiding much of the bureaucracy of large donor or financial agencies. • They can provide a vehicle for collaboration among government and non-governmental organizations in

defining funding priorities, and for constructive engagement with the private commercial sector. • Funds often have participatory structures that involve a wide range of stakeholders-- e.g., governing boards,

technical advisory committees, and/or project selection committees that include representatives fromindigenous peoples groups, community organizations, local and national government agencies, privatebusinesses, the academic community, and international donor or NGO representatives.

• Funds can be politically independent of particular administrations or parties, and can provide continuity

from one government to another.

On the other hand, creation and implementation of environment funds present a number of challengesand potential drawbacks, including:

• Trust funds can tie up substantial amounts of scarce resources for conservation and development to generateoften modest amounts of income, some of which, in turn, is spent on administering the fund.

• They require highly technical and sophisticated management skills to safeguard the fund’s capital, provide a

predictable income stream in sometimes volatile economic environments, and create a participative andtransparent governance structure involving multiple stakeholders.

• The additional and steady flow of resources from environment funds can relieve pressure for continuing or

increased government or donor expenditures on conservation and sustainable development, resulting indecreased government or donor spending and commitment in these areas.

• There can be enormous pressure to disburse funds, particularly after lengthy start-up phases, which can lead

to an erosion of capital assets and excessive project-focus, financing a profusion of activities withoutdeveloping clear strategies.

• Funds can be overwhelmed with demands for resources from a variety of sources (often well beyond the

environmental groups originally involved), and with efforts to effectively accommodate the involvement ofa large number of diverse stakeholders.

• Funds give direction and control of potentially large sum of resources to independent organizations

(although governments and donors may be represented on their boards), and activities financed can lackcoordination with national environment strategies and priorities.

• In the GEF context, it may be difficult in practice to pass on to individual activities financed by trust funds

GEF-specific criteria such as incremental costs and achieving global environmental benefits.

Issues that the Evaluation will Address

Annex 1 lists the environment funds that have received GEF support to date, those that are presentlybeing designed or under active consideration, and additional funds that may possibly be supported in the future.The evaluation will examine the experience under these GEF projects--and selectively under environment fundsassisted by other donors--to determine:

(1) to what extent have the potential advantages of environment trust funds been realized in practice, and havethe concerns expressed about them been minimized or overcome?


(2) what enabling conditions are needed for conservation trust funds to succeed and what conditions are likely tohinder success?

(3) what evidence is there to date of the impact of these funds on conservation and sustainable use of biologicaldiversity?

(4) what lessons and good practices can be identified from this experience that could usefully be applied by othercurrent or future funds?

(5) what recommendations result from a review of this first generation of trust funds for GEF policies that wouldhelp guide future funding of and technical assistance to conservation trust funds?

Specific Scope of Work

Within the framework of the five questions listed above, the evaluation team will assess the followingspecific issues:

I. FUND ADMINISTRATION AND ASSET/FINANCIAL MANAGEMENT

• How much additional funding for conservation trust funds has been leveraged with GEF resources? Fromwhat sources have these resources been provided? What are the prospects for further fund-raising in thenear future?

• In practice, what has been the annual flow of funding for biodiversity conservation and sustainable use

activities generated by GEF-supported funds? Has there been a good match between projected resourcesand those actually generated?

• How has the trust funds’ capital been invested? How has the real return on the assets in these funds

compared to market averages and investments by similar organizations during the same period? • What skills and resources were required to manage the funds’ assets? Have the funds used professional

asset managers? If so, how were they selected and how has their performance been evaluated? Did fundmanagers and board members have the skills and experience to deal adequately with assets managementissues? What training or other capacity building assistance was provided in this area (by GEF or others),and what impact have they had?

• How much is spent on administrative costs? Were ceilings on these costs respected in practice? What are

the components of the funds’ costs?

II. PROGRAM MANAGEMENT • Are the funds guided by a specific strategy for selecting the activities they will finance? Are their grant

programs targeted to have a particular impact on conservation and sustainable use of biodiversity? Has thisstrategy given focus to the activities financed? Has it stood up to pressure from stakeholders to fund otheractivities that are not within priority programmatic areas? To what extent do the funds proactively seek outactivities that help advance their biodiversity strategy? Based on experience to date, what impact does itappear that the funds are having on biodiversity conservation and sustainable use?

• What monitoring and evaluation systems are in place for activities financed by the funds? Have the funds

identified progress and performance indicators for individual activities and their overall programs? How arethey being used in practice?

• What procedures are in place for selecting and administering the funds’ grant programs? Are decisions about

selection of individual activities made in a transparent and consistent manner? How are these proceduresregarded by fund managers, recipients and donors? How many administrative layers do proposals have topass through before they are approved? What authority do field staff have to make adjustments in projectsbased on implementation experience?

Annex A 51________________________________________________________________________________________________________________________________________________

• What procedures were implemented to assure that GEF criteria and CBD guidance, inter alia with respect toincremental cost financing and selection of activities intended to produce global environmental benefits,were passed on to activities financed by the funds? Were these procedures followed? Does theimplementation of these activities to date support the rationale for funding them with GEF resources?

• What skills and resources were required to manage the funds’ programs? Were people available locally or

was it necessary to hire them from outside the country? What training or other capacity building assistancewas provided in this area (by GEF or others), and what impact have they had?

III. GOVERNANCE

• Who is involved in the governance of the funds? What governance structures are in place and how well dothey function? How wide a range of stakeholders are involved in a meaningful way? Have the funds’governance structures led to a better understanding among all stakeholder groups, especially on issuesrelated to biodiversity conservation and sustainable use?

• How independent are the governance structures of direction by any one set of stakeholders or interests? of

the professional management of the fund? of the political processes in the country? Do board members andothers involved in fund decisions (e.g., technical selection committees for projects) represent their owninstitutions, sectors or interests, or do they act for the benefit of the community of stakeholders as a whole?

• What provisions exist for the regular and orderly change of board members and professional fund managers?

Have funds experienced a transition in the members of their governing bodies? Have they experienced achange in managerial leadership? How have these successions been handled? How have the organizationsfared as a result of these successions?

• What skills and resources were required to manage the participation of a large number of stakeholder groups

in the funds’ governance structures? Do board and other members of governing bodies have the necessaryskills to carry out their roles? Do they devote the time necessary to perform their expected roles? Whattraining or other capacity building assistance was provided in this area (by GEF or others), and what impacthave they had?

IV. STRATEGIC AND NATIONAL CONTEXT

• Who are the driving forces for setting up the trust funds the GEF has supported? What linkages existbetween the funds and government and NGO activities, particularly those supported through GEF projects?

• What contribution do GEF-supported funds make to overall funding for biodiversity activities in the

countries in which they are located? Are there other environment funds operating in the same country?How is their mission and program different from the GEF-supported fund?

• To what extent are the funds’ program strategies based on national biodiversity action plans or related

strategies? How do national priorities influence the selection of sites and activities financed by the funds?How do national governments view the funds?

• To what extent have fund managers contributed to the development and/or monitoring of national

biodiversity strategies, and/or to other national fora in which biodiversity priorities are considered? Whatinfluence have the funds had on national or local policies, laws and institutional constraints? Have the fundsserved as an effective voice for biodiversity conservation and sustainable use within their countries?

• Have resources allocated to biodiversity conservation and sustainable use activities by national governments

and/or others, in addition to those supported by the funds themselves, decreased or increased as a result ofthe creation of the GEF-supported funds?

V. GEF’S ROLE

Based on the experience of the funds currently supported:


• What are the basic requirements and enabling environment needed for a conservation trust fund to beestablished? What are the factors that influence the optimal size of a trust fund, and sequencing of supportto one?

• Under what conditions should GEF consider assistance to new or existing conservation trust funds? What

niche can GEF best fill in supporting the creation and growth of conservation trust funds? Whatimplications does this have for the comparative advantages and roles of GEF’s implementing agencies?

• What kinds of activities and/or objectives are most suitable to be supported through conservation trust funds,

as distinguished from other general or multipurpose funds or direct funding of specific activities? • How have GEF-supported projects strengthened the organizational skills and capacity of assisted

conservation trust funds to carry out their responsibilities? • What kinds of monitoring and evaluation systems are appropriate at the project/ implementing agency/GEF

level for conservation trust funds? What are the long-term requirements for monitoring the performance ofconservation trust funds to determine their impact on biodiversity conservation and their management andfinancial sustainability?

EVALUATION APPROACH

There is considerable experience and expertise within the GEF family on environment funds. Forexample, an Interagency Planning Group (IPG) on Environmental Funds involving a wide range of donor(including GEF) agency representatives, foundations, and NGOs is chaired by Jane Jacqz, a member of theUNDP/GEF staff. The IPG has sponsored a number of global and regional fora that have brought together fundmanagers, donors and NGOs to exchange experiences beginning in 1994. The World Bank published in 1995 apaper on “Issues and Options in the Design of GEF Supported Trust Funds for Biodiversity Conservation”prepared by Kathy Mikitin, a member of its ENVGC staff. A number of the international NGOs most activelyinvolved with the GEF--including The Nature Conservancy, World Wildlife Fund-US, and ConservationInternational--have a high level of interest in and experience with environment funds.

Therefore, while the evaluation will be carried out under the direction of the GEFSEC M&E team, it willinvolve the active participation of GEF staff from implementing agencies, the secretariat and the NGOcommunity. The approach to conducting the evaluation, and schedule for carrying it out, that will be followed isdescribed below:

• The assessment team will be made up of seven people: Scott Smith, a member of the GEFSEC M&E team,will serve as team leader, Kathy Mikitin from the World Bank’s GEF coordination unit, Martin Krause andKevin Hill from UNDP’s GEF coordination unit, Walter Lusigi, a member of the biodiversity/internationalwaters team from the secretariat, and two outside consultants independent of the GEF.

• A reference group will be created to provide guidance to the evaluation team. It will be made up of 15-20

people representing task managers with experience overseeing projects which include trust funds,environment fund and biodiversity specialists in the implementing agencies and GEF secretariat, NGOrepresentatives, members of implementing agency evaluation staff, and representatives of other donors withan interest in environment funds. In addition, current or former officers of environment funds that will notbe evaluated under the study will be included. The reference group will review the evaluation team’simplementation plan for the study, help identify and obtain materials for the evaluation team, facilitatearrangements for project visits by the team, and review and provide additional input on drafts of the team’sreports. The group will not meet physically with any frequency, but will perform its functions by individualconversations with the team, telephone conference, electronic mail, or other forms of correspondence.

• In addition to the core team members, local consultants will be hired in countries to be visited as part of the

evaluation to help prepare for the field visits and participate actively in them. These consultants will beemployed through UNDP, with funding from the M&E budget for the evaluation.

METHODOLOGY

The evaluation will be conducted in three steps:

Annex A 53________________________________________________________________________________________________________________________________________________

• First, the team will conduct interviews with task managers and review documents (e.g., evaluations,supervision reports, project implementation reviews, project designs and related analyses, other articles orreports) on projects which include GEF-supported conservation trust funds. They will also review reportsfrom international and regional fora on environment funds and other documents relating to the experiencewith GEF-supported and other environment funds (including funds in the Philippines, Jamaica, and Belize),as well as interview others knowledgeable about this experience. On the basis of this desk review andinterviews, the team will prepare a progress report identifying the team’s preliminary findings and the keyissues on which the rest of the study (especially the field visits) will concentrate. The team will also prepareinterview guides to be used in all of the field visits in order to assure that comparable information iscollected systematically in all of the trips.

• Second, the team will visit 5-6 funds supported by GEF and, ideally, 1-2 others. Teams of two members

will travel to two countries each for approximately three weeks. Each trip will include a major field visitfrom 10-12 days in duration to a GEF-supported fund, and involve visits to subproject sites. In each of thesecountries, team members will be joined by a local consultant. Each trip will also include another countrywhere the team will make a shorter visit (3-5 days), primarily limited to visiting the funds’ headquarters.These shorter trips will seek to complement and/or update material available from project evaluations andother reports, and will include at least one country with environment funds not supported by the GEF.

The GEF has made substantial investments in trust fund equity in five countries to date: Bhutan, Brazil,

Mexico, Peru, and Uganda. The GEF project in Bhutan has just been completed and a final evaluation andcompletion report has been prepared. It is likely that the evaluation team can benefit from a current assessmentof the project without a field visit. The trust fund in Mexico just began operating with GEF funds in January1998. Therefore, the countries tentatively selected to be the major field visits are Brazil, Peru and Uganda.

Of the other funds supported by the GEF, no contributions were made to equity in Bolivia or the Seychelles.

GEF projects supporting the Central American Fund (FOCADES) and trust funds in Malawi, Mongolia, andSouth Africa have not yet begun implementation. Thus, minor field visits are tentatively planned to Mexico andthe Eastern Carpathian funds, as well as to two funds in Jamaica which have not received GEF support but offersome interesting experience for the evaluation.

While these visits are being made, 1-2 background papers on issues related to the evaluation will be

prepared by other team members and/or representatives of U.S.-based NGOs with considerable experience andimportant perspectives on conservation trust funds. These papers will be available to the full team by the time allof the field visits are completed. • Third, following the field visits, the team will meet together to synthesize their findings, discuss them with

the reference group and others, and prepare the draft of the evaluation report. This draft report will then bereviewed with the implementing agencies and secretariat, the IPG members, the NGO community, andothers. The evaluation report will be revised based on the input received from these consultations andpresented to the Council at its October meeting.

SCHEDULE

The evaluation team will hold its first meeting from April 15-17, 1998. This meeting will be devoted todeveloping working relationships among team members, elaborating a specific plan for carrying out theevaluation, and dividing responsibilities among the team members.

While the specific implementation plan for the study will depend on the outcome of this first meeting, itis expected that the general schedule for the evaluation will be:

⇒ April 20 - May 8: desk reviews/research of evaluations, mid-term reviews, supervision reports,and other documents; discussion with task managers; sharpening of issues; confirmation of theprojects to visit in the field; and logistical planning for field work.

⇒ May 15: completion of progress report.

⇒ May 18 - July 17: field work (three visits of approximately three weeks each, which will include atotal of seven funds, by teams of two members); continued desk reviews and interviews.Tentatively, the funds to be visited are (1) Brazil-FUNBIO (10-12 days) and Jamaica--two funds


not financed by GEF (4-5 days); (2) Peru-FONANPE (10-12 days) and Mexico-FMCN (4-5 days);and (3) Uganda-Mgahinga/Bwindi (10-12 days) and Eastern Carpathians (2-3 days).

⇒ July 20 - August 7: team meetings and drafting of report.

⇒ August 10 - September 16: discussion of draft report with IAs, biodiversity task force, NGOs, IPG,others. Input made into policy paper GEFSEC prepares for October Council meeting. Draft ofevaluation report sent to Council o/a September 16.

⇒ September 16 - October 1: finalization of report

⇒ October 14-15: presentation to Council

⇒ December 31: final report translated, printed, and distributed.

GEF-Supported Environment Funds

Country/Fund GEF IA Status

Bhutan Trust Fund World Bank ExistingBolivia FONAMA World Bank ExistingBrazil FUNBIO World Bank ExistingCentral American Fund--FOCADES UNDP ExistingEastern Carpathian Biodiversity Conservation World Bank ExistingMalawi Mulanje Mountain Trust Fund World Bank ExistingMexico Protected Areas Fund (FMCN) World Bank ExistingMongolia Environmental Trust Fund UNDP ExistingPeru FONANPE World Bank ExistingSeychelles Island Foundation World Bank ExistingSouth Africa Cape Peninsula Trust Fund World Bank ExistingUganda Mgahinga/Bwindi Trust World Bank Existing

Colombia Sierra Nevada de Santa Marta World Bank In DesignIndia Ecodevelopment II World Bank Under StudyNepal World Bank Under StudyPapua New Guinea National Conservation Trust UNDP/WB In Design

Belarus Belovezhskaya Primeval Forest World Bank PossibleBurkina Faso -- West Africa Wildlife Ranching UNDP PossibleCambodia Tonle Sap Management Program UNDP PossibleChina/others -- Tumen Trust Fund/TRAD UNDP PossibleGuinea -- Monts Nimba National Park UNDP PossibleLaos Wildlife/Protected Areas World Bank PossibleMekong Trust Fund UNDP PossiblePakistan National Biodiversity Trust Fund UNDP PossibleSao Tome/Principe -- National BD Protection Fund UNDP PossibleSierra Leone -- National Protected Areas Fund UNDP PossibleUkraine Danube Delta World Bank Possible


Annex B

LIST OF CONTACTS

Names in bold type indicate members of the Reference Group.

Ricardo Bayon IUCN-USJorge Bilbao Americas Fund, ArgentinaVictor BullenJim HesterEric Fajer

USAIDUSAIDUSAID

Gonzalo CastroKathy MacKinnon

World Bank/GEFWorld Bank/GEF

Tina Kimes World Bank/GEFAndres Liebenthal World Bank/Operations Evaluation DepartmentAlberto Ninio World BankSusan Shen World Bank task managerClaudia Alderman World Bank task managerAgi Kiss World Bank task managerSteve Cornelius Sonoran FoundationRandy CurtisGina GreenSheldon CohenWilliam MillanBruce Moffat

TNCTNCTNCTNCTNC

Chona Cruz GEF SecretariatMario Ramos GEF SecretariatKen King GEF Assistant CEOJane JacqzNikhil Sekhran

UNDP/GEFUNDP/GEF

Marianne Guerin-McManus Conservation InternationalAlfred Gugler Swiss Coalition of Development OrganizationsF. Garry JewettBarry SpergelJamie ResorMeg Symington

WWF-USWWF-USWWF-USWWF-US

Sam Johnston Convention on Biological Diversity SecretariatDan Martin John D. and Catherine T. MacArthur FoundationJeff McNeelyFrank VorhiesPatrick DugganGeorge Green

IUCNIUCNIUCNIUCN

Jorge Osorio Vargas Americas Fund, ChileCarlos Quintela Independent consultant; former FONAMA executive directorDavid Smith Jamaica Conservation and Development TrustBuenafe Solomon Foundation for the Philippine EnvironmentCarmen TaveraAhmed DjoghlafJohn Tychssen

UNEP/GEFUNEP/GEFUNEP/GEF

Jennifer Tufts European Union Washington mission


Country-specific contacts

Belize

Barry Spergel, WWF-USHumberto Paredes, executive director, PACT

Bhutan

Jessica Mott, World BankGabriel Campbell, The Mountain InstituteJamie Resor, WWF-USPaljor J. Dorji, Deputy Minister, National Environment Commission

Bolivia

David Lozano, USAIDCarlos Quintela, former FONAMA executive director

Brazil

In Washington:Claudia Sobrevila, Conservation International (former World Bank task manager)Alberto Ninio, World BankMusa Asad, World BankRuth Norris, Consultant

In Brasilia:Luis Carlos Ros, Task Manager/Environment, World Bank*Braulio Dias, General Coordinator for Biological Diversity, Ministry of EnvironmentCarlos Roberto de Carvalho, Environmental Coordinator, Ministry of Planning/SEAINWashington de Mendonca, General Coordinator for Bilateral Planning, Ministry of Planning/SEAINServulo Moreira, Division Chief, Min of Planning/SEAIN*Aspasia Camargo, Special Advisor to the Minister of Foreign Affairs,Oneida Freire, Project Director, Ministry of EnvironmentAltineu Miguens, Project Director, Ministry of Environment*Ricardo Soavinski, Chief;, Ecosystems Directorate IBAMA*Garo Batmanian, Director, World Wildlife Fund/BrazilCristina Montenegro, Director, Environment Division, UNDP

*indicates FUNBIO board members

In Rio de Janeiro:Pedro Leitao, Executive Director, FUNBIOMagarida Lima, Coordinator of Control, FUNBIOMaria Clara Soares, Coordinator of Studies, FUNBIOJ. Mello Flores, President, Getulio Vargas FoundationJose Alfonso Barbosa, Director General, Getulio Vargas FoundationJose Augusto Drummond, Project Director, ISERKarla Matos, Project Director, ISERAngelo dos Santos, Coordinator for External Affairs,

Brazilian Foundation for Sustainable Development (FBDS)Israel Klabin, President, Brazilian Foundation for Sustainable Development (by phone)Silvio Gomes de Almeida, Services for Alternative Agriculture Projects (AS-PTA)Pablo Sidersky, AS-PTA*Benjamin Gilbert, Oswaldo Cruz Foundation

Annex B 57________________________________________________________________________________________________________________________________________________

In Curitiba:Maria de Lourdes Nunes, Technical Coordinator, O Boticario FoundationIvan Carlos Baptiston, Forestry Engineer, O Boticario FoundationBernardo Fedalto, Executive Vice President, O Boticario.Clovis Borges, Director, Society for Wildlife Research (SPVS)

In Sao Paulo:Clayton Lino, Technical Director, National Council for Atlantic Forest Biosphere ReserveLuciana Lopes Simoes, Project Officer,

National Council for Atlantic Forest Biosphere ReserveJoao Lucilio R. de Albuquerque, Administrative Director,

National Council for Atlantic Forest Biosphere ReserveJoao Paulo Capobianco, Executive Secretary, Instituto Socioambiental (ISA)Roberto Bornhausen, President, FUNBIO Board of Directors (by phone)

Other:Fernando Allegretti, Project Director, COMARU (by phone)

Eastern Carpathians

In the US:

Dan Martin, John D. and Catherine T. MacArthur FoundationAndrew Bond, World Bank task managerGarry Jewett, WWF-USBarry Spergel, WWF-USEmilia Battaglini, World Bank task managerGennady Pilch, World Bank legal departmentPhil Brylski, World Bank task manager

In Slovakia:Zuzana Guziova, GEF Project Coordination Unit and Foundation PresidentZbigniew Newiadomski, Foundation Board MemberStephan Stojko, Foundation Board MemberMieczyslaw Zaniewski, Foundation Board MemberMiroslav Bural, Foundation Board MemberRudolf Dudic, Foundation Board MemberZoltan Rakonczay, World Wide Fund for Nature

Jamaica

Environmental Foundation of Jamaica (EFJ)Peta-Anne Baker, Board ChairpersonSelena Tapper, Executive SecretaryPatrick Daley, Director of ProjectsMarlene Lewis, Membership and Community Relations Officer

Jamaica National Park Trust Fund (JNPT)Shermaine Barrett - Director Fund Development

Jamaica Conservation and Development Trust (JCDT)David Smith, Executive Director (Trustee JNPT)Ezra Whittock, Chief of Corps (Rangers), JCBMNP


Government of JamaicaLeonie Barnaby, Director of EnvironmentLearie Miller, Deputy Director, NRCAMarilyn Headly, Director, Forestry DepartmentAmb Don Mills, Spokesperson for the EnvironmentSybil Ricketts, Environmental Planner, Planning Institute of JamaicaHopoton Peterson, Environmental Planner, Planning Institute of Jamaica

NGOsMaureen Rowe, Director, National Environment Societies Trust (NEST)Peter Espeut, Director, South Coast DevelopmentTerry Williams, Director, South Coast Conservation Project

Business SectorCharles Ross, Private Sector Office of Jamaica (trustee JNPT and JCDT)Blossom O’Meally Nelson, (trustee JNPT and JCDT)Jeanne Robinson, Insurance Company of the West Indies -ICWI (Trustee JCDT)Diana McCauley, Jamaican Environmental Trust (Trustee EFJ)Eleanor Jones, Managing Director, Environmental Solutions, Ltd.Barry Wade, Chairman, Environmental Solutions, Ltd.David Lee, Managing Director, Caribbean Ecosystems, Ltd.Hosfort Scot, Retired (ex EFJ Board)

Donor AgenciesJan Jansen, Program Officer, UNDPHoward Batson, Acting Chief, Office of Environment and Natural Resources, USAIDGreg Booth, Environmental Advisor, USAIDConrad Ornstein, Environmental Specialist, Technical Support Services (DEMO project)Chris Brown, Former Office Director, USAID

Academic CommunityAl Binger, University of the West Indies Centre for the Environment and Development Cheryl Dash, Manager,Special Projects and Sponsored Research,

UWI. Environmental Consultants

Mexico

In the US:Luis Constantino, Task Manager, GEF project, World BankFreeborn G. Jewett, WWF-USTina Kimes, Latin America/Caribbean Regional Coordinator, World Bank/GEF

In Mexico:Michael E. Ayala, Deputy UNDP Resident Representative, MexicoAdolfo Brizzi, Sector Leader Agriculture and Environment, Mexico Department, World BankGuillermo Castilleja, WWF Representative and Mexico Program DirectorJavier de la Maza Elvira, General Coordinator, Natural Protected Areas, Instituto Nacional de Ecologia (INE),

SEMARNAPJorge Favela Fierro, FANP Program Coordinator, Instituto Nacional de Ecologia (INE)Bruno Guandalini, UNDP Resident Representative, MexicoRenee Gonzalez Montagut, Director, FANPDavid Gutierrez Carbonell, Director, Isla Contoy Biosphere ReserveDiane Hermanson Zuelow, Director, Information and Communications, FMCNJavier Hirosa, Director, Red de Organizaciones del Sureste para el Desarrollo SusentableRene Kantun Palma, Legal and Administrative Officer, Ria Lagartos Biosphere ReserveRodrigo Medellin, Universidad Nacional Autonoma de MexicoRaul E. Murguia Rosete, National Coordinator, UNDP Small Projects Program, MexicoAlfonso Oseguera Iturbe, Director, Inverlat Casa de BolsaRamon Perez Gil, former coordinator of CONANP Task Force charged with design of FANP

Annex B 59________________________________________________________________________________________________________________________________________________

Delia Reyes, Director of Administration, FMCNJorge Rickards, Director of Evaluation, FMCNLorenzo Rosensweig, Director General, FMCNRamiro Rubio Ortiz, Director, Ria Lagartos Biosphere ReserveMauricio Ruiz Galindo, President, CTFANP and member of FMCN BoardLuz del Carmen Salido, Deputy Director of Investment Advice, Inverlat Casa de BolsaJorge Soberon Mainero, Executive Secretary, CONABIOFebo Suarez, Balam (Mexican NGO)Paul Suarez Navarro, ProNaturaLiliana Urbina Callejas, FANPElia Villanueva, GEF Program Coordinator, UNDP Resident Representation, MexicoFrank Zadroga, Environment, Energy and Global Climate Change Advisor, USAID/MexicoThe staff of Ria Lagartos Biosphere Reserve, and fishermen, union leaders, officials from Industrias SalineraYucatan S.A. (ISYSA), NGO representatives, and others in Ria Lagartos Reserve.

Peru

In Washington:Claudia Alderman, World Bank Task ManagerGonzalo Castro, Biodiversity Specialist, World Bank/GEFAlberto Ninio, Legal Advisor, World Bank

In Lima:Luis Alfaro, Director General of Natural Protected Areas and Wildlife, INRENA,

and member of Board of Directors, PROFONANPECayetana Aljovin, Executive Secretary, Ministry of Economy and FinanceViveca Amoros, Advisor, Presidency of the Council of MinistersDiego Aramburú, Asset Manager, Gerente General, InterfondosLivia Benavides, Acting Resident Representative, World BankAntonio Brack, Consultant*Alejandro Camino, former Coordinator, PROFONANPEEric Cardich, Technical Director, Sociedad Pachamama

and member of Board of Directors, PROFONANPENicole Cote, First Secretary, Embassy of CanadaJurgen Czerwenka, GTZ and member of Board of Directors, PROFONANPEAlberto Giesecke, Program Officer (GEF Focal Point), UNDP/LimaCarlos Giesecke, Investments Office, Ministry of Economy and FinanceNestor Guerra, Coordinator, Fondo Canadiense para Iniciativas LocalesLuisa Elena (Lupe) Guinand de Paredes, Consultant, Smithsonian/SPDP*Mariela Leo, Asociacion Peruana para la Conservacion de la Naturaleza (APECO)*Thomas Moore, Environmental Specialist, USAID/LimaJaime Nalvarte, Executive Director,

Asociacion para la Investigacion y Desarrollo Integral (AIDER)Alberto Paniagua, Coordinator, PROFONANPECarlos Ponce, Vice President (Andean Countries), Conservation International*Manuel Pulgar Vidal, Executive Director, Sociedad Peruana de Derecho Ambiental

and member of Board of Directors, PROFONANPEMikko Pyhala, Ambassador of Finland to PeruGabriel Quijandría, Technical Coordinator, PROFONANPEMaria Luisa del Rio, Consejo Nacional del Ambiente (CONAM)Eduardo Sal y Rosas, Manager, Executive Secretariat for International

Technical Cooperation, Ministry of the PresidencyCarlos Soldi, Director, Consejo Nacional del Ambiente (CONAM) and GEF

Operational Focal Point (and Council member)Gustavo Suarez de Freitas, Executive Director, ProNaturaleza*Raul Tolmos, Environmental Advisor, Ministry of Economy and Finance*Alvaro Torres, Environmental Advisor, AIDER (and former Director General

of Natural Protected Areas and Wildlife and PROFONANPE Board member)Raul Torres, Financial Coordinador, PROFONANPEJorge Ugaz, ProNaturaleza (and former Director General of Natural


Protected Areas and Wildlife)Miguel Ventura, Chief, Instituto Nacional de Recursos Naturales (INRENA),

and President, Board of Directors, PROFONANPECharles de Weck, DESCO and member of Board of Directors, PROFONANPE

* member of PROFONANPE Technical Committee

In Cusco and Manu Biosphere Reserve:Almir Salazar, Chief, Manu National Park, INRENAJohn Florez, (supervisor of park guards), Manu National Park, INRENA/PROFONANPEJuan Carlos Leiva, Administrator, Manu National Park, INRENA/PROFONANPE

Park Guards in Manu National Park:Emilio AparicioDatsen GonzalesTerry ItalianoAdrian MorueliNemecio MosqueraVictor Reategui

Rainer Hostnig, Co-Director, European Community Project, ManuIng. Muñiz, Co-Director, European Community Project, ManuExecutive Director, Region Inka Manu project

In Huascaran Biosphere Reserve:René Valencia, Chief, Huascarán National Park, INRENALincoln, Administrative Director, Huascarán National Park, INRENA/PROFONANPEMilton Alva Villacorta, Director Regional Huaraz, CARE PeruMarc Kapust, Asociación Ecológica KaweyBetty Mendoza Muñoz, Coordinadora General, Asociación Ecológica KaweyArmando Pasco Ames, Victor Rojas Arbulú, Asociación VIDAJorge Recharte, Director, Andean Program-Peru, The Mountain InstituteJuan Roque, Consejo Nacional de Camélidos Sudamericanos, CONACSMiriam Torres, Andean Program-Peru, The Mountain Institute

Uganda

Agi Kiss, World Bank task managerNathalie Johnson, World BankChristine Oryema-Lalobo, Steve Cavell, Jones, MBIFCT staff

Members of the Trust Management Board, MBIFCT:Fred Kigenyi, Forest Department (Chair)Yakobo Moyini, UWALucy Muwuluke, Ministry of Planning and Economic DevelopmentEdith Kabesiime, Wildlife Clubs of UgandaNick Ritchie, CAREDr. Richard Malenky, Mbarara University Institute for Tropical Forest ConservationJohn Tindiwegi, Rukungiri DistrictZikanga Bashaija, Kabale DistrictAloisius Bakesigaki, Kisoro DistrictChris Van Vugt, Royal Netherlands Government

Paddy Bahiirwa, MBIFCT community development officerPhilip Franks, CAREMaryke Gray, Dennis, Robert, ITFCRay Victurine, Grants Management Unit, USAID Action Program for the EnvironmentRobert Nabanyumya, UNDP/GEF East African Cross Border Biodiversity ProjectArthur Mugisha, Deputy Director, and Gerald Ndawula, administration

coordinator, UWA

Annex B 61________________________________________________________________________________________________________________________________________________

Daniel Moore and Karen Menczer, USAIDEric Edroma, Former director, UWACharles Akol and Telly Muramira, NEMAChris Kassami, GEF Operational and Political Focal Point

Members of the midterm review team:

Jamie Resor, WWF-USPaul Clarke, ConsultantMaria Aycrigg, Consultant

Members of the Technical Advisory Committee, MBIFCT

Members of the Local Community Steering Committee, MBIFCT

Members of Project Implementation Committees, community residents in these communities:Rubuguri (primary school)Nombe (primary school)Giharo (primary school)Kateretere (water tank)Kagunga (aid post)Batwa indigenous food production

63_______________________________________________________________________________________________________________________________________________

Annex C

DESCRIPTIONS OF FUNDS ANALYZED

Funds that have both “grants” and “parks”functions

MEXICO

1. The Mexican Nature ConservationFund (FMCN) was established as a private,civil association under Mexican law in 1994.Its mission is to conserve the biodiversity ofMexico and ensure the sustainable use of itsnatural resources, through the promotion ofstrategic actions and medium to long-termfinancial support. FMCN was createdfollowing extensive consultations throughoutthe country and with the strong support of thepresident of Mexico, WWF-US and otherinternational and Mexican NGOs, and leadersof the Mexican business community. FMCNwas capitalized with $19.5 million fromUSAID and $10 million contributed by theMexican government (part of which is stillbeing paid).

2. Since 1996, investment earnings havesupported a competitive grants program ofapproximately $2 million annually. Proposalsare evaluated by committees made up ofFMCN’s technical director and outsidereviewers, and approved by the fund’sEvaluation Committee and full board. Thecategories in which proposals are invited haveevolved based on experience. In the firstyear, more proposals were received fromacademic institutions than NGOs andcommunity groups. This was not the mix thefund wanted. So they focused future requestsfor proposals on activities that would produceresults in the field, and helped stimulate betterproposals from their target groups. FMCNapproved 76 projects in 1996 and 108 in 1997.In 1998, proposals were received in threecategories: (1) conservation of ecosystemsand species, (2) sustainable use of naturalresources, and (3) institutional strengtheningand environmental education. Allconservation projects must be in areasidentified as high priorities for biodiversityconservation or for species included in the

government’s endangered list or in the CITESconvention. 3. In July 1997, FMCN received a $16.5million GEF grant implemented by the WorldBank to establish a Natural Protected AreasFund (FANP). This was the amount thenremaining in a problematic GEF projectoriginally implemented through thegovernment of Mexico. Since January 1998,earnings from the fund have supportedrecurrent and other costs associated with themanagement of ten priority protected areas.The program provides a total ofapproximately $1 million a year to the tenareas. The allocation of resources amongthese protected areas in 1999 will be based inpart on size, the population inhabiting theareas, and past performance under theprogram. The Mexican government hascommitted to provide a core staff of fivepeople and an increasing share of basicmanagement costs in each area included in theprogram.

4. FMCN has a General Assembly, madeup of current and past board members, whichis its highest governing body. Its boardcurrently has 18 members, all but one ofwhom are private individuals selected torepresent diverse experience, professionalabilities, and geographic and demographiccharacteristics. The exception is Mexico’ssecretary of environment, who serves exofficio. The president of WWF-US alsoserves on the board; USAID has non-votingrepresentation. Board responsibilities includeapproval of a strategic plan for the fund, anannual operating plan and budget, and theportfolio of grants projects recommended forfunding. The fund has four standingcommittees (administration and finance,evaluation [project selection], international,and natural protected areas). The latter,CTFANP, was created when the protectedareas fund was established in FMCN. Itprovides direction and oversight to the FANP.It is made up of seven members drawn fromfive sectors of society (public, private, social,

Annex C 63________________________________________________________________________________________________________________________________________________

academic, and conservation groups). No onesector can be represented on the CTFANP bymore than two members. FMCN has anExecutive Director and a staff organized intofour divisions: technical, administrative,communications and protected natural areas.The director of the latter is responsible for theadministration of the FANP; the technicaldirector oversees the grants program.

BOLIVIA

5. FONAMA (the National Fund for theEnvironment) was created in 1990 to developfunding for environmental conservationthrough international cooperation and debtreduction. The Fund is an agency of theGovernment of Bolivia. FONAMA’s missionis to raise funds, both nationally andinternationally, manage those assets, andadminister grants in the public and privatesectors. (In fact, the government of Boliviainitially required that all funding for theenvironmental sector flow throughFONAMA, which implemented both trustfunds and more typical project funding.)FONAMA is a modular fund with severalseparate accounts operating under theFONAMA umbrella. The accounts haveincluded a $20 million US Enterprise for theAmericas Initiative fund that provides smallto medium grants to NGOs; two smaller fundsfrom the Swiss and Dutch bilateral agenciesthat provided small grants to NGOs in theearly 1990s; the GEF BiodiversityConservation Project (1993-97; FONAMAacted essentially as a project coordinationunit); a national parks endowment (neverfunded beyond its $1 million initialcapitalization); and a USAID forestry project.Most accounts have their own staff andadministrative councils.

6. During its first two years, FONAMAsecured some $70 million in donorcommitments and built a highly qualifiedstaff. But in 1993, the government changedhands, and FONAMA, which had been a highprofile agency reporting directly to thePresident, became a third-level agency inwhat became the government’s smallestministry. The national environmental

planning process that FONAMA hadsupported was discontinued and itsrecommendations rejected. Plans to empowerlocal and regional institutions to elect civilsociety representatives to FONAMA’s boardwere scrapped. Professional staff werereplaced by political appointees, andFONAMA became mired in bureaucracy,internal and external conflict. It developed areputation for protracted bottlenecks anddelays in its administrative processes (at leastin its grant-making functions), and was unableto produce consolidated financial statements.

7. An independent evaluation in 1995-96highlighted several lessons learned fromFONAMA’s experience, chief among themthe need to insulate funds from politicalconsiderations. Today, the EAI account (theonly part of FONAMA that truly functionedas a conservation trust fund) is in the processof separating from FONAMA to become anindependent non-governmental institution.The evaluation will generally consider theoperations of the EAI fund in discussingFONAMA throughout this evaluation, andtherefore generally classify it as a “grants”fund.

BHUTAN

8. The Bhutan Trust Fund forEnvironmental Conservation was establishedin January 1991 with technical support fromthe World Wildlife Fund and UNDP. It wasthe first trust fund supported by the GEF,which committed $10 million in two tranches,and made the first disbursement in May 1992.The fund was established to provide a securesource of funds for environmental programsin Bhutan. GEF project objectives were toassist the Bhutanese government inconserving the nation’s forestry andpreserving its rich biological diversity; and totest the feasibility of trust funds asmechanisms for providing long-term,sustainable support for biodiversityconservation. Activities included a) upgradinggovernment capacity and staff to manage aprotected area system and monitor changes inbiodiversity; b) establishing a national systemof protected areas; c) gazetting four priority


protected areas and developing a modelmanagement plan; d) strengtheningmanagement of two existing protected areas;and e) establishing additional protected areasin phases. Each of these program elementswas appraised during project design. For theinitial stages, the trust fund activities werealmost identical to those of a traditionalWorld Bank project. 9. Because of the ready availability ofother assistance, especially from WWF-USand the Asian Development Bank, only$418,000 of trust fund revenues had to beused for these purposes; as a result, theendowment has grown. Project activitieswere carried out on a timely basis and keyobjectives for Year 5 were fully met by Year3, triggering the release of the second trancheof GEF funds. 10. The Bhutan fund is governed by a six-member management board, with fiverepresentatives from the government ofBhutan and one from WWF-US. The UNDPresident representative is an ex officio(participating but not voting) member. In2001, the board will be expanded to includenational NGO and private for-profit sectorrepresentatives. Government representativesinclude the ministers of finance, planning, andenvironment. A four-person secretariatcoordinates and supervises fund projects,working closely with the Department ofForestry. Administrative costs areapproximately 10% of investment revenues.Board decisions are made through consensus,following Bhutanese tradition. An advisorygroup comprising staff from WWF, UNDP,the government and a local NGO assists thesecretariat. 11. Investment of assets, initially managedby UNDP, has been contracted to an overseasprivate investment manager. Investmentincome net of fees since the change is morethan 8 percent annually. The fund hasreceived $11.4 million from four Europeandonors. Trust fund assets now total more than$27 million. Donors have been attracted bythe extremely high priority the Bhutangovernment gives to protecting its forests and

other natural resources and by its strong ethicof integrity. 12. Grant funding in early years wasseverely limited by the government’s lack ofcapacity in project preparation and execution,and the existence of only one small NGO.Therefore the fund has focused on capacitybuilding. The fund has recently developedgrant-making guidelines and procedures, andhopes to finance increasing numbers ofproposals from NGOs, government,communities, and individuals.

UGANDA

13. The Mgahinga - Bwindi ImpenetrableForest Conservation Trust (MBIFCT)supports Mgahinga Gorilla and BwindiImpenetrable national parks through financingof park management activities by the UgandaWildlife Authority (UWA), applied researchand monitoring, and community developmentprojects in the zones immediately surroundingthe parks. MBIFCT’s policy is to devote 60percent of its project funding to developmentand alternative livelihood activities insurrounding communities, whose residentslost access to subsistence and economicresources when the parks were created. Parkmanagement and research activities each get20 percent of the available project funding.

14. MBIFCT received $4.3 million inendowment funding from the GEF and nearly$4 million in co-financing from USAID andthe Netherlands. The trust operates as anintegrated conservation/development project,providing both financial and technicalassistance to the communities it serves. It hasa highly participatory governance structure,highlighted by a Local Community SteeringCommittee (LCSC) elected by localcommunities. The LCSC is empowered toevaluate all proposals originating withcommunity groups, authorizing small projectsdirectly and referring larger ones to the TrustManagement Board. It also determinespriorities and selection criteria for communityprojects and plays a key role in monitoring.

Annex C 65________________________________________________________________________________________________________________________________________________

15. The Trust Management Board includesrepresentatives of two government agencies,one national and one international NGO, thetourism industry, one donor, threerepresentatives elected by the LCSC, the TrustAdministrator, and three PermanentSecretaries from the ministries of tourism,justice, and finance. Nine of these boardmembers are also Trustees with authority tovote on matters concerning the endowment. Itconsults on research matters, and some projectevaluation, with a Technical AdvisoryCommittee. To date MBIFCT has committedsome $290,000 in project funding, including50 community projects all selected from thefirst call for proposals but phased in over atwo-year period. A significant portion ofthese were projects that should have beenfinanced by revenue sharing monies from theparks, but were not funded when thegovernment changed its policy on revenuessubject to sharing and cut income tocommunities by more than 90 percent.MBIFCT support to the UWA for parkmanagement activities has averaged $10,000per park per year or about 5 percent of thepark operating budgets. Research andmonitoring activities have included specialstudies (masters’ theses) on species andecosystems of particular concern. Acomprehensive plan for long-term monitoringis in development.

“Parks” funds

PERU

16. The Fund for Natural Areas Protectedby the State (FONANPE) was created inDecember 1992, together with a privateorganization--PROFONANPE--designated tomanage the fund’s resources. FONANPE hasan endowment capitalized by a $5.2 millionGEF grant through the World Bank disbursedin 1995, additional contributions of $355,000from Canada and $100,000 from Finland, andaccumulated interest earnings. In addition, ithas received nearly $17.0 million in grantsand debt swap proceeds, mostly fromGermany and Finland, the majority of whichare invested and operate as sinking funds. Allof FONANPE’s capital is invested in Peru,

although much of it in dollar-denominatedassets. Returns were high in 1996, but havesince declined significantly as a result ofgenerally adverse conditions in emergingmarkets such as Peru. 17. Significant program activities began inmid-1996. PROFONANPE was originallycreated to channel funding both for recurrentprotected area management costs of thegovernment’s parks and wildlife departmentand for NGO-executed activities in andaround protected areas. In practice, except forthree pilot projects financed by a GTZ grantin the mid-1990s, almost all PROFONANPEresources have gone to the former. The fundsupported 14 protected areas in 1997; 11 in1998. The program budget for 1998 totalsapproximately $2.2 million, of which over$850,000 is for one area--Machu Picchu--towhich support under Finland’s debt-swapprogram is limited. Funding primarily coversbasic operating costs and the salaries of parkguards and other staff, who are contracteddirectly by PROFONANPE to facilitatetimely payment. 18. PROFONANPE is governed by aseven-member board of directors. Three arenamed by the minister of agriculture3 andthree are selected by the PeruvianEnvironmental Network, a group ofenvironmental NGOs. The NGOrepresentatives have two-year terms and canbe re-elected once. The seventh member is adonor representative, filled by Germany sincethe fund was created. The board presidentmust be a government representative. Duringthe past three years, he has been the head ofthe Natural Resources Institute (INRENA),which oversees the parks and wildlifedepartment and has been the principalrecipient of fund resources. PROFONANPEhas a Technical Committee intended to

3 After years of lobbying by the World Bank andPROFONANPE’s other donors, a new law was approved inMay 1998 that requires the minister of agriculture to name toPROFONANPE’s board one person recommended by theMinistry of Economy and Finance and one recommended bythe Presidency of the Council of Ministers. At the time of theevaluation visit to Peru, in July 1998, implementation of thischange was still pending.


provide advice to the fund and its board, but ithas not functioned actively. PROFONANPEhas a Coordinator and a small staff, whichuntil mid-1998 was made up primarily ofpeople with administrative and accountingbackgrounds. The original Coordinator, hiredin May 1993, left PROFONANPE in February1997 following irreconcilable differences withthe board. The current Coordinator began inSeptember 1997. 19. Given the absence of enablinglegislation for trust funds in Peru,PROFONANPE was created by a decree-lawsigned by the Peruvian president. This hascontributed to difficulties in changingPROFONANPE’s statutes and in obtainingexemption from Peruvian taxes.

20. Despite what has been in some ways arather troubled past, PROFONANPE appearsto have a good chance for a more promisingfuture. The new Coordinator has done muchto repair the damage to the fund’s image thatsurrounded the departure of his predecessor,and is very highly regarded among the NGOand donor communities. He is activelyseeking ways to diversify PROFONANPE’sprogram to again include NGO activities thatsupport protected area management. Atechnical officer was recently hired tosupervise field activities and work moreclosely with park managers. Progress is alsobeing made in resolving many of thecomplications created by PROFONANPE’slegal status. Perhaps most importantly, newlegislation requiring a change in thecomposition in the government’srepresentatives on PROFONANPE’s board ofdirectors has great potential to alter theunfortunate combination of governmentdominance combined with general inattentionthat has characterized the recent past, whilealso bringing to the board perspectivesbeyond those of the ministry of agriculture. SOUTH AFRICA 21. The Table Mountain Fund (TMF) wasestablished in 1993 by WWF-South Africa atthe request of NGOs and other organizationsconcerned about the conservation of the

remaining natural areas on the CapePeninsula. Interest on the capital fund assistsgovernment agencies, NGOs, localcommunities and private individuals in theirefforts to stem the deterioration of the CapePeninsula’s biodiversity and naturallandscapes. The Fund was converted to aTrust in March 1998. WWF-SA has raisedlocally approximately $2 million incontributions to the capital of the TableMountain Fund; an additional $5 million wascontributed by the GEF through the WorldBank in 1998. The Table Mountain Fund hastwo objectives: (1) the conservation of thebiological diversity of the Cape Peninsula andits adjacent marine systems; and (2) theconservation of the biological diversity of theremainder of the Cape Floral Kingdom and itsadjacent marine systems. 22. The Fund is governed by six Trustees:two representatives from WWF-SA, two fromthe South African National Parks, and twonominated by the Cape Peninsula NationalParks Committee. WWF-SA houses andadministers the Fund. The Trustees havehired a TMF Coordinator, who will beginwork in September 1998. The Coordinatorand an assistant are envisioned to be the onlystaff of the TMF. The Coordinator will reportto the Director: Conservation of WWF-SA,while the Trustees provide overall directionand policy for the TMF.

BELIZE

23. The Protected Areas ConservationTrust (PACT) is financed by a $3.75 taxlevied on international tourists arriving by airor sea. This tax, enacted in 1995 after severalyears of consultations, negotiations, andlobbying by the local conservation communityand WWF-US, generates some $500,000 peryear. This funding is directed towardconservation in and around protected areas.(Approximately 36 percent of Belize is undersome form of protected area status.)However, PACT funding falls considerablyshort of the estimated $2.5 million neededannually to adequately manage the protectedarea system. PACT is prohibited by itsenabling legislation from paying for recurrent

Annex C 67________________________________________________________________________________________________________________________________________________

expenses of government agencies, or forpermanent staff of government or NGOs.

24. PACT is governed by a 9-memberBoard elected by the relevant ministries, NGOassociation, tourism sector, and villagecouncils, and then appointed by the Ministerof Natural Resources. It provides funding toprotected area management, development ofeco-cultural tourism, assessments anddevelopment of archeological sites, andcommunity participation. There is a separate,private PACT Foundation to facilitatecontributions by donors who could notsupport this mixed public/private agency.Each year 5 percent of revenue is set aside tobuild an endowment, and PACT would alsolike to solicit endowment capital from othersources. To date there has been no GEFfinancing. PACT maintains closecollaboration with the GEF Small GrantsProgramme in Belize.

EASTERN CARPATHIANS (SLOVAKIA,POLAND, UKRAINE)

25. The Foundation for Eastern CarpathianBiodiversity Conservation was created in1994 as a financial mechanism to supportconservation activities in the tri-nationalEastern Carpathians Biosphere Reserve. TheBiosphere Reserve is in the process ofconsolidation and recognition by UNESCOfollowing a 1991 agreement by theenvironmental ministers of the threecountries. The GEF, World Wildlife Fund,and the John D. and Catherine T. MacArthurFoundation (US) joined the three governmentsin developing the framework for thefoundation, which has its legal headquarters inSwitzerland. The Foundation is governed --and operated -- by a 14-member board with afive-member executive committee. Theacting president is the Slovakian governmentrepresentative, who headed the GEF ProjectCoordination Unit in the Ministry ofEnvironment (the project closed at the end ofJune 1998).

26. This foundation started with only$600,000 capital, which is investedconservatively --mostly in bonds -- by a Swiss

banking firm and yields some $30,000 peryear. The MacArthur Foundation provided a$45,000 start-up grant for operations, whichhas paid for board meetings and otherrecurrent expenses during 1995-98. Thefoundation has no staff and has not been ableto raise additional capital. It incurssubstantial expenses in convening meetings ofthe Board (12 members from the threecountries, and two international members) andon legal, translation, and accounting fees.Having legal domicile in Geneva Canton,Switzerland, requires the foundation toproduce all official documents in French, inaddition to English (its operating language)and the three national languages; and to useonly Swiss-certified auditors.

27. The foundation’s board members saythat meetings have provided an opportunityfor protected area managers and academicsfrom the three countries who had not been incontact with each other during the entiresocialist period, to meet and discuss commonresource management issues. Given the smallflows of income available, the foundation hasfocused its program on small grants to NGOs,of which two have been disbursed and sixmore committed. These have generally beenmatched by substantial in-kind contributionsfrom implementing organizations and haveresulted in the gazetting of a new nationalpark in Ukraine and improved management oftourism impact on the Slovakian side. JAMAICA --NATIONAL PARKS TRUST 28. The Jamaica National Parks Trust(JNPT) was formally established by aJamaican NGO, the Jamaica Conservation andDevelopment Trust (JCDT) in January 1991.JNPT was capitalized with the proceeds ofJamaica’s first debt-swap on Earth Day, 1992.The fund concept was developed within thecontext of a USAID-funded project helping toestablish a national park system, includingUSAID finance for debt-swaps. Individualnational parks are managed by JamaicanNGOs rather than government agencies. 29. The initial capitalization of $437,000was invested in high-interest Jamaican bonds


and grew to $530,000 by 1997. The fund ismanaged as a permanent endowment.Investment income is currently used tofinance the salaries of rangers at Jamaica’sfirst two national parks.. Fundraising effortsto increase the endowment to $1.4 millionhave been largely unsuccessful. One factorwas a USAID policy forbidding the use ofendowment income for fundraising expenses.Funds are insufficient to support a recentlyestablished third national park. Availablefunding does not meet the needs of the twoparks, and the Blue and John Crow Mountainspark is under serious threat from logging andagriculture. Although the government has notpaid its annual commitments to the trust fund,it does pay utility and vehicle maintenancecosts for the rangers’ operations. 30. The JNPT is administered by JCDT fora fee of 10 percent of trust income. Initially,the seven-member JNPT board had threerepresentatives from the JCDT, two fromgovernment institutions, and one each fromthe University of the West Indies and thePrivate Sector Organisation of Jamaica. Thetrust had a staff of one USAID financeddevelopment officer and provided no separateguidance or direction to JCDT for investmentswhich were guided by the Finance Committeeof JCDT’s Board.

31. A mid-term evaluation of the USAIDproject concluded that the trust was much tooinsular for a national fund. JCDT was alsocriticized by NGOs for managing a trust fundof which it was the only grantee.Subsequently four changes in governancehave occurred: 1) the board was expandedfrom 7 to 9 with the addition of membersrepresenting the Montego Bay Park Trust(now formally managing that park) and theprivate sector; 2) a project subcommittee wasestablished, without the participation of NGOrepresentatives; 3) a separate JNPTinvestment committee was established to giveguidance to JCDT in managing the financialassets of the trust; and 4) a fundraiser positionwas established to separate JNPT fundraisingand give it autonomy.

32. A recently approved governmentprotected areas policy offers several optionsfor national parks to achieve financialsustainability. It suggests the use of the JNPT,but does not give it priority over the creationand use of additional park-specific trust funds,or the use of other methods (charging fees) tocover park costs. Several young NGOs areaggressively developing plans for 8-10 newnational parks which they hope to manage.Many indicate a preference to establishseparate trust funds rather than becomedependent on a Kingston-based NGO. Thisposes a potential problem of inefficienciesand competition for scarce resources if JNPTis not able to secure resources and gainconstituency support needed to support a trulynational park system. “Grants” funds BRAZIL

33. The Brazilian Biodiversity Fund(FUNBIO) was established in September1995, as an independent unit within theprivate, nonprofit Getulio Vargas Foundation(FGV). The GEF provided $20 million, to bedisbursed in two tranches and programmed asa sinking fund. This was part of a Brazilbiodiversity project that also included $10million for a government fund (PROBIO) tosupport development of a nationalbiodiversity strategy which would, inter alia,provide guidance for FUNBIO programmanagement. A key role of FUNBIO is tocreate an efficient, transparent, long-termmechanism to assure resources for prioritybiodiversity projects, capable of attractingprivate sector contributions, functioningoutside the government domain. FUNBIOhas a governing council of 16 members -- foureach from the private sector, academia, andNGOs; two from government, and two fromFGV. FUNBIO’s assets are managed by aninvestment manager in London. Most assetsare invested abroad and investment returnshave exceeded initial benchmarks.

34. FUNBIO has benefited from a highlyqualified, hard working board, chaired by a

Annex C 69________________________________________________________________________________________________________________________________________________

respected private business leader, and anexecutive director with considerableexperience in management andadministration. The fund had significantinitial difficulties with its host institution(FGV) which was selected by the Ministry ofEnvironment following a six-month nationalconsultative process that reviewed severaloptions, including management of the fund byan existing institution, a new institution, or anew consortium of NGOs. AlthoughFUNBIO has succeed in defining itsindependence within FGV, significantdifferences remain. There was conflict overthe executive director selection and initialdifficulty in getting administrative support.FGV has not engaged in fundraising on behalfof FUNBIO or assisted to the level expectedin supervising the asset manager, althoughthere are signs that the situation is improving.Fundraising efforts are just beginning. Theboard is attempting a novel “programpartnership” approach to raise the $5 millionneeded to trigger the second GEF tranche of$10 million.

35. In the absence of a completed nationalbiodiversity strategy for guidance, FUNBIOstarted by financing pilot or demonstrationprojects in five project categories: sustainablemanagement of natural forest areas,conservation of ecosystems on privateproperty, sustainable management of fisheriesresources, agricultural biodiversity, andmanagement of conservation units. The firstset of 10 projects selected (totaling $2.1million) were small within the Braziliancontext and tended to reflect the wide range ofinterests of the sectors represented on theboard. In order to achieve greater impact, theboard has recently determined to narrow thefocus of future requests for proposals toprivate-sector partnerships. The second roundof projects will also require logical frameworkanalysis to determine the expected outputsand impacts of each project financed.

36. FUNBIO program managementprocedures, influenced by World Bankregulations, do not demonstrate the flexibilityand efficiency expected from a private entity,and are as burdensome to grant recipients as

government grant procedures. Private sectorenterprises have shown little interest in thefund, citing the small size of its grants and itsheavy bureaucratic requirements.

37. FUNBIO has kept administrative costsbelow the 22 percent ceiling established atdesign, expending 11 percent of net revenueson operating costs and 7 percent on institutionbuilding, for a total of 18 percent. JAMAICA -- ENVIRONMENTAL FOUNDATIONOF JAMAICA

38. The EFJ was established in 1992 by thegovernments of Jamaica and the United Statesunder the Enterprise for the AmericasInitiative (EAI), a debt reduction program.The Jamaican government committed todeposit local currency equivalent to theinterest on the forgiven debt into two funds($9.2 million for environmental activities, and$12.3 million for child survival anddevelopment projects) over a multi-yearperiod. The monies are invested in Jamaica,with a real rate of return between 5 and 12percent annually. Establishment of anendowment fund has been proposed, but notyet approved by the board. EFJ has recentlydeveloped a fundraising plan with a target ofraising an additional $6 million by 2003. 39. The EFJ is a membership organization,governed by its NGO members and the two“parties” (GOJ and USA) which signed theoriginal EAI agreement. EFJ has a nine-member board of directors (one representativeeach from the governments of Jamaica and theUnited States, and the University of the WestIndies; and six representatives from the threeNGO communities addressed by the fund --environment, child welfare/survival, anddevelopment). The NGO members are electedat an annual general meeting. Generally aslate is prepared in caucuses by each of threeNGO umbrella organizations. The three NGOcommunities often vie to maximize theirrepresentation on the board, and the annualgeneral meeting has sometimes beencontentious. The final proposed slate of boardmembers must be approved by the parties tothe agreement that established EFJ.. The


government has used this power to change theproposed board membership.

40. The Executive Secretary reports to theboard, but some decisions must be ratified bythe total membership and/or by the parties tothe agreement.

41. The mission of EFJ is to promote andimplement activities designed to conserve andsustainably manage Jamaica’s environmentand natural resources, as well as to encouragethe improvement of child survival anddevelopment. It has a mixture of institutionalstrengthening objectives and technicalobjectives. EFJ monies have been distributedbroadly in small amounts. Some 300 projectsaveraging $150,000 were funded from 1993-96, of which almost 90 percent are situated inor around the capital. About 60 percent ofcommitments have been disbursed tograntees, reflecting the limited absorptivecapacity of many grantees. Many of theprojects are in environmental education –inschools, communities, and at the university.EFJ is proud of the support it has provided toyoung NGOs developing communityconsensus for new protected areas, many ofwhich hope to eventually manage thoseprotected areas. EFJ has also provided grantsto support NGO management of the Blue andJohn Crow Mountains National Park. Theboard has recently finalized a 1997-2003strategic plan. Responding to criticism fromenvironmentalists who see little cumulativeimpact from previous grants, the plan willfocus environment project selection on“biodiversity hot spots”. The strategic planalso calls for EFJ to reduce the burden of itsreporting requirements on grantees and adopta more supportive approach to projectmanagement. GUATEMALA 42. The Conservation Trust of Guatemala(FCG) is a small fund (capitalized at about$900,000) whose objectives includesupporting projects that (1) emphasize therelationship between natural resources andrural populations; (2) support the developmentof NGOs and other organizations working to

protect natural resources; (3) encourage cross-sectoral collaboration in resourcemanagement; and (4) bring new sectors andinstitutions into the community of supportersof conservation in Guatemala. The fund wascreated in 1991 by four Guatemalan andinternational NGOs (later joined by a fifth). Itis a private fund whose assets to date havecome from a private foundation, a bank, andan international NGO. Its goal is to build anendowment of $5 million.

43. Initially, FCG primarily channeledfunding to its member organizations, butrecently it has initiated open calls forproposals. Any civil society organizationengaging in natural resource conservation andsustainable use, as well as government bodiesand the national NGOs represented on theboard, is eligible to compete for funding in thepriority areas of protected areas, sustainablenatural resource management, research,environmental training and education, andinstitution building.

44. The board (Administrative Committee)includes representatives of the four foundersand a fifth NGO. It is authorized to invite upto four additional members. There is anexecutive director and administrativeassistant. The board members and executivedirector are all conservation professionals orlong-time conservation activists, who aredeeply involved in national environmentalissues. FCG is part of the advisory committeefor the biodiversity strategy currently inpreparation. It maintains close relationshipswith government in other ways as well:involving government representatives inproposal review processes, and coordinatingworkshops on policy issues. FCG is part ofthe national committee for the GEF SmallGrants Programme in Guatemala, and acandidate financial intermediary under theGEF Small and Medium Enterprises project. PHILIPPINES 45. The Foundation for the PhilippineEnvironment (FPE) began with advocacy byPhilippine and international NGOs for a trustfund component to support NGO activities in

Annex C 71________________________________________________________________________________________________________________________________________________

a USAID natural resources managementproject. In 1991, USAID and WWF-USsigned a cooperative agreement to initiatedebt swaps to capitalize the fund. By the endof 1992, FPE had been established, elected aboard of trustees, and released $520,000 ingrants under interim guidelines. The firstexecutive director was hired in early 1993.During that year, FPE adopted a five-yearstrategic plan and established regionaladvisory committees (RACs) as a forum foradvice and participation from NGOs andpeoples organizations. By 1994, theendowment fund, which was initiallymanaged by WWF while FPE developed atrack record and management structure, wasformally transferred to FPE. FPE has a totalendowment of $21.2 million and has madegrants totaling $8 million from funds providedby the MacArthur Foundation, the PhilippineDevelopment Assistance Program, and othersin addition to funds from endowmentrevenues.

46. FPE’s mission is to catalyze thebiodiversity conservation and sustainable

development efforts of communities. Theorganization provides financial resources tostrengthen organizations as well as toimplement programs. Three types of grantsare awarded: (1) urgent “action grants” up to$5,000; (2) community-based grants forresource management projects in 22 prioritysites where FPE tries to focus its funds formaximum impact, and (3) proactive grants forsupport service projects often initiated by FPEitself. FPE also serves as a “funds facilitator”bringing community projects to the attentionof other donors. More than 400 partners arecurrently implementing projects ranging insize from small community projects to largesite-based projects. About 60 percent of grantfunding goes to 33 site-based projects, theremaining 40 percent to 350+ communityefforts.

47. The governing body is the 11-memberboard of trustees. FPE currently has 23 staff,and maintains an annual budget ratio of about83 percent program and 17 percentadministrative costs.

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Annex D

COMPARATIVE ADVANTAGES OFDIFFERENT TYPES OF FUNDS

1. As noted in Chapter II, the evaluation teamfound it useful for analytical purposes to groupthe trust funds analyzed as “parks” or “grants”funds and to compare and contrast the wayfindings and conclusions apply to each of thegroups. It seemed possible to learn more abouttrust funds compared in these two groupings thanby considering all trust funds as a whole.

2. There are several important ways in whichthese two types of funds often differ. Theyinclude:

• their role within a national biodiversity orenvironment strategy;

• governance: the extent of governmentinvolvement and the importance ofrepresentative involvement of stakeholders;

• grant-management procedures for activitiesfinanced and the fund’s ability to meet GEFglobal importance and incremental costcriteria.

• financial issues such as the type of trust fundestablished, its life-expectancy and methodsand actors in mobilizing or leveraging otherresources for the fund;

3. Role within a national strategy: “Parks”funds are often established as integral elements ofa national protected areas strategy, a nationalbiodiversity strategy, or a national environmentalaction program. Their primary role within thatstrategy is assuring that sustainable recurrent costfinancing will be available for all or some nationalparks or protected areas. Some funds also providegrants to entities working in protected area bufferzones, but normally within the context of a parkmanagement strategy. Donors often finance“parks” funds as part of broader projects which,for example, help establish national parkauthorities, systems of park management, andtechnical support for organizations which willmanage parks (usually government, but sometimesNGOs). The ability of a “parks” fund to havebroader upstream impact on government policiesand programs is primarily associated with thefund’s role within the overall protected areassystem and secondarily associated with the

protected area system’s role within a broadernational biodiversity or environmental strategy. 4. “Grants” funds are harder to place within abroad national strategy and are not as integral. Thefocus of “grants” fund tends not to be specificallydetermined during the project design, but is left tothe board of directors. Boards of directors ofteninitially determine that the focus should be aspecific set of stakeholders (normally NGOs, theprivate business sector, the research community, ora combination thereof). Some funds decide tofocus their resources on new NGOs while otherstry to expand the programs of existing NGOs.With maturity, most funds have tended to movetowards a focus on either: (a) specific biodiversityproblem areas (e.g. sustainable use,agrobiodiversity, edge effects); (b) a geographicregion (e.g. the Amazon); or (c) special protectedareas (private reserves, buffer zones). 5. “Grants” funds are normally not automaticallyinvited to a seat at the government policy table.Their upstream role tends to be a function of thesize of the fund and its individual grants(associated with potential impact), its program“niche,” and whether the fund is perceived to haveaccumulated knowledge and experience to bring tothe policy table. Sometimes governments subtlyreject the policy or coordination initiatives of“grants” funds as inappropriate. FUNBIO’sattempts to establish regular meetings between themany environmental funds in Brazil was viewed asa good idea, but more appropriate for thegovernment to orchestrate.

6. Governance: Because governments own theland set aside for national parks and protectedareas, government plays an essential role in thegovernance of all “parks” funds. Most of thesehave the national parks director and other keyofficials on their board, although the governmentis not in the majority. PROFONANPE in Peru hasthe highest proportion of governmentrepresentation (three of seven members). 7. The governance of “grants” funds is normallystructured to reflect the stakeholders or users of thefund (NGOs, the private sector, the academiccommunity). Government is represented on theboard but is less dominant than for “parks” funds.

ANNEX D 73________________________________________________________________________________________________________________________________________________

“Grants” funds often encourage broad ownershipand participation via (a) setting aside board seatsfor formally elected representatives of stakeholderumbrella organizations; and (b) annual assembliesof stakeholder or member organizations. The mostextensive representation of stakeholders is in thegovernance of funds that support a specificprotected area (e.g., representatives of buffer zonecommunities) and in membership funds (EFJ). 8. Program Management: The programs of“parks” funds are focused on a limited universe ofprotected areas. The grant selection process isrelatively simple. Activities funded usually supportelements of a multi-year park management plan.Program monitoring and evaluation are relativelyeasy to the degree that all grantees are carrying outsimilar functions and they work in circumscribedgeographic areas. Meeting GEF criteria on globalsignificance is straightforward for protected areaswhich are so identified. 9. Program management for “grants” funds ismore difficult and complex. “Grants” fundsnormally have a broader scope, review moreproposals and finance more projects than “parks”funds. The breadth of the program tends to beassociated with the breadth of the stakeholders orpotential users (NGOs only, vs. NGOs, privatesector, academia, and government). “Grants”funds have more freedom to finance innovativeand catalytic projects. However, it is moredifficult to easily ascertain the capacity of granteesto manage fund resources. Given the heavycompetition for projects, the selection process ismore difficult to manage and to keep transparent.Over time, most “grants” funds try to be moreefficient program managers and to increaseaggregate program impact by focusing their grants

on one or more program “niches.” However,focusing also risks leaving out some keystakeholders and may be difficult to achieve.Monitoring and evaluation is more difficult for“grants” funds not only because of the largenumber of grants, but also because of the need insome funds to evaluate civil society strengtheningas well as biodiversity objectives. Meeting GEFcriteria on global significance and incrementalcosts is more difficult for “grants” funds whenprojects are not limited to regions of globalsignificance or are not easily aggregated intoprogram “niches” which reflect GEF priorities.

10. Financial issues: A permanent endowmentrather than a sinking fund is normally establishedfor a “parks” fund, given the need for long-termsustainable financing for the recurrent costs of theprotected area system. A sinking fund (orreplenishment fund) is often seen as a more cost-effective use of capital for a “grants” fund becauseits projects are more catalytic and startup in natureand do not normally require long-term recurrentcost financing. If the fund is successful, it shouldbe able to attract additional funds. 11. Fundraising is critical to increase the size ofany trust fund. Governments have tended to bemore active in providing revenues and raisingfunds for “parks” than “grants” funds.Governments show less commitment to “grants”funds and tend to believe that fundraising shouldbe the responsibility of the key stakeholders andusers of the “grants” fund (NGOs, the privatesector). Governments may provide initialcontributions to “grants” funds but governmentcontributions after start-up are less likely.

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Annex E

BIBLIOGRAPHY

General

Publications

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Bayon, Ricardo, and Carolyn Deere (1998). Financing Biodiversity Conservation: The Potential ofEnvironmental Funds. IUCN-The World Conservation Union. Paper presented at NGO Forum, Convention onBiological Diversity COP, Bratislava, Slovak Republic.

Bowles, Ian A. and Dana Clark, David Downes, and Marianne Guerin-McManus (1996). Encouraging PrivateSector Support for Biodiversity Conservation: The Use of Economic Incentives and Legal Tools. ConservationInternational Policy Papers (Vol. 1).

Central American Parliament, Central American Commission on Environment and Development, andGuatemalan Environmental Conservation Trust (1996). Report on the First Central American Forum onNational Environmental Funds.

ECOFONDO/The Nature Conservancy (1996). Regional Consultation on National Environmental Funds inLatin America and the Caribbean: Case Studies on National Fundraising.

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European Commission (1996). Progress Report from the Commission on the Implementation of the EuropeanCommunity Programme of Policy and Action in Relation to the Environment and Sustainable Development.

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Interagency Planning Group (1995). Environmental Funds: A New Approach to Sustainable Development.Also, Environmental Funds: The First Five Years. Issues to Address in Designing and Supporting Green Funds.Reports for a briefing for OECD/DAC Working Party on Development Assistance and Environment.

IUCN (1996). Report of the Fifth Global Biodiversity Forum, Buenos Aires, Argentina. See especiallyInnovative Funding Mechanisms, Workshop on Investing in Biodiversity, pp. 11-17.

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Jakobeit, Cord (1996). “Nonstate Actors Leading the Way: Debt-for-Nature Swaps.” Chapter 5 in Institutionsfor Environmental Aid.

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Meyer, Carrie (1997). “Public-Nonprofit Partnerships and North-South Green Finance.” Journal of Environmentand Development, 6(2), pp. 123-146.

Mikitin, Kathleen (1995). Issues and Options in the Design of GEF Supported Trust Funds for BiodiversityConservation. The World Bank, Environment Department Papers, Biodiversity Series.

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Resor, James P (1997). “Debt-for-Nature Swaps: A Decade of Experience and New Directions for the Future.”Unasylva (FAO) Vol. 48. Reprinted by WWF-US.

Rubin, Steven, Jonathan Shatz, and Colleen Deegan (1994). “International Conservation Finance: Using DebtSwaps and Trust Funds to Foster Conservation of Biodiversity.” The Journal of Social, Political, and EconomicStudies 19(1), pp. 21-43.

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Tavera, Carmen, Pilar Vasquez, and Ruth Norris (1996). Regional Consultation on National EnvironmentalFunds in Latin America and the Caribbean: Final Report and Profiles of the Environmental Funds.ECOFONDO, in collaboration with IUCN, The Nature Conservancy, World Wildlife Fund, DAMARENA, theColombian Ministry of Environment, CARDIQUE, the MacArthur Foundation, UNDP, and the C.S. MottFoundation.

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Belize

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Personal communication, Humberto Paredes, executive director of PACT.

PACT Web site <www.belizenet.com/pact.html>

Bhutan

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Personal communication from Paljor J. Dorji, Deputy Minister, National Environmental Commission

Bolivia

Asselin, Robert, Ana Maria Linares and Ruth Norris (1996). Institutional Evaluation of FONAMA. ManagementSystems International for USAID.

Asselin, Robert, Ana Maria Linares and Ruth Norris (1996). Evaluation of the Enterprise for the AmericasAccount. Management Systems International for USAID.

Inter-Agency Planning Group. Profile of FONAMA prepared for 1997 Merida workshop on capacity-buildingfor national environmental funds.

Brazil

FUNBIO (various). Organizational documents: Relatorio Annual 1997. Trust Fund Grant Agreement (June 5,1996). Manual do Executor. Manual de Operacoes. Estatuto. Investment Guidelines. Analise dos Investimentos.Edital Inaugural 96-97. Relatorio Quadrimestral de Execucao financeira dos Subprojetos (Jan-April 1998 andNov-Dec 1997).

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PROBIO (1997). Edital.

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Eastern Carpathians

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Guatemala

Inter-Agency Planning Group. Profile of FCG prepared for 1997 Merida workshop on capacity-building fornational environmental funds.

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Anon. Agreement between the Government of the USA and Government of Jamaica concerning the Enterprise ofthe Americas Foundation.

Barita Portfolio Management (1998). Statement of March 31, 1998. Agreement between EFJ and BaritaPortfolio Management (Oct 1996).

Environmental Foundation of Jamaica (EFJ). Strategic Plan 1997/9-2002/3. Annual Reports, 1992-93 and1996-97. Articles of Association. Memorandum of Association of the Environmental Foundation of Jamaica.Financial Statement, Coopers and Lybrand (July 1997). Progress Report August 1995-July 1996. Guidelines forRequesting Funding. Projects Approved from Inception to July 31, 1994. Investments of the EFJ in ActionAreas of the Jamaica National Environmental Action Plan (May 1998). Project Review Criteria (1997).Analysis of Funds-PL480 as at March 31, 1998. Analysis of Funds-USAID as at March 31, 1998. FundSummary as at March 31, 1998. Investment Philosophy and Policy Statement (1998).

Jamaica National Parks Trust (various). Fundraising Plan 1998-2001. Financial Statements 1994 and 1995.Proposal to the Bank of Jamaica for a Pilot Debt Conversion for the Jamaica National Parks Trust Fund. 1990.


Smith, David (1996). Jamaica’s Protected Areas Conservation Trust Fund: A Case Study.

Mexico

FANP/FMCN (1997). Manual de Operaciones, Manual de Operaciones, Fondo de Donativos para AreasNaturales Protegidas.FANP (1998). Reporte cuatrimestral, enero a abril 1998

FMCN (various). Convocatorias for FMCN grants program, 1997 and 1998. Informe Annual 1996. InformeAnnual 1997. Sistema Operativo y Criterios para la Evaluacion, Seleccion y Apoyo de Proyectos (Marzo 1996).

Various other Board and investment policies, draft strategic plan, monitoring and evaluation data,agreements with asset managers, by-laws, financial statements, working documents, tables and dataprovided by staff of FMCN and FANP.

Global Environment Facility (1997). Mexico Protected Areas Program: Proposed Restructuring Project. ProjectDocument.

Sutton, Richard. April 1998 and May 1998 investment reports, Braehead Treasury Management.

US Agency for International Development (1995). Mexico Nature Conservation Fund. Project Paper.

National park system documents:

Programa Operativo Annual 1998, Reserva de la Biosfera Ria Lagartos

FMCN Web site<www.fmcn.org>

Peru

Agencia Canadiense para el Desarrollo Internacional (1998). ACDI y su Programa de Cooperacion alDesarrollo del Peru. Mecanismos de la Cooperacion Canadiense en el Peru.

Angelina, Natalia And Vizcarra Noriega. Terminos De Referencia Para La Elaboracion Del Estudion Y ProyectoDefinitivo Del “Centro De Interpretacion De La Biodiversidad De La Reserva De Biosfera Del Manu” RegionInka-Gesuremad, Proyecto Especial Regional Parque Nacional Del Manu.

Congreso de la Republica (1997). Ley de Areas Naturales Protegidas. Modifican la Ley Organica del Ministeriode Agricultura

Consejo Nacional del Ambiente (undated). CONAM por el Desarrollo Sostenible. Politica Ambiental Peruana.

Dominguez Faura, Javier Luis (1997). Informe de Gestion del Director Ejecutivo del Programa de ManejoIntegral del Santuario Historico de Machu Picchu.

FINNCONSULT and INDUFOR (1995). Documento de Proyecto, Manejo Integral del Santuario Historico deMachu Picchu.

Fondo Peru-Canada (undated). Vision y estrategia 1996-2000; Guia para la presentacion de proyectos.

Global Environment Facility (1995). Republic of Peru National Trust Fund for Protected Areas. ProjectDocument.

Ministerio de Agricultura, Instituto de Recursos Naturales, Direccion General de Areas Naturales Protegidas yFauna Silvestre, Direccion de Areas Naturales Protegidas (undated). Nueve Areas Prioritarias (Proyecto KFW).

Primer Congreso Latinoamericano de Parques Nacionales y Otras Areas Protegidas (1997). Informe Nacional,Sistema Nacional de Areas Naturales Protegidas por el Estado, Peru 1997.

ANNEX E 79________________________________________________________________________________________________________________________________________________

PROFONANPE (various). Estatutos del PROFONANPE. Memoria 1993. Proyectos Piloto 1995-96. Reportedel Coordinador del PROFONANPE Referente a sus Actividades Realizadas en 1996. Proyecto Financiamientode Costos Recurrentes: Primer Informe de Ejecucion. Informe de Gestion 1997. Aportes FinancierosProvenientes de la Conversion de la Deuda Bilateral, de la Cooperacion Tecnica y Financiera Internacional, yde Entidades Privadas. Manual de Organizacion, Funciones y Politicas. Programa de Financiamiento deActividades Productivas Sostenibles en las ANPEs (DRAFT).

Proyecto Especial Regional Parque Nacional del Manu (1997-98). Memoria Anual 1997, Plan Operativo 1998.

World Bank. (1996-98). Aide memoires for supervision missions, June 1996, December 1996, August 1997,April 1998.

Philippines

FPE, TNC and Inter-Agency Planning Group. Profile of FPE published in proceedings, First Asia-PacificForum of National Environmental Funds (1997).

Personal communications, Buenafe Solomon, information and networking specialist, FPE.

Global Environment Facility (1994). Republic of the Philippines, Conservation of Priority Protected Areasproject. Project Document.

South Africa

Global Environment Facility (1998). South Africa Cape Peninsula Biodiversity Conservation Project. ProjectDocument.

Personal communication, Dr. Rob Little, WWF-South Africa.

Table Mountain Fund (1998). Deed of Trust. Operational Manual. Briefing Document for the National ParksCommittee. Funding Application Procedure. Project Screening Criteria. Guidelines for ReviewingApplications. Terms and Conditions of Grant Funding. List of Currently Active Projects.

Uganda

Braehead Treasury Management (1997). Report to MBIFCT on asset management.

CARE-Uganda (1998). Survey of Knowledge and Attitudes from People from the Communities BorderingBwindi Impenetrable National Park and Mgahinga Gorilla National Park.

Global Environment Facility. (1995). Bwindi Impenetrable National Park & Mgahinga Gorilla National ParkConservation. Project Document.

GEF (1996). Project implementation review.

MBIFCT (various). Articles of Association and Bye-Laws. Trust Administration Unit Workplan 1997-98.Minutes of the Trust Management Board (TMB), Local Community Steering Committee (LCSC), and TechnicalAdvisory Committee (TAC). Technical Advisory Committee Guidelines. Trust Administration Manual. ProjectSelection Criteria for Community Projects

US Agency for International Development (1995). Project Implementation Letter, USAID Grant Agreement No.617-0214, granting $880,700 to MBIFCT

USAID (1998). Report of the Evaluation of the Mgahinga-Bwindi Impenetrable Forest Conservation Trust.

World Bank (1997). Report of supervision mission. (1998) MBIFCT Project Midterm Review Draft Report.

evaluation of experience with conservation trust funds

Documents

summary of funds

descriptions of funds

national context

gef evaluation of experience

annex e

evaluation teamnovember

annex c

annex b