Introducing transparent mechanism of CSO funding - Introduction of LOD methodology
Stari Grad Municipality, Sarajevo

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
The system of funding Civil society organizations' projects in the previous period was completely disorganized. Adequate documents which regulate the transparent reallocation of funds from the budget of Stari Grad Municipality to CSOs did not exist. CSOs were able to recognize the problems of citizens in the local community by working with them in the field. Municipality has given funds to NGOs, but rarely for specific projects. The award system was not transparent, money was given arbitrarily, without projects and adequate criteria. Money was given to organizations for their regular activities. Also, there weren't any mechanisms for tracking the expenditure of allocated money, implementation of projects. CSOs were justifying the money they spent based on invoices (for rent, office supplies etc). Reporting system for project implementation and budget spending did not exist, there were no narrative or financial reports. The effects of that system of funding organizations for citizens were minimal or non existing. The only benefit was minimal to some civil society organizations which were able to pay their rent or office supplies. Funding projects of civil society organizations in order to improve providing services to citizens and improving living conditions in this local community was not possible to realize because Municipality Stari Grad did not apply a method of joint defining of problems and ways to solve them with citizens and civil society in the previous period. Communication between this local community and CSOs was almost non-existent, which additionally aggravated this segment of work in local community. It is important to stress that Stari Grad Municipality did not have forms for CSOs which would help them to adequately apply for public calls for funding from the budget. CSOs did not have guidelines for preparing projects and offer them to the Municipality. Special difficulties had arisen before organizations with small capacities and those who did not know how to solve problems of citizens based on project approach. In BiH extremely small number of municipalities have a partnership and well established relationship with CSOs. Also, a small number of municipalities apply transparent and efficient system of funding projects of CSOs. Most of the municipalities apply system of cooperation and funding projects which was used by Municipality Stari Grad. In this environment it was almost impossible for Stari Grad Municipality to use positive experiences and practices of other municipalities because in BiH there were hardly any.

B. Strategic Approach

 2. What was the solution?
Stari Grad Municipality applied to UNDP's public call in 2012 for realization of the project „Strengthening local democracy – LOD III“ which promised solving existing problems. After assessing applications, Stari Grad Municipality was chosen for implementation of LOD III project. In accordance with applicable laws and internal documents, the mission of Stari Grad municipality was to become a service for its citizens and provide them with quality services. Considering that activity of the Municipality addressing providing services to citizens through cooperation with CSOs was practically non-existent, this local community government applied to public call of UNDP in BiH. Its intention was to improve cooperation with CSOs with objective to provide quality services to citizens. This system firstly meant to establish communication with CSOs with objective to recognize citizen's needs as target group of this strategic process. Besides communication, Municipality tried to enable as many CSOs as possible through various educations in different segments: to recognize citizen's problems in the field, to recognize strategic priorities of the Municipality and adapt citizen's needs to strategic documents of Municipality, to be introduced with project cycle and ways of reporting to the donor, in this case Municipality, about project implementation and budget spending. With UNDP's support, key staff of Stari Grad Municipality gained basic knowledge and practice necessary for improving existing system and introducing LOD methodology as standard approach in Municipality. Municipality's goal was to gain knowledge itself about the ways of funding projects of CSOs, which was successful through implementation of LOD methodoloy. Firstly, its intention was to spend the budgeting money as efficiently as possible. The money should be spend for the purpose it was intended, and directed towards real needs of citizens. At the very beginning, the staff defined criteria for selection of projects and partners, namely CSOs. The staff was trained to, in cooperation with citizens and CSOs, transparently select projects which will be funded from the municipality budget, and which will contribute to improving of life conditions of its citizens. They were educated to objectively monitor the realization of selected projects and fulfilling their needs. As well as how the projects were really beneficial for the citizens in Stari Grad Municipality.

 3. How did the initiative solve the problem and improve people’s lives?
Insignificant number of municipalities in BiH use quality and efficient systems of funding projects of CSOs with objective to fulfill citizen's needs and creating quality life conditions for them. Stari Grad Municipality fully adopted quality and efficient system of funding CSO projects through adoption and implementation of LOD methodology. The approach offered through LOD methodology is new in BiH. Stari Grad municipality fully adopted this model of cooperation with CSOs and in regard to other municipalities in BiH and region and had substantial results as evidenced by reached decision, cooperation with CSOs and results in the field. Taking into account the definition and legal basis for establishing associations in BiH, there are several types of CSOs and they are mostly divided into three groups: CSOs that gather organizations that care about all categories of citizens, sports and veteran organizations. Stari Grad municipality is among the first in BiH that has in short period adopted Decision on funding projects of non-governmental/non-profit organizations under LOD methodology. This decision regards the first group of organizations. It defines criteria for allocation of funds, monitoring and evaluation of projects, reporting about project implementation, application forms – set with all documents necessary for applying for call for proposals, instructions for CSOs. Stari Grad municipality has gone a step further and became one of rare municipalities which has adopted the decision under LOD methodology for sport organizations. It is a Decision on procedure for allocation and provisional criteria for use of grants of Stari Grad Municipality for non-governmental and non-profit sports organizations. In this decision, as well as in previous one the criteria for distribution of money, applying for call for proposals, selection of projects, monitoring implementation of projects are clearly defined. By adoption of both decisions, Municipality included significant number of citizens to whom the projects will definitely be useful. Besides LOD methodology Stari Grad municipality adopted EU principles in this field. Even though BiH is not a EU member, Stari Grad municipality decided to accept the project approach under EU standards and in this way prepared CSOs for cooperation with EU members.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
One of the first steps of introducing LOD methodology was forming a team which would define necessary actions for complete implementation of this mechanism. Stari Grad municipality formed a working group at the beginning of the process with objective to create implementation plan for successful implementation of LOD methodology. Besides representatives of Stari Grad municipality (mentioned staff in Department of education, culture, sport and local development) working group included representatives of LOD III team from UNDP in BiH and representatives of CSOs. First step, first activity was establishing cooperation with LOD III team, and then establishing partner relationship with CSOs. Stari Grad municipality adopted Decision on funding projects of non-governmental/non-profit organizations under LOD methodology. In cooperation with partners, areas of public call were defined. The evaluation of received project was successfully implemented. The evaluation process included for the first time representatives of CSOs. The selection of CSO representatives was transparent and democratic. CSOs chose an evaluator among themselves. Nine projects were selected and successfully implemented. Also established was a Monitoring team who, with help of LOD III team, monitored implementation of selected projects. At the same time, Stari Grad Municipality adopted a Decision on procedure of distribution and provisional criteria for use of liquid grants of Stari Grad Municipality intended for non-governmental and non-profit sport organizations. Municipality published Public call for funding projects. In the same way, representatives of CSOs were selected and they participated with municipal officials in selection of the best project proposals. A Monitoring team was established and it has overseen the implementation of selected projects in 2014 independently.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The process of introduction and implementation of LOD methodology was participative. At the very beginning of the implementation of system of transparent funding of CSOs with objective to provide quality services to citizens, Stari Grad Municipality cooperated closely with LOD project team in UNDP Mission in BiH. From the Municipality, actively engaged were: Common Council, Department of education, culture and sport, Sector for local development and Department of public relations. Besides municipal departments, in introduction of LOD methodology participated more than 30 CSOs among them the most important Foundation for Local Democracy, NGO altruist „Svjetlo“, Association for research and organizational development „Roda“, Youth Council of Stari rad, Association of high school students in BiH. After Stari Grad Municipality was educated on LOD methodology principles, this strategic goal was applied independently, in partnership with CSOs. In the meantime and with objective to achieve quality and concrete results in the field, a reorganization of municipality departments was implemented. In second phase of LOD methodology implementation participants were Common Council (all councilors in the current session of the Council), reorganized Department of education, culture, sport and local development (Amina Deljković, assistant mayor, Selma Velić, senior advisor for education, Enida Osmanagić, senior advisor for education, Sanin Hadžibajrić, senior advisor for cooperation with NGOs, Admira Muhć, senior advisor for youth issues and Irma Mandžuka, senior advisor for development of business infrastructure, and 30 representatives of CSOs, among which were especially active: Foundation of Local Democracy, Zone of improved business Baščaršija, cultural associations „Šadrvan“ and „Baščaršija“, Karate club „Satori“, Swimming club „Old City“, NGO altruists „Svjetlo“, Riding club „Children of the Wind“, Association for internet promotion of business and tourism „e-Mreža“, Association for development of rural tourism „Alterural“, Foundation „Sarajevo navigator“.
 6. How was the strategy implemented and what resources were mobilized?
Introducing LOD methodology as transparent mechanism of funding CSOs cost 400.000 EUR. In this funding and providing necessary conditions for complete realization participated European Union (through UNDPs LOD III as donor of the project) and Stari Grad Municipality. In the first phase, which was about enabling capacities of Stari Grad Municipality for independent working, LOD III project from the funds allocated by EU was given through support in organizing multi-month trainings for municipality staff, as well as representatives of CSOs. Also, LOD III project organized study visit for municipality staff with objective to gain additional knowledge and positive practices in this area in the countries which implement this methodology, as well as expert help of the team who worked with Stari Grad municipality team. Also, through LOD III project a consultant was provided who monitored the introduction of this mechanism, gave expert help and recommendation, as well as direct financial support for CSO projects. Stari Grad municipality participated in the first phase by providing necessary staff who participated in the trainings, provided venues, office supplies and materials, as well as funding for co-funding of CSO projects. In the second phase, Municipality organied educators for additional trainings of municipality staff and representatives of CSOs. Then, it provided complete technical support for successful continuation of realization of LOD methodology (venues, technical and office supplies and material), and fully funded CSO projects. Besides, it provided staff that was dedicated to realization of this mechanism every day. Costs of the first phase were 300.000 EUR, and second 100.000 EUR.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
One of the most important outputs during introduction of LOD methodology was Decision on funding project of non-governmental/ non-profit organizations under LOD methodology. Stari Grad Municipality made a decision which for the first time clearly defines a way of funding CSO projects from the beginning until the end. In this decision it is defined who can apply to public call, publication of the call, criteria for selection of projects, publishing most important project proposals, appeal deadline, signing contracts, monitoring of project implementation. Team for evaluation/assessment of the projects is one other very important outputs of this mechanism. In this team, besides donors i.e. representatives of Stari Grad municipality, important role belongs to CSO representatives. They, together with Stari Grad Municipality employees, participate in assessing submitted applications to the public call and selection of the most successful which will be funded from the municipality budget. In addition to Team for evaluation/assessment of project proposals another important output is Monitoring team. This team is made up exclusively of representatives of donors, or Stari Grad municipality. In the implementation period its role is to monitor implementation of projects according to project proposals. Its role is also to suggest CSOs how to implement their project in the best way, and provide them with guidelines to implement the project in line with the application form and contribute to achieving o the final goal – creating a more pleasant ambiance for the life of citizens in Stari Grad Municipality. Application forms, as unified set of documents for applying for project proposals is one of the most important outputs from realization of the mentioned mechanism. This form is a group of documents which CSOs are obligated to fill in order to apply with quality project to public call. Besides project proposal, included in the set are logical framework, activity plan, budget and other documents. Cooperation between Stari Grad Municipality and CSOs is the last, but not least output of LOD methodology. This cooperation is apparent in all funding phases of CSO projects, from selecting the areas and topics for public call, defining the budget for CSO project, education in the preparatory field and writing project proposals, assessing the projects and signing contract.

 8. What were the most successful outputs and why was the initiative effective?
In previous two years during process of introducing new methodology several mechanisms were used to assess the success of application of LOD methodology. Internal control was about submitting reports to responsive organizational units and persons about improvement and results of LOD methodology in Stari Grad Municipality. Department for education, culture, sport and local development was continuously informing Common Council of Stari Grad Municipality and Mayor about implemented activities in line with set activity plan. Also, municipality staff in Team for Monitoring provided reports about results of approved projects on a daily basis to the chairperson in Department for education, culture, sport and local development as well as the Mayor. The results of approved projects were reported to the Common Council of Stari Grad Municipality after they were concluded. Also, analysis were conducted among citizens and beneficiaries of approved projects. Respondents were saying how much the projects were really useful for them. Their responses were submitted in the form of a report to Common Council of Stari Grad Municipality, Mayor and the Chairperson in Department for education, culture, sport and local development.

 9. What were the main obstacles encountered and how were they overcome?
During introduction of LOD methodology the biggest problems were with CSOs which were previously directly included in the municipality budget. They were afraid that the application of the new mechanism will make them lose right to the money they were entitled to exclusively in the previous period. This problem was solved by establishing dialogue with these as well as other CSOs. They were explained that the application of LOD methodology gives all organizations an equal statues and that in order to get the money they have to prepare a project which will be useful for citizens of Stari Grad municipality. They were also explained that they will have the benefits because their beneficiaries will be satisfied. Through constant constructive meetings CSOs were encouraged to specialize, or rather professionalize their services, to act in line with the local development strategy and to become one of the bearers of making civil society in the community where they act. Problems have arisen because of introducing new project approach. Special difficulties were in CSOs which had small and underdeveloped capacities. The problem was overcome by organizing training in the field of writing project proposals. All interested CSOs gained new knowledge and skills in managing project cycle. Besides gaining knowledge for applying with project proposals to Stari Grad municipality public calls, they had the possibility to apply with their proposals to other institutions which require the same procedure. Resistance emerged with some of the employees of the Municipality, who previously participated in making decisions on allocating budget money for CSOs. The problem was solved by the use of participative approach throughout the complete system of LOD methodology introduction. All who previously worked with CSOs were left a possibility to give their proposals in each segment of the application of the new mechanism. They were also given possibility to participate in selection of CSO project as well as monitoring of implementation of approved projects.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
Introducing methodology „Strengthening local democracy“ as transparent system of funding CSOs had multiple benefits for Stari Grad municipality and their citizens. Through this methodology a cooperation with CSOs was institutionalizes, public call was established as mechanism of funding CSOs and all that with objective to provide efficient and quality services to their citizens. Through institutionalization of cooperation with CSOs new mechanisms of cooperation were established. Firstly, it was a dialogue with organizations that directly work with citizens in the field. This dialogue is seen through various projects. In cooperation with organizations Stari Grad municipality prepared Development strategy. CSO participated in collection and analysis of information, round tables and discussions, as well as in preparation of around twenty project proposals. In the process of making Strategy of organizations they proposed concrete solutions to the problems recognized based on citizens' needs in various project proposals. Also, on their request Stari Grad municipality established an office for CSOs which was a part of this local government unit. In this way, the office became a bond between citizens as users and CSOs and Stari Grad municipality as providers of services. Application of LOD methodology helped Stari Grad municipality to make a register of CSOs registered in the municipality. Register contains overview of organizations based on their scope of action with the basic information, including name and mission as well as contact information. This register is published on Municipality website. Advantage of this record is that it is transparent and available to all citizens in order to know which organizations are active in their surrounding, what is their mission and how to contribute to solving a problem in their local communities with those organizations and with help of the Municipality. Two-way communication between Stari Grad municipality and CSOs was present during introduction of public call as mechanism for funding organizations. Within the process of preparing LOD methodology, CSOs were equal partners in preparation of public all, from the beginning to an end. They had important role in proposing and selection of areas which are important and based on which they would propose their projects. Participation of CSOs in creating public call helped Stari Grad municipality to gain information about citizens needs firsthand. Also, this was the first time that monitoring of selected projects was established which is one of the most important issues in the process. During assessment the focus was put on the citizens who would really benefit. Monitoring of their realization to CSOs provides guidelines how to make the project come to an end and achieve set goal and have results in the field – satisfaction of citizens for whom the project was intended. Thanks to the successful cooperation between the team for monitoring and CSOs, approved projects are at an end and set objectives were really important and improved.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
LOD methodology is extremely useful mechanism for establishing partner relations with objective to provide quality services to citizens, especially in the surrounding such as Bosnia and Herzegovina. It was pointed out earlier that relatively small number of municipalities have adopted this system of cooperation with citizens through CSOs. Stari Grad Municipality adopted Decision on funding projects of non-governmental/ non-profit organizations under LOD methodology and bearing in mind its content, it has proven itself so far to be exceptionally good and adaptable to working in the field. This Decision can serve as example of good practice to other municipalities in introducing new mechanisms of cooperation with CSOs. Decision of Stari Grad municipality served as a model for Visoko Municipality which is also introducing LOD methodology to create their Decision. Also, Stari Grad municipality shared its experiences in this process with Novi Grad municipality. In order to avoid difficulties, Stari Grad municipality pointed out the possible issues and problems in the implementation of LOD methodology. Stari Grad municipality made quality database of CSOs who directly cooperate with citizens in the field during this process. Independently, it created application forms and publicly presented it to all CSOs and asked them to register in the Municipality database. This system of establishment of unique register of CSOs can serve as good basis for other units of local government to set up their own databases.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
The process of introducing new mechanism for providing services to citizens through CSOs was not a simple one. At the very beginning there were difficulties within Stari Grad municipality and in the process of cooperation with CSOs. Issues within the municipality were that the people from who previously participated in awarding grants to CSOs were afraid that they will be eliminated from the process altogether, and CSOs who were direct beneficiaries from municipality budget and those with small capacities were afraid that they will not comply with the criteria and therefore be excluded from the new system. Establishing dialogue and providing a chance for all participants to be a part of creation of new mechanisms , team work and constant education are a key to success which was shown in the process of implementation of new system of cooperation of Stari Grad municipality and its citizens through CSOs. Through these three segments all obstacles were overcome and all needs of all participants in the process were fulfilled.

Contact Information

Institution Name:   Stari Grad Municipality, Sarajevo
Institution Type:   Government Agency  
Contact Person:   Amina Deljkovic
Title:   Assistant to Mayor of Municipality  
Telephone/ Fax:   + 387 33 28 25 01
Institution's / Project's Website:  
Address:   Zelenih beretki 4
Postal Code:   71000
City:   Sarajevo

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