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Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.:75942 (The report # is automatically generated by IDU and should not be changed) Project Name PNPM Peduli Region East Asia Pacific Region Country Indonesia Sector Social Development Project ID P126424 Implementing Agency TBD (To be Determined) Environmental Screening B Partial Assessment Category Date PID Prepared 13 May 2011 Estimated Date of Appraisal 30 June 2011 Completion Decision Other Decision I. Country Context In President SBY s second term, the Government adopted Indonesia's Medium-Term Development Plan (RPJMN) 2010-2014, with the target of increasing economic growth to 7 percent and reducing the poverty rate to 8-10 percent by 2014. The RPJMN highlights the need for growth with equity and a range of cross-cutting policies to ensure that development is both sustainable and inclusive. Indonesia managed to weather the global economic downturn of 2008-09 and regain its growth momentum. The social impact of the global crisis was also limited in Indonesia. Despite strong economic growth and falling poverty in the last decade, inequality is rising. The gap between the poor and non-poor is also widening. The Gini coefficient has increased from 0.32 in 1999 to approximately 0.41 in 2010. Growing intolerance of minority groups, including sexual and religious minorities, threatens social cohesion and stability. Social and economic exclusion, together with internalized and external stigmatisation prevents marginalized individuals and groups from accessing the country s mainstream development programs. As a result, their needs remain invisible and opportunities for their participation and contribution are limited. In addition they internalize this stigma and feel less entitled which increases their sense of isolation from society. Positive engagement with the broader community and government helps to influence perceptions about the potential of marginalized groups. This in turn builds social harmony and social capital. In addition to being a Millenium Development Goal (MDG), specific attention to marginalized women has a multiplier effect as it not only promotes gender equality, but in turn brings about exponential social and economic benefits for their families and wider communities. 1. 1 Gender Equality as Smart Economics, A Work in Progress, World Bank, Washington 2011. PNPM Peduli PID May 2011 Page 1

II. Sectoral and Institutional Context The Government of Indonesia s National Program for Community Empowerment (PNPM Mandiri) is the Government s flagship program for poverty alleviation. It is a community-driven development program that encourages local communities to participate in the planning process; provides financial support to communities for direct and transparent funding of povertyalleviation activities; and enhances the partnership of central and local governments to best provide services where most needed. An AKATIGA study in 2010 on marginalized groups in PNPM Mandiri concluded that although some marginalized groups received some benefits from poverty reduction programs, the broad brush stroke of PNPM Mandiri was not able to effectively reach the most marginalized. They were often left out of planning processes, or their needs and aspirations not reflected in community decision-making. 2 Marginalized individuals and groups are not always defined by their economic status and can cross or overlap economic, cultural, religious, political and social groups. These are the people with fewer assets, lack access to resources and information, have lower levels of education, are poor and stigmatized for their sexual orientation or lifestyle choice, of ethnic or religious minority, people living with disabilities and widows. But they are also those who have limited access to services, social, economic and political life due to social constructs. These individuals and groups lack resources, access to information and economic opportunities, and confidence. Since inception, PNPM Mandiri has been envisaged as a broad-based effort to reduce poverty. Such an effort requires multi stakeholder participation and support for the program. This includes the need for promoting greater involvement of civil society organizations (CSOs) 3 in the implementation of PNPM Mandiri. CSOs are recognized for their comparative advantsge in reaching the most marginalized and working with and for these groups at the grassroots level in a way that large poverty programs are often not able to. The Government of Indonesia has a long and somewhat underappreciated track record of cooperation with CSOs within PNPM Mandiri. From the time of its launch in 1998 (in form of its precursor program, the Kecamatan Development Program - KDP), the program operations and the participation of communities in PNPM Mandiri have been monitored by independent journalists and CSOs. These entities were given blind contracts through PNPM Mandiri which financed travel and publication costs, but required no prior review on behalf of the GOI for the content of their reports. This mechanism supported the transparency of PNPM Mandiri s planning and implementation processes, and substantiated CSO s in a de-facto watchdog capacity. PNPM Mandiri has also had some limited experience in directly financing CSO activities to further efforts to reduce poverty. There have been two pilot programs which provide funding to the South Sulawesi CSO forum and to a church-based CSO in Papua. Similar arrangements have led to the development of the large and highly successful Program for Women Headed Households in Indonesia, or better known by its Indonesian acronym, PEKKA. 2 Akatiga (2010) Marginalization and PNPM Mandiri study. 3 Throughout this document, the term Civil Society Organization and CSO also refers to local Non- Governmental Organizations (NGOs). PNPM Peduli PID May 2011 Page 2

Although these pilot programs have had notable successes over the years, it has proven to be challenge to coordinate their activities into a comprehensive poverty reduction strategy. Global best practice shows that channeling resources through civil society organizations (CSOs) that are working at the grassroots level with those that are marginalized enables the government to engage with these individuals and groups. Under the facilitation of Indonesian CSOs, marginalized groups are developing new skills; accessing services; learning about their rights; and connecting with others (including the broader community and local government). Best practice also shows that empowerment of citizens in this way requires a rights-based approach rather than one only focused on meeting direct and immediate needs. PNPN Peduli Project activities will directly support the World Bank s Country Strategy Core Engagement 3 - Community Development and Social Protection. Activities will foster inclusive growth providing support services and technical assistance to marginalized groups currently not able to access, or access easily, PNPM and other poverty reduction programs. The focus of the CPS is investment in Indonesian institutions, including a focus on non-state actors, such as civil society and community-based organizations. The project will provide capacity support to Indonesian civil society organizations working on poverty reduction activities. Investment in these institutions aims to improve accountability and build capacity of these non-state organizations to meet Indonesia s development objectives. III. Project Development Objectives In 2010, the Government of Indonesia conceptualized the PNPM Peduli program in response to awareness that the broad brush stroke of PNPM program was not able to reach marginalized populations 4. The program is given strategic guidance from the Ministry for People s Welfare (Menko Kesra) and managed by the PNPM Support Facility (PSF). 5 The program promotes a just society where marginalised people are recognized, respected and valued with the freedom to act and make choices about the quality of their lives. The main development objective of PNPM Peduli is to strengthen the capacities of Indonesian CSOs to reach and empower marginalized groups to improve their socio-economic conditions. PNPM Peduli aims to fill gaps of government poverty reduction programs in reaching marginalized groups by capitalising on the comparative advantage of local CSOs in reaching and working with these groups. It seeks to tap into and learn from the innovative and inclusive poverty reduction practices of Indonesian CSOs and strengthen their management capacities and sustainability. IV. Project Description 4 Akatiga (2010) Marginalization and PNPM Mandiri study. 5 The PSF is a mechanism established by the Government of Indonesia (GOI) and international development partners to support PNPM Mandiri. Through the PSF, development partners provide high-quality, coordinated, technical assistance, planning advice and dialogue, as well as targeted financial assistance to the GOI in its management of PNPM Mandiri. PNPM Peduli PID May 2011 Page 3

Program Components The program will have the following components: 1. Grants. Under PNPM Peduli, grants will be awarded through a competitive selection process by the PSF Trust Fund to around 3-4 Indonesian CSOs ( Executing Organizations hereafter called EOs) that are either: a) national grant-making organizations or NGOs working through a third-party (model A, or EO-A); or b) nationwide membership-based organizations working through their sub-national branches (model B, or EO-B). Grants will have a co-financing component where the Executing Organisation contributes either seed funding for activities or contribution in kind (resources, staffing and so on). The contribution will be 5% on top of the total value of the Grant Agreement. Contributions in kind will be based on their market value. 2. Sub-Grants. The EOs will then sub-grant to local CSOs (under EO-A) or allocate funds to their sub-national branches (under EO-B) implementing poverty reduction activities targeting marginalized groups. Thematic areas that can be considered for funding include: livelihood support, access to governance, access to justice, education, health, water and sanitation. Potential to expand the range of activities applicable under PNPM Peduli will be reviewed at the end of the pilot phase (June 2012). Marginalized groups that will be covered through the project are listed below in the Project Activities section. There will be no geographic focus of the project, the focus being on reaching targeted marginalized groups. However, EOs will have in place strategies for upscaling their reach and scope of activities to ensure that CSOs/branches throughout most of Indonesia s provinces are eligible for sub-grants. Sub-Grants for direct support provided by Executing Organisations to their implementing partners will comprise 80% of the total amount allocated to their implementing partner. 3. Capacity-Building to Executing Organsiations. An important objective of PNPM Peduli is to strengthen the capacities of Indonesian national and local-level CSOs. Capacity-building support will be provided to EOs based on their specific needs. The level and type of training for each EO will be assessed based on specific capacity development plans. EOs will in turn be responsible for providing capacity-building services to their sub-granted CSOs/branches. Support will be provided through appropriate strategies including technical assistance, mentoring, on-the-job training, workshops and seminar. 4. Capacity-Building to local CSOs/Branches. Capacity-building support will also be provided to the sub-grant CSOs/branches. This will initially include developing activity work plans and budgets, conducting monitoring and evaluation, and in reporting on subgrant funds and activities. The sub-granted CSOs/branches may also receive training on issues such as fiduciary management, fundraising, proposal writing, organizational learning, and governance and transparency. Capacity support provided by Executing Organisations to their implementing partners will comprise 20% of the total amount allocated to their implementing partner. This component will be implemented by Local CSOs (for Model A), branches or affiliated organisations (for Model B) funded by subgrants awarded to them by EO. The activities should directly support poverty reduction PNPM Peduli PID May 2011 Page 4

activities targeting highly marginalized groups. Sub-grants will support activities that reach vulnerable groups not easily accessed through current poverty reduction programs, such as PNPM. Poverty reduction activities are aimed to empower communities and bring them together with the aim of reversing declining standards of living and poor conditions. Of the programmatic costs, direct support comprises 75% of the sub-grant. Program Phases Phase 1 (pilot phase): January 2011 June 2012. This phase will involve: the establishment and signing of Grant Agreements between the World Bank and selected Executing Organisations; provision of initial training to Executing Organisations; the establishment of subgrant/funding agreements between Executing Organisations and their selected partners; the implementation of project activities by local CSOs/branches; and the provision of capacity support to these local partners under the sub-grant/funding agreement. The pilot phase will have a strong focus on learning and sharing and testing approaches to poverty reduction and reaching marginalized groups. Executing Organizations and their implementing partners will support and actively participate in the documentation of good practices and lessons learned managed by the Technical Support Group (TSG). The end of this phase will involve an evaluation and review of activities and extension of existing Grant Agreements based on satisfactory performance - with provision for additional funding to EOs for Phase 2. Executing Organisations will actively participate in the review of the pilot phase that will inform full implementation of the project in Phase Two. As required, the Operational Manual will be revised and fine tuned in preparation for Phase Two. Phase 2: June 2012 2014. Phase 2 will commence following evaluation of Phase 1, with Executing Organisations continuing their existing sub-grant/funding agreements which will be extended and additional funds allocated according to the proposed and approved Activity Plans and linked budgets. Executing Organisations will implement their strategy to up-scale activities, develop new partnerships and reach new marginalized groups, specifically focusing on gaps identified through review at the end of Phase 1. Phase 2 will build on lessons learned and recommendations from the review of Phase 1. Innovation and good practice will be brought to scale. During Phase 2, PNPM Peduli will also seek to promote synergies between CSOs and government programs and promote integration of innovative approaches to social inclusion of marginalized groups into government poverty reduction government programs, including PNPM. There will be no delay in the transition between implementation of activities Phase 1 and continuation into Phase 2. Program Design Approach The pilot phase will be a design implement with a strong focus on learning by doing. The results framework, program definitions, reporting templates and monitoring and evaluation framework will be built in partnership with national CSO partners in the program start-up promoting a participatory approach that builds on CSO experience and expertise and ensures program mechanisms reflect the way grassroots CSOs work. An external review will be conducted close to the end of the pilot phase to assess what s working well and what can be built on for Phase II to inform the design. It is expected that a results framework will be updated for PNPM Peduli PID May 2011 Page 5

full implementation. The PDO and program outcomes may also be refined at this time and a full baseline developed. The rationale for a design implement approach is that social inclusion and marginalization is a new area of work and the first time the government and World Bank has partnered with Indonesian CSOs to address issues of inclusion. The pilot phase will have a strong focus on testing and learning what works and why. The approach to designing and setting up implementation structures for PNPM Peduli is also about forging a new business model for grant making with CSOs. This is about finding the right process that ensures that our quality, fiduciary, and safeguards requirements are met, while keeping the transaction costs for the CSOs at a minimum. This will involve educating CSOs on what information is required in the early stages, and building their capacity to provide that information in a form that is understandable for the Bank. Practical strategies have involved consultations to gain a better understanding of how these organizations work and providing Proposal Writing Clinics to educate CSOs on the requirements of the Bank. In this way, project implementation can maintain a light touch approach by working through existing CSO systems as far as possible to fully captialise on their strategic advantage in working with and for the most marginalized. As well as a learning process for the Bank and CSOs, through the PNPM Peduli model, the government anticipates it will learn from the innovative approaches to poverty reduction captured and to look for strategies to replicate and upscale these practices in other poverty reduction programs, including PNPM Mandiri. V. Financing Multi Donor Fund (JMC) US$ 4,215,000 Total - US$ 4,215,000 VI. Implementation Government of Indonesia: Indonesia s Ministry of People s Welfare (Menko Kesra) is a key decision maker concerning the overall direction of the Program and provides strategic and operational oversight and guidance to the program through Pokja Pengendali. This includes involvement in periodic reviews of the program and helping to draw in those ministries under its coordination to support implementation of the Program and learn from the knowledge generated. Strategic oversight is also provided by Indonesia s National Agency for Development Planning (BAPPENAS). Joint Management Committee (JMC): JMC is the governing body of the PSF Trust Fund and comprises representatives of Government and donors which provides periodic inputs on the strategic direction and oversight of Peduli, reviews progress of the program. It also has the key decision making role concerning the funding of the program, including approvals for any additional financing required and new EO partners. PNPM Support Facility (PSF): The PSF is guided by the Government of Indonesia and JMC in making strategic decisions about the program based on program reports, learning and consultation with implementing CSO partners, other stakeholders and the TSG. The PNPM PNPM Peduli PID May 2011 Page 6

Peduli Coordinator based at the PSF manages the Grant Agreements with EO and recipients of Innovations Grants, in accordance with World Bank Fiduciary Guidelines and Safeguards requirements as set out in the Program Operations Manual. It is accountable for funds disbursement and management, ensuring information flow to Government of Indonesia and JMC and ensuring that decision making bodies have a full and open account of the Program s progress and issues arising. PSF is responsible for ensuring that EO and TSG are acccountable for their their contractual and milestone obligations. It is the key decision maker regarding program strategies, processes and tools which are developed in consultation with EOs and will address any issues of misconduct or poor performance among EOs, Strategic Partners or TSG. Technical Support Group: The TSG will be guided by the Program Operations Manual and adhere to all governance provisions and program policies. While the TSG does not have responsibilty for financial management, it must be fully aware of Peduli financial procedures and requirements to the extent that it can report any identified issues to PSF for immediate action. The TSG will become the main point of contact between the EO and the PSF and will have the key decision making role regarding quality of implementation and reporting. The TSG will address any issues of misconduct or poor performance among team members, other than cases of fraud which are addressed by PSF. Executing Organizations and CSO partners: Executing Organizations and their CSO partners are guided by their Program Operational Manual (POM) and Project Management Manuals (PMM) respectively which align with the Peduli POM and World Bank requirements. EOs will decide their own program structures and implementation strategies and process, select their local partners using agreed criteria and address any issues of misconduct or poor performance among EO staff and/or CSO partners. Financial systems have been developed with EOs in line with World Bank requirements and they are responsible for addressing any fiduciary issues with their Partners. CSO partners are responsible for working in partnership with individuals and groups to develop and implement activities working with the most marginalized. PNPM Peduli PID May 2011 Page 7

This is shown pictorially below in Diagram 1. Diagram1. Pokja Pengendali (BAPPENAS ) Operational Oversight PSF Secretariat (World Bank) PNPM Peduli Coordinator Technical Support Group (TSG) GRANT MODEL A GRANT MODEL B Executing Organization (work thru 3 rd party org) Executing Organization (work thru 3 rd party org) Executing Organization (work thru subnational branches) Executing Organization work thru subnational branches) CSO CSO CSO CSO Subnational branch Subnational branch Subnational branch Subnational branch Beneficiaries Indicate Lines of Technical Assistance Indicate Grants/Sub-Grants Indicate Contract Grant Mechanism PNPM Peduli will be implemented through two grant mechanisms: Grant Model A. The World Bank will award Grants to Indonesian grant-making organizations (Executing Organisations, EO-A) that provide support to and work through a third party organization (ie. local CSOs). Grants will be used by EOs to: a) strengthen their own management and operational capacity and b) provide sub-grants to local CSOs. The sub-grants from EO-A to local CSOs will: a) support sub-grantees poverty reduction activities with marginalized groups; and b) strengthen their management and organizational capacity. Grant Model B. Through a separate process, the World Bank will also award Grants to Indonesian nation-wide organizations (Executing Organisations, EO-B) that provide support to and work through sub-national branches of their organization. Grants will be used by EO-B to: a) strengthen their own management and operational capacity and b) allocating funding to their sub-national branches. The funding from EOs to their sub- PNPM Peduli PID May 2011 Page 8

national branches will: a) support poverty reduction activities of sub-national branches with marginalized groups; and b) strengthen their management and organizational capacity. Grant Eligibility In order to be eligible to receive PNPM Peduli Grants, the Executing Organisation under Grant Model A and B must as a minimum be legally registered entity that has a legal basis for operation in Indonesia; must be working across more than one province; must be working with more than one of the target marginalized groups; and must be supporting a range of poverty reduction activities. In addition, the specific requirements include: Fiduciary Have existed as an organisation for the past two years and have documented external audit reports for the past two years; Have an Operation Manual outlining clear standard financial and operational procedures for program and financial management; Be willing and able to establish a separate account in the name of the Project or have an accounting system to adequately separate Project funds; and Be willing and able to be audited by an external independent auditor on an annual basis for the duration of the Grant Agreement. Grant Model A: Capacity and Experience Established and strong working partnerships with local CSOs working supporting poverty reduction activities to targeted marginalized groups; Able to identify potential CSO projects and activities consistent with the objectives of PNPM Peduli in reaching the most marginalized; Demonstrated experience strengthening the capacity of local CSO networks evidenced by reference letters from recipients for recent programs; Demonstrated experience in grant making to local CSOs and existing grantees carrying out relevant project activities; Capacity and willingness to upscale support for local CSOs over time through increased number and reach of sub-grants; Demonstrated staffing and resources that will be allocated (either existing or contracted for the project purposes) to ensure on-granting is well managed; Grant Model B: Capacity and Experience Have established sub-national branches of the organisation supporting poverty reduction activities to targeted marginalized groups; Established and strong working partnerships with local grassroots and community groups at the sub-national level working in poverty reduction in the priority themes evidenced by long term engagement, identification of potential partners and projects and demonstrated understanding of local poverty reduction activities; Propose projects that will be carried out by their sub-national branches that target the most marginalized groups, propose a logical implementation strategy for activities, propose a credible M&E systems and sound budget; Capacity and willingness to upscale support for sub-national branches over time through PNPM Peduli PID May 2011 Page 9

increased number and reach of sub-grants; Demonstrated staffing and resources that will be allocated (either existing or contracted for the project purposes) to ensure on-granting is well managed; Governance Requirements Have a credible and transparent organisation structure that ensures decision-making processes are consultative and the Board decisions and operations are transparent to members and beneficiaries. Grant Recipient Selection Process The PNPM Peduli team will prepare a number of documents to support the process of selection and appointment of Executing Organisations. These include: mapping and short listing documentation to invite shortlisted eligible organizations to submit full proposals, Selection Criteria for Executing Organisations, Terms of Reference (ToR) for Executing Organisations, Financial Proposal Template, Technical Proposal Template, Appraisal Criteria for Executing Organisations, CSO Selection Worksheet (which will include a financial and procurement assessment), and PNPM Peduli Operational Manual. The selection process for Executing Organisations will involve the following steps, shown pictorially below: PNPM Peduli PID May 2011 Page 10

1.Mapping of eligible organisations using criteria and ranking. Verification of mapping with CSO experts. Short-listing of eligible organizations invited to submit pre-proposal forms. 2. Pre-Proposal Submission. Organisations meeting basic criteria submit form outlining core requirements related to their operations and structure. Organisations meeting all criteria invited for full proposals. 3. Initial Meeting on Full Proposal. Shortlisted potential EOs receive a project briefing and have opportunity to ask questions about proposal process or project. 4. Proposal Writing Clinic for shortlisted organisations to educate them on required information for proposal stsge in the correct Bank format..5. Technical Evaluation Committee. TEC established (inviting government WB experts and selected CSO experts) to assess proposals and select Executing Organisations. 6. Financial and Procurement Assessments & Procurement Plan for Executing Organisation involving anti-corruption and safeguards teams. Recommendations made to Legal Team. 7. Grant Agreement Drafted by Legal Team incorporating recommendations. Grant Agreement finalised with organisation. Activities begin. Sub-Grant Eligibility In order to be eligible to receive PNPM Peduli Sub-Grants or funding agreements, organisations under Grant Model A as a minimum the organisation must: Fiduciary Requirements Be a registered entity recognised either within their community or have a legal basis for operation; 6 Be able and willing to show accounts for the past year; Be able and willing to be audited annually by an external independent auditor for the duration of the Sub-Grant Agreement; 7 Be willing and able to use the Executing Organization s grant instruments (Financial and 6 Organisations that are not registered can obtain a letter from the local government or confirming their that they are recognised as an organisation carrying out activities as they claim.. 7 For smaller organisations who have not participated in an external formal audit, training will be provided in preparation for the first audit at the end of the 12 month period. PNPM Peduli PID May 2011 Page 11

Management Manual) and to meet their fiduciary and reporting requirements; Be willing and able to establish a separate account in the name of the Project; Capacity and Experience Have strong community partnerships demonstrated by long term engagement and strong understanding of the poverty issues in their working environment; Be currently engaged in poverty reduction activities working with marginalized groups; Have a clear strategy presented for how they target and work with the most marginalized groups; and Propose activities that demonstrate a logical implementation strategy, and sound budget. Governance and Accountability Requirements Have a clear organisational structure in place Have mechanisms to involve beneficiaries in decision-making and poverty reduction activities (this may include involvement in monitoring and reporting activities, planning, developing proposals, attendance at organisational meetings and how they make information readily available through newsletters, open meetings and so on). Under Grant Model B, Executing Organisations, as nationwide organisations, will have internal mechanisms to work with branches or affiliated organisations and select suitable partners. Executing Organisations will ensure eligible activities are selected with suitable branches that meet the following: Fiduciary Requirements That the branch implementing the activities is officially connected to the Executing Organisation; Be able and willing to show accounts for the past year; Be able and willing to be audited annually by an external independent auditor for the duration of the Funding Agreement; 8 Have financial and management systems in place from the Executing Organization s (i.e. using the EOs Financial and Management Manual/systems) and have demonstrated ability to meet their fiduciary and reporting requirements; Be willing and able to establish a separate account in the name of the Project; Capacity and Experience Have strong community partnerships demonstrated by long term engagement at the local level and strong understanding of the poverty issues in their working environment; Be currently engaged in poverty reduction activities working with marginalized groups; Have a clear strategy presented for how they target and work with the most marginalized groups; and Propose projects that demonstrate a logical implementation strategy, and sound budget. 8 For smaller organisations who have not participated in an external formal audit, training will be provided in preparation for the first audit at the end of the 12 month period. PNPM Peduli PID May 2011 Page 12

Governance and Accountability Requirements Have a clear organisational structure in place and mechanisms to involve beneficiaries in decision-making and poverty reduction activities (this may include involvement in monitoring and reporting activities, planning, developing proposals, attendance at organisational meetings and how they make information readily available through newsletters, open meetings and so on). Under both grant models, the selection process for all sub-grants will follow the existing systems of the Executing Organisations but ensure that local partners meet the basic criteria above and selected poverty reduction activities are in line with the objectives and priorities of PNPM Peduli in reaching the most marginalized. Process for selection of partners and activities must be well documented and transparent. Executing Organisations may carry out a mapping exercise of existing and new partners to identify potential poverty reduction activities, and they will be responsible for providing capacity support to local partners to support them in the development of proposals with well planned timelines, realistic budgets and quality monitoring and evaluation frameworks. Executing Organisations will be responsible for carry out capacity assessments of local CSOs/branches selected will work in partnership to develop Capacity Development Plans that will be carried out for the duration of the sub-grant/funding agreement. Executing Organisations can use existing templates within their organization to establish funding agreement but must ensure they include standard World Bank clauses for grant agreements as outlined in the project s Operational Manual. Executing Organisations will also be responsible for providing standard training on PNPM Peduli and relevant World Bank guidelines on financial management, procurement, safeguards and anti-corruption as outlined in the project s Operational Manual. PNPM Peduli Activities There are two broad types of activities supported by sub-grants/funding to local branches under PNPM Peduli. Support will be provided for activities that address specific and identified needs of a marginalized individual or community and directly provide for this need. This may include providing equipment for disabled persons or medicine for people suffering from infectious or terminal diseases, access to public and/or private services, and access to economic opportunities. Here the ultimate objective is to assist individuals to improve their situation and condition so that they can fulfill their own potential. Support will also be provided for activities that empower individuals to participate in order to effectively advocate or articulate their individual needs to those who can influence outcomes. This may include activities that focus on strategies for marginalized individuals to become involved in community planning and decision-making processes. Here the ultimate objective is to have the specific needs or aspirations of marginalized individuals heard and addressed, and to integrate into mainstream society so that they can fully participate. Ineligible Activities PNPM Peduli PID May 2011 Page 13

Sub-grants will not support the following: revolving funds; micro-credit programs; charity nor provide welfare payments; activities banned by PSF donor policies or by Indonesian law; government programs, which PSF finances through Windows 1 &2; political activities; purchase of land; activities involving major construction works; and the purchase of large items that are not part of a broader project or activity approved for funded under PNPM Peduli. Target Groups Individuals and communities supported by project activities may include, but are not limited to: street children, orphans, exploited children who may be sexually abused, youth in conflict with the law or suffering drug abuse, female-headed households, victims of domestic violence and of community abuse, sex workers, victims of conflict, people living with HIV and AIDS, people living with disabilities related to leprosy, poor ethnic minorities, handicapped persons and other disabilities, garbage collectors, peddy-cab drivers (bajaj and becaks), domestic workers subject to exploitation, poor migrant workers, trafficked persons, transgendered persons, street beggars, landless farmers, rural fisher folk, poor plantation laborers and poor indigenous peoples. Accountability Mechanisms Downward accountability to these marginalized groups will be ensured through: mechanisms developed by selected CSOs and sub-national branches to involve beneficiaries in project planning, reporting, monitoring and evaluation; projects selected that are based on community needs and target activities to meet these identified needs; collection of stories and case studies to document and share good practice in downward accountability across the project network managed by the Technical Support Group (TSG) supported by the Executing Organisations and local CSOs/branches; a survey conducted of beneficiaries to provide feedback to the project cycle managed by the TSG and supported by local CSOs/branches; and a complaints handling mechanism developed and managed by the TSG making communication about the project accessible at all levels, including beneficiaries and the general public. Grant and Sub-Grant Sizes An initial USD 4 million has been allocated to the start-up pilot phase to support activities managed by EOs. Grants awarded to EOs will not to be of a value greater than the annual amount the EO has previously programmed under other donor funded projects. Sub-grant sizes will vary depending on size and capacity of local CSOs as well as activities being carried.it is expected that the sub-grants will vary between USD 20,000 up to USD 100,000. VII. Safeguard Policies (including public consultation) PNPM Peduli is a pilot project under the PNPM umbrella, with the main Government counterparts, Menko Kesra and Bappenas, providing strategic oversight to the program. The safeguards framework therefore builds upon the lessons learned from safeguards management in PNPM under the umbrella guideline of Implementation Guideline of Social and Environmental Safeguards (IGSES), which similarly funds small-scale projects at the local level. The updated IGSES with several improvement and updates will be used as reference for the implementation of PNPM Peduli. PNPM Peduli PID May 2011 Page 14

There are no significant long-term potential impacts expected to be triggered by this project. PNPM Peduli is implemented by Executing Organizations which are responsible for screening possible environmental and social impacts of their sub-grant activities during planning. If any impacts are identified they are provided with supervision and guidance for developing and implementing measures to mitigate the impacts. Specific guidelines for environmental management and Indigenous People safeguards issues will be referred to updated IGSES 2012. The safeguards screening, implementation and reporting will be outlined in the PNPM Peduli Operational Manual and reference to these guidelines will be included in the sub-grant manuals. The World Bank will provide initial safeguards training to EOs and will continue do so during project implementation. Following the provision of train-the-trainer training EOs may be in a position to provide safeguards training to their sub-grantees so that they have the capacity to manage any potential safeguards risks. Close supervision and monitoring from the Task Team and safeguards team is being provided during project implementation, specifically for safeguards compliance. In the initial start-up the World Bank will conduct a safeguards assessment of the EOs capacity to identify and mitigate safeguards risks. This will be followed by safeguards training on safeguard policies and how to manage potential environmental and social risks. The PNPM Peduli Operational Manual will include specific environmental and social guidelines for screening site-specific impact. The EOs progress implementation reports will contain a section on safeguard implementation for applicable cases. As most projects will be small-scale, there are no large-scale, significant, or irreversible impacts anticipated to occur from these activities. Most of the sub-grants in PNPM Peduli will be focused on capacity and skills training to marginalized beneficiaries, advocacy, legal aid and participatory governance. The few sub-projects that will involve minor construction will follow solid engineering designs and construction practices modeled on lessons learned from the PNPM safeguards approach. Any potential negative environmental impacts will therefore typically be negligible, site-specific, small in scale and can be managed locally by adopting screening criteria and adequate mitigation measures as outlined in the Operational Manual and specifically in the Environmental and Social Codes of Practices (ECOPs). Several of the sub-projects specifically target indigenous people with the aim of improving their economic and social conditions. All sub-grant projects, including those working with indigenous peoples, are expected to be prepared with free prior and informed consultation; with broad community support throughout the project cycle, in design, implementation, monitoring and evaluation. These processes are described in the sub-grant proposals and tracked through quarterly reports (templates developed by the program). The Indigenous Peoples Planning Framework will contain the principles and elements for identifying potential negative impacts, a framework for implementing free prior and informed consultation with the effected indigenous communities in each stage of the subproject cycle; institutional arrangements for screening project supported activities, evaluating their effects on indigenous communities; and monitoring and reporting arrangements. PNPM Peduli PID May 2011 Page 15

Safeguard Policies Triggered Yes No Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60) VIII. Contact point at World Bank and Borrower World Bank Contact: Kevin Tomlinson Title: Task Team Leader Tel: (62) 213148175 Email: ktomlinson@worldbank.org Implementing Agencies Association for Community Empowerment Komplek Depkes, Jl. H. Umaidi No. 39 A, Rawa Bambu 2 Rt.010 Rw. 007, Pasar Minggu, South Jakarta Tel. +62 21-85912967; 85912945 Contact person: Dra. Titik Hartini, M.Si (Executive Director) Kemitraan Jl. Wolter Monginsidi No. 3 Kebayoran Baru South Jakarta 12160 Tel. +62 21-72799566 Contact person: Wicaksono Sarosa (Executive Director) Lakpesdam/NU Jl. H. Ramli No. 20A Menteng Dalam, Tebet Jakarta 12870 Tel. +62 21-8298855, 8281642, 83796120 Contact person: YahyaMa'shum (Chairman of Board) I. For more information contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-4500 Fax: (202) 522-1500 Web: http://www.worldbank.org/infoshop PNPM Peduli PID May 2011 Page 16