*Tools\
for\
Alliance Builders*

![](media/image1.png)

April 3, 2002

***Prepared by the Global Development Alliance Secretariat***

#### Table of Contents

[Foreword i](#foreword)

[Using Alliances 1](#using-alliances)

[Using *Tools for Alliance Builders*
3](#using-tools-for-alliance-builders)

[Part 1: Is An Alliance Appropriate?
6](#part-1-is-an-alliance-appropriate)

[Part 2: Getting the Alliance Underway
10](#part-2-getting-the-alliance-underway)

[Part 3: What Do We Have In Common?
15](#part-3-what-do-we-have-in-common)

[Part 4: Getting It On Paper 21](#part-4-getting-it-on-paper)

[Part 5: Moving Ahead---Formalizing the Relationship
23](#part-5-moving-aheadformalizing-the-relationship)

[Part 6: Alliance Management 34](#part-6-alliance-management)

[Attachment A: Due Diligence Guide
A-1](#attachment-a-due-diligence-guide)

[Attachment B: Overview of the Federal Advisory Committee Act (FACA)
B-1](#attachment-b-overview-of-the-federal-advisory-committee-act-faca)

[Attachment C: Guidance Memorandum on Solicitations
C-1](#attachment-c-guidance-memorandum-on-solicitations)

[Attachment D: Sample Memorandum of Understanding
D-1](#attachment-d-sample-memorandum-of-understanding)

[Attachment E: Global Fund to Fight AIDS, TB and Malaria
E-1](#attachment-e-global-fund-to-fight-aids-tb-and-malaria)

[Attachment F: Alliance Examples F-1](#attachment-f-alliance-examples)

[Attachment G: Bilateral Donor CSR Strategies and Activities
G-1](#attachment-g-bilateral-donor-csr-strategies-and-activities)

# Foreword

Since 1961, USAID has helped developing and transition countries fight
hunger, poverty and disease; protect the environment; educate their
citizens; recover from disaster; and engage in democratic reforms. Over
that time period, USAID has gained recognition as a lead development
agency, based in part on such strengths as technical expertise,
extensive field presence, and strong working relationships with host
country governments and local and international institutions.

Today, other actors have come to play increasing roles in international
development assistance. Foundations, corporations, non-profits, academic
institutions and other private U.S. players now, in the aggregate, are
contributing more resources than USAID to address overseas development
challenges.

The Global Development Alliance (GDA) approach responds to this changed
environment; it extends USAID's reach and effectiveness in meeting our
development objectives by combining our strengths with the resources and
assets of other partners. While some Agency units have already been
forming public-private partnerships, the GDA represents an important
business model to build upon the best of past activities and extend the
approach, where appropriate, throughout the Agency.

A GDA Secretariat leads the initiative and is working to mainstream the
approach within USAID. The Secretariat is a small, temporary
organizational unit reporting directly to the Deputy Administrator. The
Secretariat identifies alliance opportunities, provides technical
assistance in alliance development, develops and disseminates training
materials and practical "how to" guides like this one, and assists with
"due diligence" research on prospective alliance partners. It also helps
develop processes and criteria to allocate resources, and directs
assessment, research, and reporting activities.

What are the attributes of a good alliance? How is one formed? What are
the pitfalls to watch out for, and how does developing an alliance
relate to USAID's normal legal, procurement and management systems? How
should it be managed, and what constitutes success? *Tools for Alliance
Builders* is a resource guide to answer these and other fundamental
questions. It is designed to allow the reader quick access to key
information. Because of the extensive use of hyperlinks, you are
encouraged to use it in an electronic format.

# 

## The GDA Secretariat welcomes your comments and suggestions on ways to improve this document, and to advance the concept of public-private alliances within USAID. And we look forward to working with you as your specific alliance ideas take shape.

Holly Wise

Director,

> GDA Secretariat

# Using Alliances

As the vehicle for implementing a new business model, the public-private
alliance will enable USAID to operate more collaboratively and
effectively with the many public and private actors now involved in
international development assistance. In seeking opportunities to form
and support alliances, USAID sees itself approaching development
problems in the role of catalyst, facilitator and partner. In this new
role, USAID will provide, among other things, financial resources,
technical expertise and country-level knowledge to assist strategic
partners in stimulating new investments and generating new ideas.
USAID's decision to carry out its mission in this way has significant
implications for the manner in which the Agency provides assistance.

Operating units have the authority to plan, establish and participate in
alliances as a means of achieving the unit's objectives. When
contemplating an alliance, you are encouraged to think first of the
development objectives that will be served, and then consider how to
achieve those objectives. If you choose to explore an alliance as a way
to better meet your unit's objectives, it will of course be necessary to
develop the relationships and agreements that give life to the alliance,
consistent with our objectives as an Agency. When using funds
appropriated to USAID, the provisions of ADS 200 on Programming Policy
must be followed. This includes policies with regard to planning,
especially meeting pre-obligation requirements and performance
monitoring and reporting.

In most situations, you'll find that existing forms of agreements and
instruments can be used to develop an alliance. There may be some
instances where the conventional form of a contract, grant or
cooperative agreement does not adequately capture the planned
relationships. This situation requires creative thinking by all parties
involved, and the early involvement of USAID's legal and procurement
personnel.

Well-conceived and implemented alliances offer substantial advantages in
meeting USAID's development objectives. However, with these advantages
may come working and funding relationships, as well as risks, that
should be understood, assessed and accepted in the process of reaching a
decision to form or support an alliance.

In some instances, the use of a new approach could mean less direct
USAID control of the direction of a program that USAID funds. In these
cases, it will be very important for you to ensure that the alliance is
designed with appropriate and effective governance, operational capacity
and accountability.

Relationships and agreements that address these requirements are
essential both to the success of the development program to be supported
by the alliance and also to protect USAID's reputation as well as
financial and programmatic interests. This guidebook, *Tools for
Alliance Builders*, is intended to help you put together successful
alliances with these qualities.

# Using *Tools for Alliance Builders*

*Tools for Alliance Builders* (*Tools*) is organized to allow you
instant access to the information you need to form alliances. **The
liberal use of hyperlinks will enable you to go directly to those
sections of specific interest, and to link quickly to both internal and
external web sites. Thus, the document should be read electronically and
selectively.**

*Tools* is meant to describe recommended processes and important
procedures to consider when working on alliances.

Because different operating units (OUs) are at various stages in forming
alliances, *Tools* is divided into six parts, each of which applies to a
separate phase in the development of an alliance. A brief description of
each part is provided below. When you determine where your OU is on this
continuum of alliance development, you can simply turn to the part in
this guidebook most immediately appropriate to your needs.

[**Part 1: Is An Alliance Appropriate?**](#_Part_1.:_)

**Part 1** provides a way for you to decide---before too much time and
energy is devoted to the process---whether or not an alliance is a good
way of identifying and solving a development problem. It is composed of
two sections: 1) preconditions for success, an alliance checklist; and
2) meeting to encourage innovation.

[**Part 2: Getting the Alliance Underway**](#_Part_2.:_)

**Parts 2 and beyond** are meant for OUs that have decided, at least
tentatively, that an alliance is a good way to meet a development
challenge. They provide a step-by-step guide to alliance building.
**Part 2** looks at processes known to be useful in identifying
prospective members of your alliance *and* figuring out if they're the
"right" members. Its two sections are: 1) working together, anticipating
problems; and 2) due diligence, i.e., an assessment of the past
performance, reputation and future plans of the prospective alliance
partner with regard to various business principles and practices.

Due diligence should be of great interest to everyone, regardless of
their progress in creating an alliance.

[**Part 3: What Do We Have In Common?**](#_Part_3.:_)

Continuing the step-by-step guide to alliance building, **Part 3** will
help if you're uncertain of how to bring members of the alliance
together and start to work in partnership. Its four sections are: 1)
convening the alliance; 2) setting directions; 3) developing an action
plan; and 4) conflict of interest considerations.

As in due diligence above, conflict of interest considerations must be
addressed throughout the alliance building process.

[**Part 4: Getting It On Paper**](#_Part_4.:_)

**Part 4** is for you if your alliance has reached a point where the
goal and objectives of the alliance, its operating principles, and
alliance members' responsibilities and accountability are all fairly
well defined. It provides a description of how a non-binding agreement
like a memorandum of understanding or letter of intent can be used to
commit the alliance members to the agreed-upon course of action (pending
home office approvals and resource availability).

[**Part 5: Moving Ahead---Formalizing the Relationship**](#_Part_5.:_)

**Part 5** will meet your needs if you're looking to identify workable
approaches and USAID funding mechanisms for implementing alliance
programs. It discusses the broad categories of alliances, types of
implementing mechanisms, and creative uses of various types of
assistance mechanisms to establish alliances.

[**Part 6: Alliance Management**](#_Part_6.:_)

If you already have alliance programs underway, **Part 6** provides
information and guidance on monitoring alliance progress that may be
helpful. You might also find it useful in developing monitoring plans
earlier in the alliance-building process.

We welcome suggestions you might have for improving *Tools for Alliance
Builders*. Please send these to Christina Hannum at the Global
Development Alliance Secretariat
([mailto:channum@usaid.gov](mailto:channum@usaid.gov)).

# Part 1: Is An Alliance Appropriate?

The checklist below is meant to provide you with criteria for deciding
whether or not an alliance is a good way of identifying and solving a
development problem---before too much time and energy is devoted to the
process!

To be effective, completing the checklist requires open-minded inquiry
without an inclination toward the predetermined solution of a
development problem. It also requires that you proactively seek the
information required---if you think an alliance might be the best way to
meet a development challenge, get out and find out...don't wait for the
alliance to come to you. Alliances are quite different from the usual
USAID partner arrangements wherein USAID's strategic objective team
decides the problem and solution and the development partner is sought
through conventional implementing mechanisms (e.g., grant, contract).

Rather, alliances should...

-   Jointly define the development problem and its solution by all
    development partners in the alliance.

-   Reach agreement between the development partners to share resources,
    risks and results in pursuit of an objective that can be better
    obtained with a joint effort.

-   In some cases, look toward new partners (or existing partners in new
    ways) and innovative approaches to get the job done.

-   Leverage significant resources that may include financial resources,
    in-kind contributions and intellectual property (i.e., for financial
    resources, a greater than one to one ratio is desirable).

## Preconditions for Success: An Alliance Checklist

 *Common cause*: The issue to be addressed by the alliance is important
to prospective alliance members. It is clear why forming an alliance is
advantageous as a way to treat the issue.

 *Belief in alliances as a strategy*: Prospective alliance members
believe that this approach can solve problems better than the status
quo. Alliance members are willing to treat each other as equal partners.

 *Presence of a convener*: At least one prospective alliance member (it
might be you!) has the standing to call the other alliance members to
the table.

 *Principled Behavior:* It is critical that USAID aligns itself with
private sector entities whose interests are compatible with USAID's and
whose business practices do not pose reputational risks for the alliance
or for USAID. Look for "evidence" that the proposed partners'
operational practices incorporate, for instance, commitment to human
rights, decent work conditions, environmental protection, and community
involvement.

 *Resources*: Financial and human resources to support the alliance are
available. Each member is willing to commit the particular resources
that it is able to share.

 *Willingness to explore opportunities*: Alliance members are willing
to take risks together that individually they might not be willing to
take; and they're willing to work creatively together in doing so.

Don't feel that you have to work in isolation as you complete the
checklist. Many other organizations---other donors, NGOs,
companies---already have a wealth of experience in establishing and
using alliances. Find out who they are and talk to them. [Attachment
G](#attachment-g-bilateral-donor-csr-strategies-and-activities) holds a
summary of what some other bilateral donors are doing to promote
corporate social responsibility and greater private sector involvement
in development.

## Encouraging Innovation

If multiple alliance ideas are being informally considered, but no
concrete ideas have been set out for discussion, a meeting or conference
could be held for purposes of encouraging and developing innovative
thinking. You may wish to invite donors and multilateral organizations
who have had some alliance building experience, companies known for
their philanthropy and innovation, and a couple of well-grounded NGOs.
Such a meeting can provide a sense of whether alliances are an
appropriate way of identifying and solving the development problems you
are facing. The meeting may even lead directly to an alliance idea
incorporating some of the USAID alliance approaches described in
[Part_5](#part-5-moving-aheadformalizing-the-relationship) of this
manual.

### The Federal Advisory Committee Act (FACA): A Cautionary Note for USAID/Washington

Offices in USAID/Washington that are taking steps to bring together
private individuals (e.g., representatives of NGOs and companies) to
discuss with USAID the establishment of an alliance will need to be
aware of the possible application of the Federal Advisory Committee Act
(FACA). Under FACA, a group that consists of both U.S. Government and
non-US Government employees that is established or utilized by a federal
agency for the purpose of giving advice to Agency officials must be
chartered and approved by the Office of Management and Budget and the
General Services Administration. Once established under FACA, an
advisory committee must have open meetings and follow other public
access requirements. In most instances, bringing a variety of parties
together to discuss and eventually establish an alliance will not
trigger FACA. However, it is advisable to address the applicability of
FACA as the approach to establishing an alliance is being developed.
USAID's General Counsel has provided a brief guidance document
([Attachment
B](#attachment-b-overview-of-the-federal-advisory-committee-act-faca))
and should be contacted if you have questions.

When you're satisfied that the criteria above have been met, it's time
to move on to organizing the alliance.

# Part 2: Getting the Alliance Underway

If you've decided that an alliance is a good way of identifying and
solving a development problem, but aren't quite sure what to do next,
this part of *Tools* provides a step-by-step guide to alliance creation,
including how to perform due diligence.

One of the first things to do is to get a handle on who among the
prospective alliance members is interested in working in partnership
with you, and what their ideas for an alliance might be. Rather than
going "door-to-door" soliciting interest and ideas, you could consider
holding a conference specifically to encourage the alliance and develop
innovative ideas. Such a conference could be widely advertised to
potential partners and posted on the Global Development Alliance web
site (and/or other sites, as applicable). At a minimum, this conference
should provide you with a good sense of who to invite to participate in
the alliance. The conference might also lead to future submissions of
alliance proposals to USAID. You might even find that discussions at the
conference lead directly to ideas for an alliance approach (see
[Part_5](#part-5-moving-aheadformalizing-the-relationship) of this
manual). An additional advantage of a conference is that it announces
your alliance intent openly and transparently, so that all that may want
to know about it will know about it.

Although it's anticipated that the work of an alliance will contribute
to meeting the strategic vision of all the member organizations, no one
organization is in the "driver's seat." Let's look at some of the
lessons that organizations have learned about working in partnership
with others.[^1]

## Working Together, Ensuring Success

Potential members of an alliance may not have a history of interaction
and may even view one another with some apprehension. Prior to the first
formal alliance meeting, each prospective alliance member should do some
"familiarization" research. Some suggested steps are:

*Talk with people in the organizations you have identified as
prospective members of the alliance*.

Ask them about their histories, experience with past collaborative
efforts, and perspectives on the development problem you are trying to
address. For example, ask "Could you imagine working with USAID to solve
"X" problem or take advantage of "Y" opportunity?" Some questions to
answer: What is the history of the issue in the organization? What
present (or past) coalitions exist among the prospective alliance
members? Particularly, where you are dealing with private companies, you
may need to provide basic information about USAID and its mandate.

*Investigate particular sources of potential problems*.

A key reason for the lack of productive interaction among alliance
members is that the missions and cultures of the organizations are
different. To form a successful alliance, organizational representatives
must be able to address the focal issue of the alliance from the
viewpoint of their constituents, even while they may have substantial
disagreements over other related issues. Some questions to answer: What
is the history of the organization's relationships with other
prospective members of the alliance? How much tension, if any, must be
overcome to make cooperation possible?

*Be aware of typical organizational strengths and potential areas for
concern*.

**Government strengths** include the ability to improve the enabling
environment, public accountability and adjudicative functions.
**Potential areas of concern with the government sector** include
inertia, micro-management, exhaustion from an ongoing tension between
demands and resources, and a bureaucratic culture.

**Business strengths** include access to production facilities,
technical expertise, and a market culture that promotes efficiency,
innovation, entrepreneurship, competition and a strong client
orientation. **Potential areas of concern with the private sector**
include distrust of collective action, inability to deal with
externalities, lack of transparency, and emphasis on short-term results.

**NGO strengths** include a volunteer culture sensitive to members\'
needs and values, and organizations that tend to be smaller and more
flexible than the other alliance members. **Potential areas of concern
with NGOs** include chronic under-funding, focus on process rather than
product, lack of experience in working with government and private
business, as well as various management and organizational weaknesses.

Overall, it's important to realize that effective organizations learn
how to deal with these issues, but may never really get over them
completely. However, effective organizations manage to affirm the
collective interest and provide a base for action with others. Some
questions to answer: To what extent is the issue so widely perceived as
a crisis that otherwise reluctant organizations might be willing to try
something new? Which prospective alliance members are ready for
collaboration? Which are not? What are the impediments to a strategic
alliance?

## Due Diligence

Once you have an idea of whom your alliance partners might be, it makes
little sense to move forward with the alliance without first assessing
the past performance, reputation and future plans of the prospective
alliance partner with regard to various business principles and
practices.

What is due diligence? A "due diligence" investigation is a well thought
out inquiry of a prospective partner that must be carried out prior to
engaging in alliance negotiations. While a due diligence exploration can
take many forms and range from quick and simple to long and complicated,
its essence is to investigate what is often called the "triple bottom
line"---i.e., is the prospective partner socially responsible,
environmentally accountable and financially sound.[^2] To assist you, a
guide to conducting the due diligence investigation is found in
[Attachment A](#attachment-a-due-diligence-guide). For ease of use, the
guide features key questions and references to important web sites that
will be of use to you. Please contact the GDA Secretariat should you
require further assistance or need additional information.

As you browse the guide, keep in mind three things. First, *it may not
be necessary to investigate every possible avenue of consideration*. For
most transactions that you might consider, it would be too costly and
too time consuming. Particularly for small alliances, too much due
diligence can kill the transaction. Note also that due diligence, once
beyond an initial phase, *is an ongoing process.* Indeed, alliances take
time to develop, implement and manage.

As a final point, note that it is not a requirement that a prospective
alliance partner must have adopted any one or more of the several sets
of international principles referred to in the guidance (some examples
of which are noted in the inset boxes on the foregoing page and on page
7). Rather a prospective partner's adoption of such principles is a
factor for USAID to consider in making an informed decision about
whether a company would be an appropriate alliance partner.

In sum, the guide is meant to serve as a menu from which you choose
those items that warrant further investigation. Be sure to make
conscious and informed, not random, decisions when conducting due
diligence.

# Part 3: What Do We Have In Common?

## Convening the Alliance

When the partner "pieces" of the alliance puzzle are in place, it's time
to collaborate on developing an approach to the issue. The first meeting
of prospective alliance members is exploratory (generally, the partner
that is initiating the alliance will take this step---it may be you!).
Its goal is to build enough trust and commitment to meet again. Here are
some tried and true meeting tips for you to consider:

*Who convenes?* It is important to identify an individual or
organization that is well regarded by all parties to call meetings. The
convening individual or group needs to have credibility with all the
prospective alliance members.

*Who attends?* It is also important that those with appropriate
professional responsibilities attend the meetings. Oftentimes, such
meetings require attendees possessing clear authority to speak on behalf
of their organizations.

*Where?* The actual meeting location must also be considered. For an
initial few meetings, it may be best to identify some neutral ground.
This prevents the meeting from being perceived as under one
organization's control.

*Who moderates?* If choosing a moderator for the initial meetings, find
a good facilitator---someone who allows alliance members to raise issues
without getting bogged down in unproductive discussions.

*What to discuss?* An agenda for the first meeting might simply focus
upon two things: personal and organizational introductions and a sharing
of viewpoints about the common cause or issue that has brought the
alliance together. If the organizations have not had a history of
interaction, the meeting might end right there with a summary of
viewpoints written for distribution.

> If the meeting members already know each other, they might move
> directly to setting directions---i.e., determining their collective
> vision of the problem and its solution (which would otherwise be a
> topic for a second meeting).

## Setting Directions

A benefit of an alliance is that it often looks at old problems in new
ways, bringing energy and creativity along with shared solutions. This
happens most easily if the alliance members begin with a shared
understanding about the nature of the problem and ideas about possible
solutions. Steps you might take together include:

*Defining the problems and concerns of all interested parties.*
Successful problem definition involves meaningfully identifying the
junction of the interests of the alliance members and the needs of those
the alliance is seeking to benefit. Having representatives of all
interested parties at the table during this discussion on setting
directions is highly desirable. Equally desirable is for the alliance
members to seek out and bring to the discussion the positions and
strengths of those who might oppose the work of the alliance so that
these can be addressed. Some questions to answer are: What is the nature
of the problem that this alliance might solve, and why is it
advantageous to organize an alliance to solve it? How are the
stakeholders affected by the problem?

*Brainstorming solutions*. Noting the importance of having the
beneficiaries' support, describe each member's stake in the problem and
identify solutions to it (without getting bogged down in tasks,
resources, personalities and histories). This is the time to clarify the
vision of the alliance, its goal and strategic objectives, and establish
a climate of hope and a willingness to work together. Some questions to
answer are: To what extent are resources from different alliance members
required? What skills, human and/or material resources does each member
have that could help solve the problem? Is there another organization
that should be brought into the alliance?

*Identify country-level and community-level allies of the alliance*. For
Mission-level alliances in particular, there are often local
organizations already active in solving the problem. They may already be
working in partnership with other public or private entities. In the
public sector, different agencies at various levels of government often
collaborate to address a particular issue, based upon their mandate,
interests and resources. In business, joint ventures, trade
associations, and federations are common. And in civil society, NGO
coalitions are often formed around common issues or relationships to
more effectively utilize resources. Some questions to answer: What are
the local organizations active in solving the problem (and who are the
key actors in the organizations)? Among these, are there organizations
with the capacity to become members of the alliance? Are there
organizations with the capacity to become implementing partners?

## Developing an Action Plan

In subsequent meetings the alliance can develop its goal and objectives
into an initial action plan. When developing the action plan, keep in
mind the ground rules of effective collaboration. Key questions that the
alliance needs to answer at this point are:

*How should actions be implemented?* Open lines of communication are
vital; as are clearly defined planning rules (e.g., something akin to
the logical framework which helps the alliance set lower order outcomes
and outputs, and roughly identify inputs and cost estimates). The
implementation of major action plans may involve recruiting new alliance
members (or implementing partners) that may not have been part of
earlier problem-solving discussions.

*How will resource allocation take place?* Each member has distinct
financial, human resource and technological capabilities. This issue
often becomes a sticking point during the implementation process.
Alliance members need to discuss resource allotments
continuously---i.e., who's providing what---in order to ensure that the
issue remains well understood from the outset.

*How can alliance members implement detailed plans in ways that respect
their particular interests?* Action planning may bring out further
points of difference between the alliance members. It is important to
respect these differences at all times. Differences exist in every
alliance and accommodating them is a necessary component of successful
alliances.

## USAID Statutory and Policy Requirements

## At this stage, you should address the normal list of statutory, regulatory and policy requirements that apply to USAID-funded activities. For instance, USAID's environmental review requirement will need to be addressed in accordance with USAID Reg. 16. In general, as with any activity, the items listed in the country and activity checklists that are updated annually by GC should be addressed and complied with. The FY 2002 statutory checklists are expected to be added as a reference to ADS 200 in the near future. In addition to these checklists, you will need to consider the applicability of the Agency's policy determinations and statements on various subjects that are included as references to the ADS 200 series. This of course assumes that USAID will be providing financing for the alliance. In some situations, USAID may simply play a matchmaker role, or may provide in-kind resources rather than direct funding.

## Conflict of Interest Considerations

Planning collaboratively with alliance partners, one or more of who may
well become USAID's implementing partners or otherwise receive USAID
funds, requires your careful attention because of the possibility for
organizational conflict of interest (OCI). The Supplementary Reference
to ADS 201 and 202, [*Legal and Policy Considerations When Involving
Partners and Customers On Strategic Objective Teams and Other
Consultations*](http://www.usaid.gov/pubs/ads/200/2016s1.pdf), discusses
what constitutes OCI and what restrictions must be placed on partners to
avoid it. In brief, OCI restrictions are not required when outside
organizations participate in:

1.  Discussions regarding concepts, ideas or strategies, i.e., the stage
    prior to identifying possible implementation instruments.

2.  Discussions regarding ongoing and completed activities (whether
    under contracts or assistance instruments).

3.  Matters involving only assistance (not contract) instruments, both
    during the competition stage and once the activity is in progress.

In discussions regarding concepts, ideas and strategies, the key
question is the extent of association with a specific
procurement---e.g., does the discussion of concepts, ideas and
strategies spill over into decisions about the implementation instrument
to be used and/or details that will be written into the statement of
work. OCI does not exist in the abstract. If one cannot identify a
procurement that would be compromised by discussions with outside
organizations, then there is no OCI under the federal standard.

The overarching principle for both contracts and assistance is
fundamental fairness. In contrast to the contract context (which is more
heavily regulated by statutes and Agency policies), there are no
specific legal or Agency-level restrictions on participation of outside
organizations when only assistance instruments (grants and cooperatives
agreements) are involved. However, in view of the fairness concern as
well as to ensure that the Agency receives the best services or products
available, Strategic Objective Teams are encouraged to review assistance
competitions case-by-case to consider whether certain restrictions make
sense under the circumstances.

If questions remain, please contact your cognizant legal officer or Drew
W. Luten, Deputy General Counsel at 202-712-4698
([mailto:dluten@usaid.gov](mailto:dluten@usaid.gov)).

# Part 4: Getting It On Paper

By now, your alliance is fairly far along in determining what it wants
to do, why it wants to do it and who the other partners will be. At this
point, alliance members should undertake some formal codification of
their collaboration. This might take the form of a memorandum of
understanding (MOU) or letter of intent, that---while not legally
binding---commits the alliance members to the agreed upon course of
action pending home office approvals and resource availability. Although
the Agency has no set format for such an agreement, and they will vary
greatly in degree of specificity, the following are elements to
consider:

*Partner organization details*. The name of each alliance partner, the
contact person and her or his contact details, and a very brief
description of the organization.

*Goal and objectives*. A description of the problem the alliance was
formed to solve and why the alliance is a good way to address the
problem, what the alliance's goal is in solving the problem, and what
the alliance objectives are for reaching the goal.

*Operating principles*. Conveys the general understanding that the
alliance members have on how the alliance will manage its program. This
includes such things as a description of any special administrative
structure required by the alliance (including anticipated working groups
and committees); how decisions will be made; how conflict will be
resolved; how the agreement can be renewed, modified or terminated; and,
the end date for the agreement.

*Responsibilities of alliance members*. Describes what each member gives
to and gets from the alliance; provides a preliminary view of the
resources that each member will commit---core resources, program and/or
project resources (financial and non-financial); and sets out the
alliance's implementation timeline.

*Accountability*. Notes how the program performance of the alliance is
expected to be measured, whether an independent audit of the alliance's
financial arrangements will be undertaken, and how adjustments will be
made to the alliance.

*Disclaimer*. The agreement **must** include a statement akin to: "This
is a working agreement only and shall not be legally binding on either
USAID, \[names of the other members\] without further documentation."

In addition to setting out the operational framework for the alliance,
an agreement of this nature can be an important document because it
conveys the objectives and intent of the alliance, and may be used to
explain the alliance to the members' home offices and to seek resources.
Within USAID, it may also be part of the documentation required by
Missions and Bureaus for activity approval.

In considering and negotiating MOUs and similar agreements, you will of
course need to prepare documents that meet the needs of your specific
alliance. Topics covered in your alliance MOU may differ from those of
other alliances. GC or RLA assistance should be sought in negotiating
and drafting the MOU or similar document. While an MOU itself is not an
obligating document, it may contemplate a future grant or contract award
by USAID. If this is the case, M/OP or RCO assistance should be sought
with respect to the choice of instrument and the procedures to be
followed, and the question of competition should be addressed.

# Part 5: Moving Ahead---Formalizing the Relationship

Following approval of the proposed alliance both by USAID (in accordance
with your accepted activity approval practice) and by the other alliance
members undergoing their own approval processes, the alliance turns its
attention toward pulling together the specific resources necessary to
meet the alliance's objectives.

"Building alliances"---i.e., collaborating with others to identify
developmental problems and arriving at a plan whereby all partner
resources are used collectively to achieve far-reaching results---is
something that various parts of the Agency have done for a number of
years. Drawing on USAID's institutional experience, this section of
*Tools for Alliance Builders* focuses on the approaches that you might
use (examples of which can be found in
[Attachment](#attachment-f-alliance-examples) [F]{.underline}).

The Agency's policy is to encourage the development of relationships and
agreements that give life to alliances, consistent with our objectives
as an Agency. In most situations, existing instruments can be used to
support your alliance. In some cases, the conventional form of contract,
grant or cooperative agreement may not be appropriate for the planned
relationships. This approach requires creative thinking by all parties
involved, and the early involvement of the Office of General Counsel and
Office of Procurement.

Keep in mind that well-conceived and implemented alliances can offer you
substantial programmatic and business advantages. However, with these
advantages may come working and funding relationships, as well as risks,
that should be understood, assessed and accepted in the process of
reaching a decision to form or support an alliance. In some instances,
the use of a new approach could mean that you'll have less direct
control over the direction of a program that USAID funds. *In these
cases, it will be very important for you to make certain that the*
*alliance is established in such a way as to ensure appropriate and
effective governance, operational capacity and accountability*. New
approaches will require you to focus on relationships and agreements
that address these requirements; requirements that are essential both to
the success of the development program to be supported by the alliance
and the protection of USAID's financial and programmatic interest in the
alliance.

## Approaches to Establishing Alliances

You have a number of options when considering approaches to establishing
alliances. These can be placed into two broad categories: (a) parallel
financing and (b) pooled resources.

### Parallel Financing

Under this approach, the alliance partners reach agreement on how to
work together to address a development problem, with each partner
establishing a separate mechanism (e.g., grant, contract) through which
to provide resources to support the alliance's work (financial, human,
and/or in-kind). The coordination and management of parties' inputs
require negotiation of the respective roles and resource contributions
of each party.

In addition to each alliance member's own funding mechanism, this
approach typically involves a Memorandum of Understanding (MOU), letter
of intent or similar document among the alliance partners that lays out
the common agenda and the specific responsibilities of each party.
Though not binding, this document sets forth the intent of the partners
to work collaboratively in pursuit of a shared goal. As an MOU does not
obligate funds, a Bureau or Mission official may sign the document. GC
or the appropriate Regional Legal Adviser should assist with the
negotiation and drafting of the MOU. OP also should be involved in the
preparation of the MOU if you intend to award a grant or other
instrument in support of the alliance. This will require your attention
to the question of whether competition is appropriate or an exception to
competitive procedures is called for. Help in preparing an MOU can be
found in [Part_4](#part-4-getting-it-on-paper) of this manual.

In this type of alliance, USAID typically might award a grant or
cooperative agreement to an NGO (or a contract to a firm) that is
supporting or participating in the alliance. While there will be
situations in which contracting for services in support of alliances is
appropriate (or issuing task orders under existing Indefinite Quantity
Contracts), it is anticipated that USAID will rely significantly on
grants and cooperative agreements to provide financial support to
public-private alliances.

*Using Traditional Grants and Cooperative Agreements to Support
Alliances*, below, suggests how you might use existing processes and
agreements in the context of alliances that follow the parallel
financing approach. As always, you should approach the possibility of an
alliance by first clarifying the development objective that it is trying
to achieve and then consider, in concert with the cognizant contracting
officer and legal advisor, how best to implement that objective, using
either innovative or traditional approaches.

### Pooled Resources

Pooled resource alliances can be arranged in several different ways, and
include the following:

USAID and its partners establish an alliance governance structure for
the purpose of attracting resources and making joint program decisions.
This approach may involve the formation of a new legal entity, such as a
U.S. NGO that secures 501(c)(3) status under the Internal Revenue Code
to facilitate tax-advantaged private contributions. Or the alliance
members may agree to operate as an informal partnership to direct the
policies and programs of the alliance. The structure generally includes
a technical expert committee to support the board of directors of the
alliance and the development of clear operating procedures for the
alliance's program.

Under this general approach, whether or not a new legal entity is
established, the alliance enters into an agreement with a Public
International Organization (PIO), such as UNICEF or the World Bank, to
manage the alliance's resources as a trustee or fiduciary agent. In some
circumstances it may be possible for other types of financial
institutions to play this role. One or more additional agreements with
existing organizations may be entered into to provide administrative and
other services to the alliance program. The specific role(s) played by
the PIO or other institution may vary from alliance to alliance.

For this type of alliance, USAID support typically takes the form of a
grant to the NGO established by the alliance, or to the PIO or other
financial institution that serves as trustee for the alliance's
resources. When managed by a PIO, USAID grant funds may be commingled
with the funds of other contributors and managed collectively. USAID
will use a tailor-made and generally streamlined form of grant agreement
that requires an approved exception to the general requirement of
competition, as well as deviations under ADS Chapters 303 and 308. In
addition to the grant agreement, substantial effort generally will be
required in connection with the negotiation of the alliance's corporate
charter, by-laws, trust agreement, operating procedures and other
documents necessary to establish its operational structure.

A simpler version of the above, with which USAID has considerable
experience, is the direct use of a PIO to manage a multi-donor program
initiative. Typically this approach has involved only donor government
funding, but could include private contributions. The key distinction
between this example and the first example above is that in this case,
the alliance is essentially a financing mechanism for a special PIO
program, rather than an independent collaborative effort that relies on
a PIO's financial and administrative services.

Under this approach, USAID's grant is made to the PIO following ADS
Chapter 308 direction. Deviations may need to be approved, depending on
the details of the individual alliance.

In appropriate circumstances, USAID may make an endowment grant to a
private, non-governmental organization to capitalize a fund that will
generate income to maintain activities of the NGO that are consistent
with the alliance purpose. In the right circumstances, an endowment
grant to an NGO participating in an alliance may be just the right tool
for the alliance to develop a long-term funding plan for a long-term
financial requirement. USAID and other donor resources are pooled in the
sense that they are consolidated in the grantee's endowment fund.
Current USAID policy requires that USAID grant funds be accounted for
separately. However, this requirement has not been an impediment to
successful endowment grants.

USAID's Policy Determination #21, [Guidelines: Endowments Financed with
Appropriated Funds](http://www.usaid.gov/pubs/ads/200/pd21.doc),
provides you with guidance on making endowment grants. Model grant
formats are available from OP and GC. Depending on the circumstances
under which an endowment grant is planned, a competitive process may be
appropriate. If an endowment is proposed for a multi-party alliance with
a special governance structure, the considerations and approvals
described above will need to be attended to.

Still another possible "pooled resource" approach is a jointly funded
USAID grant, cooperative agreement or contract that accommodates
donations to USAID following the procedures set forth in ADS 628. (Note
that contributions to the U.S. Government by individuals and
corporations are considered to be tax-deductible charitable
contributions under Section 170 of the Internal Revenue Code.) This
approach would, in effect, have USAID serve as the trustee for the
management of contributions by other alliance members. In its simplest
form, this approach might involve the donation by a single company to
USAID to expand an existing USAID program (e.g., increasing the funding
for an already-awarded assistance instrument.) USAID and alliance
members also could use this approach to jointly design and fund a new
grant, cooperative agreement or contract to implement the alliance's
program.

## Using Traditional Grants and Cooperative Agreements to Support Alliances

While some alliance arrangements may require deviations from existing
policy and new, streamlined forms of grant documents, other alliances
may be supported with existing policy and traditional grant mechanisms.
The following suggests how current processes and agreements might be
used in the context of alliances that follow the "parallel financing"
approach.

This section---as with all of Part 5---is by no means meant to be
exhaustive nor definitive. All alliances should be considered
individually with cognizant legal, procurement, and/or GDA Secretariat
assistance as needed.

The process of identifying partners and jointly defining problems and
their resolution may be conducted as part of a competitive grant-making
process. Alternatively, if multiple alliance ideas in a sector, region
or country are being informally discussed, but no formal ideas have been
presented, you could consider holding a conference specifically to
encourage and develop innovative ideas. Such a conference could be
widely advertised to potential partners and posted on the Global
Development Alliance web site (and/or others, as applicable). The result
of this conference could form the basis for a Request for Applications
(RFA) or Annual Program Statement (APS) incorporating some of the
alliance ideas discussed at the conference, or it might stimulate the
submission of proposals to USAID.

### Use of Competitive Solicitation to Seek Innovative Approaches

Using either an RFA or APS, you can issue a solicitation that clearly
identifies the resulting award as being made to support a public-private
alliance. If alliance members agree, the solicitation can include the
names of alliance partners and the resources that they will be supplying
(money or in-kind support).

Another approach would be for your solicitation to challenge prospective
applicants to identify and include new and unique resources (technical
and/or financial) in their proposal. Applicants could be instructed to
factor these resources into their application and overall program as
part of their cost share. Technical evaluation criteria in the
solicitation may include points for the best-proposed use or integration
of alliance partners, whether those partners were identified in the
solicitation or discovered and cultivated by the applicant.

In general when using competitive solicitations that will result in a
grant or cooperative agreement award to NGOs or educational institutions
for the purpose of supporting public-private alliances, the solicitation
documents should specify that the recipient is required to independently
negotiate appropriate agreement(s) with all proposed alliance
partner(s). In cases where USAID enabled the relationship by identifying
in the solicitation the alliance partner(s) to be used or by suggesting
possible alliance partners, it also should specify that USAID has no
direct relationship with such alliance partner(s).

### Matching Funds

USAID can assist existing or potential USAID-funded NGOs to maximize
cost-share resources, thereby expanding the overall resources available
to a program, by actively "marketing" for outside contributions. There
are some important issues, however, for you to consider.

First, the proposed alliance member who'll provide the funding, such as
a corporation or foundation, must be willing and able to participate in
an USAID alliance through the partner NGO. Second, this approach assumes
that you've already obtained agreement to participate from the recipient
organization. Third, you should give careful consideration to which
programs actually make good candidates for this type of solicitation.
Finally, contributions from potential funding partners should reflect a
mutuality of purpose between the objective of their contribution and the
objectives of your existing USAID- funded program.

This approach uses established ADS Chapter 303 procedures and Standard
Provisions. The business and programmatic risks are therefore low---or
equivalent to the risks we normally encounter in our grants and
cooperative agreements and the process by which we make these awards.

This approach might work as follows. First, satisfy yourself that the
program in which USAID and the funding organization are interested would
be specifically related to the program in the existing grant or
cooperative agreement that is being proposed as a "match" mechanism.
Then introduce the prospective funding partner to the NGO that has the
existing USAID grant or cooperative agreement. The USAID recipient would
freely agree to the proposed arrangement and the funding partner and the
recipient would independently negotiate an agreement. (While you may
initiate the potential match, you'll have no further direct relationship
with this transaction.) That agreement could then, if necessary, be
negotiated into the USAID grant or cooperative agreement. Monies or
other in-kind resources received from the partner would then be
reflected as cost share.

### Use of Pre-qualification Rounds

The pre-qualification competition permitted in ADS Chapter 303.5.5a(4)
may be used in lieu of a traditional full and open competitive
procedure. To utilize this method, your Strategic Objective Team, with
the approval of the Agreement Officer, would establish a two-tiered (or
more) competition system. For the first tier, competition would be used
to solicit brief concept papers in which applicants will be asked to
"outline" their approach and their use of either self-proposed or USAID
prescribed alliance partners. Technical evaluation criteria would be
used to select the best applicants from the first round for a more
intensive competition and evaluation. Some suggested technical
evaluation criteria could include:

-   An emphasis on those alliances involving local leadership and local
    beneficiaries to ensure sustainability, and

-   A preference for those proposals that involve the greatest
    leveraging of outside resources and address an important development
    problem.

ADS Chapter 303.5.5a(3) includes more information on the process.

### Use of Exceptions to Competition

You are encouraged to use the exceptions to competition specified in ADS
Chapter 303.5.5d, to the extent that the exceptions are necessary to
facilitate the formation of an alliance. Some exceptions which might be
particularly relevant to entering into and providing grant support to
alliance relationships are: "Amendments and Follow-Ons," "Unsolicited
Applications," or "Predominant or Exclusive Capability." In all
instances, coordinate any envisioned non-competitive approach with your
Cognizant Agreement Officer early in the planning phase. Also, while
you're encouraged to use the available exceptions to competition where
called for in order to meet development objectives, remember that the
exceptions must still be documented and justified.

### Fundraising, A Cautionary Note

USAID's General Counsel advises that USAID officials may seek
contributions from individuals, corporations and foundations for USAID
projects and activities, or for the projects and activities of other
organizations. However, a number of conditions need to be met in order
to avoid potential conflict of interest problems. GC has prepared a
guidance memorandum that outlines procedures for USAID officials who may
wish to undertake solicitations for contributions to USAID\'s or other
organizations\' projects and activities. Note that these procedures do
not apply to donor coordination efforts or requests for cost-share
contributions, and in general do not apply to instances in which USAID
does not initiate the fundraising activity. (Agency guidance regarding
receipt of donated funds can be found in [ADS Chapter
628](http://www.usaid.gov/pubs/ads/600/628.doc), *Gifts and Donations
and Dollar Trust Fund Management*.)

Further information on fundraising is found in [Attachment
C](#attachment-c-guidance-memorandum-on-solicitations), USAID
Solicitation Campaigns for Agency Programs or the Foreign Assistance
Programs of Other Entities. Please contact GC with any questions about
these procedures, including their applicability to particular
situations*.*

If you have questions about which approach to use in supporting your
alliance, or the approaches described above in general, please direct
them to Carol Ketrick, Office of Procurement/Policy at 202-712-1382
([mailto:]{.underline} <cketrick@usaid.gov>); Lorie Dobbins at the
Global Development Alliance Secretariat, (202) 712-1805
([mailto:]{.underline} <ldobbins@usaid.gov>), or Drew W. Luten, Deputy
General Counsel at 202-712-4698
([mailto:dluten@usaid.gov](mailto:dluten@usaid.gov)).

# Part 6: Alliance Management

The alliance has been established, the money is in hand...now what?
Well, from an Agency point of view, if USAID funding is involved in the
alliance you would manage those funds and report on their use as with
any activity---i.e., your Strategic Objective Team would continue to
measure strategic objective results achievement with its agreed-upon
indicators. The principal management differences come in the way you'll
monitor and report alliance progress. To be sure, alliance governance is
an ongoing and dynamic process that requires everyone's full engagement.

## Monitoring Progress and Reporting Performance

This year's Annual Report (FY 2001) sets the baseline for the Agency to
use in measuring its progress in developing alliances. You are required
to report on the indicator "Did your operating unit achieve a
significant result working in alliance with the private sector or NGOs?"

In addition, your OU is required to report on how many alliances you
have implemented in 2001, and how many you plan to implement in 2002.

Although it's not been completely settled, it's expected that in
subsequent years (FY 2002, and each year thereafter) you will continue
to report in the same way.

The prototypical development alliance can be characterized by the
following:

-   It involves joint development of objectives and activities with
    outside partners.

-   It brings new partners to the development challenge or significantly
    expands an alliance with existing partners.

-   Significant resource mobilization (i.e., "leveraging") is
    included---this would mean greater than 1:1 and can include funds,
    in-kind contributions and intellectual property.

It's important to note that in instances where you've been instrumental
in fostering an alliance between outside groups that promotes the
achievement of your strategic objective (e.g., helping to build a
consortium of international wildlife conservation organizations that
contributes to the achievement of a natural resources strategic
objective), but have not used USAID programming resources to do so, it
does not qualify as an alliance for *reporting* purposes. However, be
sure to mention it in your Annual Report (or in its cover letter) at an
appropriate point if you want readers to know about USAID's role in
facilitating the alliance.

If you have questions about monitoring and reporting, please direct them
to Curt Reintsma at the Global Development Alliance Secretariat, (202)
712-4018 (mailto:<creintsma@usaid.gov> ).

# Attachment A: Due Diligence Guide

## Due Diligence for Private Enterprise

Listed below are the four essential areas for investigation---corporate
image, social responsibility, environmental accountability and financial
soundness---that comprise the minimum requirements for responsible due
diligence. Since due diligence is such a crucial part of the partnering
process, serious attention must be given to the topic before embarking
on a strategic alliance. Therefore and where possible, it is recommended
that a more comprehensive due diligence investigation be undertaken to
enable the Agency to make the right decision on whether to partner with
a particular firm.

Remember, though, that it may not be necessary to investigate every
possible avenue of consideration. For most transactions you might
consider, it would be too costly and too time consuming. Particularly
for small alliances, too much due diligence can kill the transaction.
The guide is meant as a menu of items to choose from. Use the menu to
select what you want to investigate and what you will overlook. Make
conscious and informed---not random---decisions of the possible lines of
investigation. A way to do this is to develop a due diligence strategy
considering the following factors:

1.  What's important to the Agency? What isn't?

2.  Which problems will be costly? Which ones will be minor?

3.  Where are you likely to find problems? Where are you unlikely to
    find problems?

4.  What is the type of transaction you are expecting? How large or
    small is the transaction? How complex? What will the investigation
    cost in time and in money?

5.  What is the risk to the Agency if the unexpected causes the
    transaction to go bad?

6.  How much time do you have? What do you have to lose by delay? What
    does the potential partner have to lose? How badly does the Agency
    need the alliance? How badly do the potential partners?

### Essential Areas for Investigation

There are a number of business-oriented resources available that can
help you find answers to the questions below. [Dun &
Bradstreet](http://www.dnb.com/) reports primarily on publicly-traded
companies, while coverage of private companies may be limited. The
[SEC](http://www.sec.gov/edgar.shtml) provides basic corporate and
financial information on US companies with more than \$10 million in
assets and at least 500 shareholders. A
[Lexis-Nexis](http://www.lexis-nexis.com/) search can be used for
gathering news stories about a company within a specific timeframe. This
may be a good place to start when researching private companies.

To order a report by Dun & Bradstreet or conduct a Lexis-Nexis search,
contact Leah Molyneu (202-712-0579; or
[mailto:lmolyneu@dis.cdie.org](mailto:lmolyneu@dis.cdie.org)) of USAID's
Center for Development Information and Evaluation (CDIE).

A number of "watch dog" organizations also provide information on
companies. However, be aware that such information may reflect a
particular point of view and require appropriate filtering. One group,
[CorpWatch](http://www.corpwatch.org/), provides hyperlinks to other
sites in a step-by-step guide to researching backgrounds of companies.
Other groups include [Corporate Watch](http://www.corporatewatch.org/)
(the UK's version of Corpwatch), the [Public Information
Network](http://www.endgame.org/), [Public
Citizen](http://www.citizen.org/) and [Corporate
Governance](http://www.corpgov.net/).

In addition, there are a number of organizations that charge a
subscription fee for information that the GDA Secretariat or CDIE may be
able to access.

Note that the GDA Secretariat is investigating the feasibility of
subscribing to the Inter-Agency Corporate Information Tool, a database
developed by the World Bank and UN agencies that contains reviews of
companies. Contact the GDA Secretariat for additional information.

A.  Corporate image

    1.  What is the company's public image? Have there been any tensions
        between the community and the company?

    2.  Has there been anything in the media that would reflect
        negatively upon the company? If so, how has the company dealt
        with significant negative publicity?

    3.  Are there any pending lawsuits against the company?

    4.  Is the company looking *solely* for PR opportunities by aligning
        itself with USAID?

    5.  Is the company only or primarily looking for procurement
        opportunities or money from USAID?

    6.  Is the company willing to engage with USAID in a transparent
        manner without expecting an exclusive relationship (i.e.,
        barring competitors)?

    7.  Is the company willing to accept limitations on the publicity
        (i.e., press and media coverage) of the alliance so as to ensure
        that USAID is not perceived to be endorsing the company or its
        products and services?

B.  Social responsibility

    1.  Is the company primarily involved in the manufacture or sale of
        firearms or narcotics, i.e., involvement in these activities
        constitutes a significant share of company's total portfolio?

    2.  Does the company have a good reputation (no serious red flag
        issue areas), especially in areas of corporate social
        responsibility (CSR)? In the case of new companies or companies
        with past CSR troubles, are they committed to
        instituting/improving a sound CSR policy?

    3.  Does the company have policies barring harmful child labor or
        forced labor?

    4.  Does the company have a non-discrimination policy governing the
        hiring and promotion of minorities, women?

    5.  Is the company accepting of unions or attempts to organize a
        union?

    6.  Does the company have a health and safety action plan for
        workers, including the handling of hazardous materials and the
        prevention of environmental accidents?

    7.  Does the company have a policy for codes of conduct, labor
        standards?

C.  Environmental accountability

    1.  Does the company collect and evaluate adequate and timely
        information regarding the environmental, health, and safety
        impacts of their activities?

    2.  Does the company set targets for improved environmental
        performance, and regularly monitor progress toward
        environmental, health, and safety targets?

    3.  Does the company assess, and address in decision-making, the
        foreseeable environmental, health, and safety-related impacts
        associated with the processes, goods and services of the
        enterprise over their full life cycle? And provide the public
        and employees with adequate and timely information on the
        potential environment, health and safety impacts of the
        activities of the enterprise?

    4.  Does the company maintain contingency plans for preventing,
        mitigating, and controlling serious environmental and health
        damage from their operations, including accidents and
        emergencies; and mechanisms for immediate reporting to the
        competent authorities?

    5.  Does the company continually seek to improve corporate
        environmental performance, by encouraging, where appropriate,
        the adoption of technologies and operating procedures in all
        parts of the enterprise that reflect environmental best
        practices? Are its products or services designed to have no
        undue environmental impacts, be safe in their intended use, and
        be efficient in their consumption of energy and natural
        resources? Can they be reused, recycled, or disposed of safely?

    6.  Does the company have a green audit for environmental
        performance?

    7.  Is the company ISO certified?

    8.  Does the company have a natural habitats policy? A forestry
        issues policy?

    9.  Is the company free from regulatory lawsuits?

D.  Financial soundness

    1.  Is the company a publicly traded company?

    2.  Does the company publish an annual report?

    3.  Does the company have audited financial statements?

    4.  Has the company been in business for several years?

## Due Diligence Guide for Non-Profit Organizations

Depending on the situation and potential partners, some of the questions
pertaining to private enterprise may also apply to other partners, while
other questions will not be so appropriate. Just as you would for other
activities, when contemplating forming an alliance exercise common
sense, good judgment, and follow established procedures and guidelines
to avoid situations that may result in embarrassment to the Agency or
ineffective development investments.

USAID has a long history of working with non-profit partners, and has
well established \"due diligence\" procedures. The Office of Private and
Voluntary Cooperation's [Registration
Policy](http://www.usaid.gov/hum_response/pvc/regpolicy.html) sets out
the basic areas for you to explore. However, as with private companies
and depending on the alliance and USAID's history of working with the
particular non-profit, you may need to undertake a more comprehensive
due diligence investigation to enable the Agency to make the right
decision on whether to partner with that organization.

# Attachment B: Overview of the Federal Advisory Committee Act (FACA)

In connection with the development and implementation of the Global
Development Alliance (GDA), USAID proposes to consult with and seek the
views of a range of outside parties. These consultations will be
initiated by the GDA Secretariat as well as program Bureaus and
Missions. Whenever USAID seeks the views of outside parties,
consideration should be given to the potential application of FACA.

FACA (and GSA\'s implementing regulations) require that certain
\"advisory committees\" be chartered, approved by OMB and GSA, give
advance notice of meetings, have open meetings and publish minutes and
comply with other public access requirements.

Generally speaking, an \"advisory committee\" under FACA is any group
**not** composed entirely of full-time federal employees. However, FACA
does not apply to committees that are established overseas and include
non-US citizens.

One often hears that FACA does not apply to \"one-time\" meetings. There
is no exemption under FACA for "one-time" meetings. Such meetings are
usually justified on the grounds that individual, not consensus, views
are being sought.

FACA only applies where the group is:

> \- **not** composed entirely of full-time government employees,
>
> \- established or **utilized** by the agency, and
>
> \- giving \"consensus\" advice, as opposed to individual views, to
> agency officials.

Thus, groups with private members (both established agency advisory
committees and ad hoc groups) can meet with agency officials without
having to comply with FACA to:

> \- receive information or advice;
>
> \- discuss internal scheduling and other non-advice matters; and
>
> \- discuss substantive matters and even proposed recommendations and
> advice,
>
> [provided]{.underline}:
>
> \- such advice and recommendations are aired at a later public meeting
> of an advisory committee; [or]{.underline}
>
> \- only individual views are sought from the public attendees and not
> a group consensus.

The more times a group meets the harder it is to argue that consensus
advice is not being sought. If there is a need for a continuing dialogue
on a particular subject, one approach is to create a subcommittee of an
existing committee established under FACA. The membership of the
subcommittee can be completely different from that of the parent. The
subcommittee can meet without complying with FACA as long as the matter
is finally considered by the parent committee at a public meeting.

Please contact the Office of the General Counsel if you have questions
or in general would like to discuss this subject.

# Attachment C: Guidance Memorandum on Solicitations

#######  February 1, 2002

## MEMORANDUM 

**TO:** Deputy GC, Patricia Ramsey

**FROM:** GC/LP, Jan Miller, GC/G, Susan Pascocello

**SUBJECT:** USAID solicitation campaigns for Agency Programs or the
Foreign Assistance Programs of Other Entities

**[ISSUE]{.underline}**: Whether it is permissible for USAID officials
to engage in solicitation campaigns seeking contributions to USAID or
other organizations for development projects or activities from
individuals, foundations and U.S. based corporations.

**[CONCLUSION]{.underline}**: Such solicitation campaigns are
permissible, but only if a number of conditions are met. In the absence
of a specific USAID procedure for solicitation campaigns, we advise that
the USAID officials take certain steps to avoid potential conflict of
interest problems.

This memorandum provides initial guidance regarding solicitation
campaigns from a legal perspective, but ideally ADS guidance would be
developed to reflect both legal requirements and USAID policy
considerations.

##### EXCLUSIONS: This memorandum does not apply to donor coordination[^3] or requests for cost share or matching fund contributions[^4], and in general does not apply to instances where USAID does not initiate the fundraising activity. 

##### USAID employees would not need to follow the procedures outlined in this memorandum if they are coordinating assistance or contributions of goods and services with other donors, both governmental and private. For example, a health officer in the field could coordinate with other donors for the provision of commodities to a health clinic without following the procedures outlined herein. 

###### In general, this memorandum does not apply to instances where a USAID employee is contacted by a potential donor about contributing to a USAID program or asks for USAID's guidance on how to spend its funds in a particular country or region. Rather, this memorandum addresses situations in which a USAID official plans to contact potential donors in a solicitation campaign. There may be instances where it is difficult to ascertain whether USAID or another donor initiated the fundraising efforts. Questions regarding the applicability of this memorandum to a particular situation should be directed to GC. 

**DISCUSSION**:

As a general rule, specific authority is needed for government officials
to solicit funds. This is reflected in the government-wide Standards of
Conduct for Employees of the Executive Branch that permit fundraising in
an official capacity if, in accordance with statute, Executive Order,
regulation or otherwise as determined by the agency, the employee is
authorized to engage in fundraising as part of his or her official
duties. [^5] For government officials to solicit contributions for a
particular project or activity, the agency must determine whether it has
the authority to do so and whether such fundraising activities are
appropriate. Once these points are confirmed and it is clear that the
fundraising is part of the government employee's official duties, we
recommend that such activities be formally approved by the Agency
pursuant to the procedures outlined below.

USAID has the authority to solicit contributions on its own behalf under
its gift authorities, Section 635(d) of the Foreign Assistance Act of
1961, as amended ("FAA"), and Section 25 of the Department of State
Basic Authorities Act of 1956, as amended, 22 U.S.C. Section 2697.[^6]
In addition, USAID officials have the authority to engage in fundraising
for USAID or others under certain provisions of the FAA which establish
U.S. policy to encourage the participation of the private sector in the
development process.[^7]

There are a number of conditions on such fundraising. They include: (a)
the agency may not solicit contributions for the travel expenses of
Government employees; (b) a solicitation must be for funds to be used in
connection with the agency's authority (e.g., funds solicited under the
FAA must be used for agency programs or the foreign assistance programs
of other organizations); (c) [a solicitation must be structured to avoid
any appearance that a contributor will receive preferential treatment in
its dealings with USAID (or would face any kind of discriminatory
treatment if it declines to contribute)]{.underline}; and (d) the
solicitation must not include covert or deceptive activities (emphasis
added)[^8].

In order to meet these conditions, especially (c), we recommend that
USAID officials take certain steps to avoid potential conflict of
interest problems. The State Department procedures described in
Attachment A provide a basis for such steps. However, the State
Department procedures have been modified because USAID, unlike State,
has business relationships with a large number of entities through
USAID's acquisition and assistance programs and because the Agency
actively seeks to promote private sector involvement in development
through the Global Development Alliance.

**General Guidance and Suggested Actions for USAID Officials Undertaking
Solicitation Campaigns**

\(i\) Potential donors

Participation should be as inclusive as possible and offered to a large
number of entities in a given category to avoid showing preference to
one or more firms. Any solicitation should note the effort to gather
support from a broad number of firms, institutions, or persons.

\(ii\) Types of donors

[Foundations]{.underline} -- As a general matter, foundations are part
of the donor community. Therefore, solicitations of foundations are not
problematic from a conflicts perspective because of the nature of their
work and the fact that a typical foundation is not seeking any business,
benefit, or assistance from the USG. In many cases we are already
working with certain foundations as partners on development projects.

However, certain foundations may be related to companies or other
entities, and that relationship may pose conflicts issues. For those
foundations, a review should be made to ascertain how the foundations
are structured and how decisions to fund certain projects are made in
order to assess possible conflicts.

[Fortune 500 Companies]{.underline} -- To the extent that USAID does
business with these companies, more than likely it accounts for only a
small percentage of their income. For that reason, from a conflicts
perspective, solicitations of these companies are not generally
problematic if a basic conflicts analysis is completed prior to the
solicitation [and]{.underline} the solicitation is made to a wide number
of companies.

Companies in a particular sector may require additional analysis because
of the direct connection between the activity for which funds are being
raised, USAID's activities in a particular area, and these companies.
For example, if USAID were soliciting contributions for an HIV/AIDS
activity, pharmaceutical companies would require additional conflicts
analysis due to their direct connection with USAID's HIV/AIDS
activities.

[Other USAID Contractors and Grantees]{.underline} -- If solicitations
are made to this group, a significant conflicts analysis must take place
to insure that there is no appearance that the gift is offered with the
expectation of obtaining advantage or preference in dealing with USAID,
especially for firms and non-profits who receive substantial USAID
funding (i.e., when USAID is a major customer or donor).

> \(iii\) The Soliciting Official

In addition to avoiding organizational conflicts at the Agency level,
care should be taken, when conducting solicitation campaigns, to avoid
creating conflicts for individual employees between their solicitation
activities and other official duties. To avoid an appearance of
conflict, USAID officials engaged in fund-raising campaigns should not
solicit contributions from persons or organizations that have financial
interests that may be substantially affected by the performance or
non-performance of the soliciting official's other duties. An employee's
other duties should be taken into account as part of a decision to
assign the individual to a fund-raising campaign. Any potential
conflicts should be noted in the action memorandum along with measures
taken to eliminate or mitigate them.

Similar conflict issues can also arise in situations where the Agency
engages a contractor to conduct a solicitation campaign. Agency
officials engaging a contractor to handle a fund-raising campaign should
consider the potential for conflicting roles that may create appearance
problems and take steps to mitigate such conflict. It is recommended
that such contract include the standard AIDAR Clause 752.209-71.

(iv) Approval of the solicitation

For all solicitations, we advise that an action memorandum be prepared
to document the decision to solicit funds from certain entities. The
action memorandum should include information on the following: (1)
amount of money to be raised; (2) who will receive the money (USAID or
another entity); (3) potential donors; (4) methods of raising money
(e.g., mail, telephone calls); (5) who will do the soliciting; (6)
availability of alternative funding sources; (7) the importance to the
USG of the proposed project; and (8) the planned text of the fundraising
"pitch," if available (the "fundraising script"). At either the time of
approval of the action memorandum or initiation of the campaign, the
text of the fundraising script should be finalized with LPA and GC
approval.

It is an Agency policy decision to identify the level at which approval
of such action memoranda should be made. Given the potential risks
involved, we would advise that it be done at the AA level. In addition,
given the public affairs aspect of a solicitation campaign and the
potential conflicts issues, we also would advise that the memorandum be
cleared at appropriate levels by LPA and GC. In addition, we would
advise that when clearing or approving the action memorandum, each
Agency official should employ a test balancing the policy interests in
favor of fundraising against the potential risks to the Agency.

(v) Maximum amount of donation from a single donor

The State Department does not usually accept more than \$200,000 from a
single donor for a specific campaign. In some circumstances, it may be
appropriate to consider a maximum contribution that will be sought from
a single donor. Because of the policy interests involved in furthering
the Global Development Alliance, however, we do not propose a maximum
contribution limit.

(vi) Implementation and Oversight

Once a solicitation campaign has been approved, the implementing office
must ensure that the solicitation campaign is implemented in accordance
with the action memorandum. The implementing office also should continue
to consult with LPA and GC on public affairs and legal issues, including
reviewing any conditions to donations (discussed below), and determining
the appropriateness of the institution to receive funds and the type of
financial instruments that will be used.

(vii) Conditions on donations

Donors may seek to impose conditions on their donations, and USAID can
accept conditional gifts. However, it is difficult to anticipate these
conditions when beginning a solicitation. It is up to the official with
authority to accept the gift to determine whether the conditions can be
agreed to given the type of conditions, administrative burden, donor,
size of donation, and other considerations.[^9]

The accepting official should document the decision as to whether USAID
accepts the conditions and inform the donor. There also will be
responsibility to implement procedures to ensure the conditions are
respected. Conditions regarding memberships on boards of directors of
private entities raise special considerations and should be reviewed
with extreme care.

(viii) Receipt of Donations

Donations for USAID must be received by USAID for deposit in the USAID
donation trust account. Such funds are subject to apportionment in the
budget process. USAID cannot contract for an agent to receive funds on
USAID's behalf.

(ix) Solicitations for entities other than USAID

For solicitations of donations to entities other than USAID or alliances
of entities, the action memorandum described above in "Approval of the
solicitation" should include additional information to assist the
clearance/approving officials in determining whether it is appropriate
for USAID officials to solicit donations on behalf of such entity. For
example, we recommend that detailed information be included about the
entity, along with an explanation of why it is appropriate for USAID to
seek contributions on the entity's behalf, or on behalf of an alliance.
USAID may need to develop disclaimers when soliciting contributions on
behalf of other entities so that contributors do not view USAID as
guaranteeing proper operation of the recipient entity.

####### Attachment A (to the GC memo)

[State Department Procedures]{.underline}

In general State Department officials have been authorized to engage in
official fundraising activities in appropriate cases when statute or
regulation sanctions private fundraising; or the public official\'s
association with the private fundraising activity furthers a significant
foreign policy objective.

\(i\) Foreign Affairs Manual

The State Department\'s Foreign Affairs Manual (FAM) sets forth a
procedure that must be followed to obtain approval for any solicitation
or other fundraising activity. (2 FAM 962(f)-(j)) The requesting office
prepares an action memo that is cleared by State L/Ethics and Financial
Management and Planning (FMP), and the memo is submitted to the Under
Secretary for Management for his/her approval. The memo includes as much
information as possible on the project for which the funds will be
raised (including amount of money, potential donors, method or raising
money, availability of alternative funding sources, and the importance
to the USG of the proposed project). FMP incorporates into the memo
information concerning any prior State Department solicitations of the
targeted donors. The approval of the proposal requires that the Under
Secretary for Management balance the policy interests in favor of
fundraising against the potential risks to the Department involved in
raising money from the private sector. The FAM specifically states,
among other things, that the Under Secretary for Management will not
approve solicitations [targeting]{.underline} persons who are seeking to
obtain any business, benefit or assistance from the soliciting official;
conduct activities that are regulated by the soliciting official; or
have interests that may be substantially affected by the performance or
nonperformance of the soliciting official\'s duties (emphasis added).

\(ii\) Solicitation/Gift Acceptance Guidelines

The State Department also employs the following Solicitation/Gift
Acceptance Guidelines for its Employees:

-   Department employees should make clear to all entities being
    solicited that their participation will not cause them to derive any
    benefit from the USG and that a decision not to participate will
    likewise not lead to any penalty.

-   Participation should be inclusive, offered to a wide number of firms
    or institutions in a given category to avoid showing preference to
    any one or handful of firms.

-   Department employees should ensure that no solicited firms have or
    are seeking to obtain any significant business, benefit or
    assistance from the USG of a type that could cause an appearance
    that the gift is offered with the expectation of obtaining advantage
    or preferment in dealing with the USG.

-   Any solicitation letters or other communications should note the
    effort to gather support from a broad number of firms, institutions,
    or persons.

### (iii) Maximum Contribution Amount

In 1998, the State Department considered whether to authorize Department
employees to solicit \$25 million to support former President Clinton\'s
Education for Development and Democracy Initiative for Africa. While the
memorandum is attached for information purposes, we understand that this
initiative was not acted upon. The memo requesting the authorization for
such fundraising noted that it was unusual for the Department to accept
donations in excess of \$200,000 from a single donor for a specific
campaign.

#  {#section-1 .unnumbered}

# Attachment D: Sample Memorandum of Understanding

Readers should treat this Memorandum of Understanding (MOU) as an
example and not necessarily as a model for general use. In considering
and negotiating MOUs and similar agreements, USAID offices will need to
prepare documents that meet the needs of their own alliances and the
topics covered in MOUs may vary from alliance to alliance. GC or RLA
assistance should be sought in negotiating and drafting the MOU or
similar document. While an MOU itself is not an obligating document, it
may contemplate a future grant or contract award by USAID. If this is
the case, M/OP or RCO assistance should be sought with respect to the
choice of instrument and the procedures to be followed, and the question
of competition should be addressed.

DRAFT

MEMORANDUM OF UNDERSTANDING

BETWEEN THE

UNITED STATES AGENCY FOR INTERNATIONAL DEVELOPMENT

AND

ABCD COFFEE COMPANY, INC.

AND

WXYZ FOUNDATION

I.  PURPOSE AND SCOPE

> The United States Agency for International Development (\"USAID\") and
> ABCD Coffee Company, a XX (state) corporation, and the WXYZ
> Foundation, a XX (state) corporation and a tax-exempt education and
> personal development foundation (hereafter each a "Party" and
> collectively, "the Parties"); share the goals of promoting
> economically sustainable and environmentally sound coffee production
> for small-holder farmers and farmer organizations in developing
> countries; increasing investments in such production; and improving
> the quality of coffee produced for export. The Parties also share the
> goal of promoting private sector approaches that are environmentally
> friendly, socially just and economically sustainable.
>
> The purpose of this Memorandum of Understanding (\"MOU\") is to set
> forth the understandings and intentions of the Parties with regard to
> these shared goals. The Parties specifically acknowledge that this MOU
> is not an obligation of funds, nor does it constitute a legally
> binding commitment by any Party.

II. IMPLEMENTATION

> To achieve the purposes of this MOU, the Parties, individually and
> subject to the availability of funds, contemplate activities including
> technical assistance and technology transfer to small-holder farmer
> and farmer organizations and coffee producers in developing countries
> (hereafter \"the eligible beneficiaries\") to improve coffee quality;
> research and investment in production, business development, and
> marketing efforts; and identification and implementation of income
> diversification options both in and out of the coffee sector.
>
> Specific joint efforts of the parties may include:

-   The mutual exchange of information and data on specific sectoral
    activities - except that deemed privileged or proprietary;

-   The coordination of technical assistance, research and other
    activities involving eligible beneficiaries\' coffee production,
    shipping, handling and processing;

-   Promoting environmentally friendly resource management practices by
    small farmers and farmers organizations;

-   Meeting periodically at the request of either Party to share
    experiences and lessons learned and to facilitate the transmission
    of \"best practices\" to regional and country-level partners;

-   Cooperation on testing and implementation of verification and
    certification systems that monitor and measure the impact,
    effectiveness, and sustainability of activities; and,

-   Sharing information on opportunities that may arise for
    collaboration with other donors and entities that may leverage
    resources invested by the Parties.

IN WITNESS WHEREOF, the undersigned Parties have agreed:

**ABCD Coffee Company:** **USAID**:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

John Doe Jane Jones, USAID

Vice President, ABCD Coffee Company Authorized Representative

Authorized Representative for USAID

for ABCD Coffee Company

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Date
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Date

**WXYZ Foundation:**

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Bob Smith

Vice President, WXYZ Foundation

Authorized Representative

for WXYZ Foundation

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_ Date

#  {#section-2 .unnumbered}

# Attachment E: Global Fund to Fight AIDS, TB and Malaria

Legal Organization Memo

-   The purpose of this document is to summarize the legal steps taken
    to launch THE GLOBAL FUND as an independent foundation under Swiss
    law with assets held in trust pursuant to a Trust Agreement with the
    World Bank, and Administrative Services provided via contract with
    the World Health Organization.

-   This document has been prepared by Willis Ritter, Legal Adviser to
    the Oversight Committee.

-   The Board may take note of this document as background on the legal
    evolution of THE GLOBAL FUND.

THE GLOBAL FUND --Legal Organization Memorandum

SUMMARY

1.  **Organizational Principles**.

> A series of fundamental policy decisions were reached at the final
> plenary session of the Transitional Working Group in Brussels on
> December 13-14, 2001, which have impacted the interim legal
> developments:

-   THE GLOBAL FUND would be an independent legal entity, not "nested"
    within any existing U.N.- affiliated organization.

-   THE GLOBAL FUND and its Secretariat would be located in Geneva,
    Switzerland.

-   THE GLOBAL FUND assets would be held in a separate trust fund with
    the World Bank as Trustee, but THE GLOBAL FUND would retain control
    over the disbursement of those funds. A Trust Agreement would be
    developed with the World Bank to describe the relationship between
    THE GLOBAL FUND and the Bank.

-   THE GLOBAL FUND would contract through an Administrative Services
    Agreement with the World Health Organization (WHO) (also located in
    Geneva) for various specifically described administrative services.
    GLOBAL FUND staff and contractors would be deemed WHO employees for
    various administrative purposes, but delegated exclusively to work
    for THE GLOBAL FUND. However, as with the World Bank Trust
    Agreement, THE GLOBAL FUND would retain its independence vis-à-vis
    WHO, occupying space separate from WHO, and retaining full control
    over the recruitment and daily supervision of staff.

2.  **First Phase Completion**

> The first phase in the implementation of these principles is largely
> complete. THE GLOBAL FUND exists as an independent Foundation recently
> formed under Swiss law. As soon as the January 28 Board meeting
> convenes, this Foundation will be legally controlled by the
> agreed-upon Board of THE GLOBAL FUND.
>
> The World Bank has formally accepted the invitation of THE GLOBAL FUND
> to serve as Trustee. The Oversight Committee and the Legal Adviser
> have negotiated the basic outlines of the requisite Trust Agreement
> with the World Bank and the Administrative Services Agreement with
> WHO. Detailed negotiations on both agreements are expected to be
> completed within the next several weeks.

3.  **Swiss Government Cooperation**.

Negotiations with representatives of the Swiss government have been
particularly helpful in developing the legal structure of THE GLOBAL
FUND. These discussions are continuing, looking toward possible eventual
transformation of THE GLOBAL FUND into a separate "quasi-
intergovernmental organization" under special Swiss statutory authority.

THE LEGAL ENTITY

1.  **Creating the Foundation**

> Under Swiss law, there has been created a foundation entitled "The
> Global Fund to Fight AIDS, Malaria and Tuberculosis" (for this
> purpose, the "Foundation"). The Foundation has been created by
> registering a notarized copy of the Foundation Board's by-laws in the
> Canton of Geneva, Switzerland. The founding directors of the
> Foundation are Messrs. Anders Nordstrom (Vice Chairman of the
> Oversight Committee), Paul Ehmer (Team Leader of the Technical Support
> Staff), and Edmond Tavernier (Swiss counsel to the Foundation).

2.  **Transition to Permanent Board**

> As the first order of business at the initial Board meeting on January
> 28, the founding directors (Messrs. Nordstrom, Ehmer and Tavernier)
> will officially designate the 18 voting and 5 nonvoting members of the
> Board to serve as provided in the Bylaws, and will then resign. At
> that point, the Foundation will be a fully constituted legal entity
> under Swiss law, entitled to do business under the direction of its 18
> voting directors. Messrs. Tavernier Tscanz will provide appropriate
> legal opinions to that effect.

Under Swiss foundation law, at least one member of the Board must be a
Swiss citizen domiciled in Switzerland. The Bylaws therefore create a
fifth nonvoting seat for the Board to fill by appointment of the
requisite Swiss citizen. It is expected that Mr. Edmond Tavernier, as
Swiss counsel to the Foundation, will be appointed to that seat for that
limited purpose.

3.  **The Bylaws**

> The Bylaws' text is taken virtually word-for-word from the TWG
> document on Governance approved unanimously at the final plenary
> session in Brussels. The provisions are deliberately broad, to give
> the Board the widest possible discretion in its activities. Several
> nonsubstantive provisions have been added to conform to the technical
> requirements of Swiss law. The text of the by-laws was initially
> drafted by the Oversight Committee's Legal Adviser in conjunction with
> Swiss counsel, then reviewed by each member of the Oversight
> Committee, and by separate legal counsel for several Oversight
> Committee member countries.[^10]

THE TRUST FUND and the TRUSTEE

1.  **The Trust**

> All assets of the GLOBAL FUND Foundation will be held in a separate
> trust fund established at the World Bank. While the Trustee will be
> the *legal* owner of those moneys, it will act as a fiduciary for the
> FUND, required to manage and disburse those moneys strictly in
> accordance with the directions of the Board. Donors may elect to
> execute Contribution Agreements either with the FUND itself, or with
> the Trustee, but in either case donations from public entities will be
> sent directly to the Trustee for deposit to the Trust Fund. This
> approach assures maintenance of the immunities attributable to World
> Bank *legal* ownership of the funds.

2.  **The Trust Agreement**

> The draft Trust Agreement submitted by the Oversight Committee to the
> World Bank characterizes the Trustee as primarily responsible for
> *financial and fiscal accounting matters*. It preserves to the GLOBAL
> FUND Board full authority over the selection of grantees, disbursement
> of funds, and program accountability.

The draft Trust Agreement between the FUND and the World Bank has
received substantial input from various members of both the Oversight
Committee and the Fiduciary Working Group headed by Japan. On January
17, 2002, the World Bank formally accepted the request of Dr. Kiyonga to
serve as Trustee; and on January 21 the World Bank was given a copy of
the draft agreement. While some comments have been received, it is
expected to be several more weeks before the agreement is finalized. In
the meantime, the World Bank has agreed to continue holding GLOBAL FUND
moneys in trust.

**ADMINISTRATION**

1.  **Administrative Services Agreement with WHO**

The World Health Organization (WHO) in Geneva has agreed to provide a
variety of routine administrative services to the FUND, such as payroll,
health care, travel, and the like. WHO has been providing similar
services on an informal reimbursement basis to the TWG, the TSS and the
interim staff of the Oversight Committee. For this purpose, GLOBAL FUND
employees will initially be hired under WHO contracts, and treated as
WHO employees. However, the FUND has reserved full authority over the
recruitment, selection and management of WHO employees assigned to its
service.

THE GLOBAL FUND will be physically separated from WHO headquarters in
Geneva, and will maintain its independence from WHO control. However,
access to WHO's existing sophisticated administrative systems, and
characterization of GLOBAL FUND personnel as WHO employees, offer
significant cost savings to the GLOBAL FUND and its staff.

The Administrative Services Agreement has been negotiated in some detail
directly with WHO and reviewed by the full membership of the Oversight
Committee. Agreement has been reached on all essential substantive
matters, and final signature awaits only the completion of cost
estimates and negotiations.

2.  **Quasi-intergovernmental organization**

Partly complementing its administrative agreement with WHO, the FUND may
consider constituting itself a "quasi-intergovernmental organization" by
executing a special fiscal agreement with the Swiss government. That
status would continue to exempt the FUND and its assets from all Swiss
taxes, and would also grant certain privileges directly to employees of
the FUND. The basic structure of the FUND (Partnership forum; Board;
Secretariat) would be unchanged, but the full Secretariat staff could
move from the status of "WHO employees" to become direct employees of
the FUND, should the Board so decide. Among the consequences of this
change, the FUND would have to set up its own employee management
structures, including provisions for payroll, health care and retirement
benefits, and related administrative responsibilities initially
contracted to WHO.

The interim Secretariat staff and the Legal Adviser have had several
conversations with Swiss government officials regarding the
quasi-intergovernmental organization model. While the approach may offer
certain advantages, it would have required at least several months to
put in place, and may or may not eventually turn out to be suitable for
the FUND's needs. For this reason the staff, the Legal Adviser and the
Swiss government representatives all recommend that the FUND first work
with the WHO Administrative Service Agreement format, reserving the
opportunity to transform itself to a quasi-intergovernmental
organization if and when circumstances warrant.

# Attachment F: Alliance Examples

## *Pooling Resources*

### *The Global Alliance for Vaccines and Immunization (GAVI)*

*The* [Global Alliance for Vaccines and
Immunization](http://www.vaccinealliance.org/) (GAVI) is an alliance
between the Gates Foundation, which provided a \$750 million financial
commitment, USAID, international institutions including the World Bank,
UNICEF and the World Health Organization, the pharmaceutical industry,
and governments from North and South. USAID is participating as a
grantor. GAVI is designed to address three problems: that every year 30
million children are still not receiving vaccinations; that only
children in developed countries have widespread access to new
life-saving vaccines; and that current market forces don\'t encourage
the development of vaccines against diseases most prevalent in poorer
countries, such as malaria and diarrhea. The GAVI partners are initially
focusing their efforts on three major areas: moving resources to
developing countries to increase immunization; augmenting the generous
Gates Foundation commitment; and working with the vaccine industry to
modernize the way vaccines are purchased for children in the world\'s
poorest countries.

Structurally, the GAVI partners have organized themselves as an informal
board of directors, with each of the several constituent groups
(foundations, multilateral institutions, bilateral donors, industry,
NGOs) represented on the board. The board establishes alliance policies
and makes funding decisions for the alliance's programs. A technical
working group and a secretariat support the work of the board. The
bilateral donor representatives represent USAID on the board. USAID also
is a member of the technical working group. The GAVI partners also
established a U.S. NGO to serve as the focal point of GAVI's private
fund-raising efforts. USAID's initial grant to GAVI was made to the U.S.
NGO, which transferred the grant funds to the trust account established
at UNICEF to manage GAVI's resources and provide financial and
administrative services to the alliance.

Within USAID, the implementing office is Global Health Bureau, Steve
Landry: 202-712-4808.

### Global Alliance to Improve Nutrition (GAIN)

The [Global Alliance to Improve
Nutrition](http://wbln0018.worldbank.org/hdnet/hddocs.nsf/c840b59b6982d2498525670c004def60/9485feca44b10bf185256adb004e959b)
(GAIN) is an emerging alliance of public and private sector
organizations seeking to improve health through the elimination of
vitamin and mineral deficiencies. GAIN policies and operating structures
are currently under development. Preliminary partners include: USAID,
The Bill & Melinda Gates Foundation, CIDA, The World Bank, UNICEF, WHO,
private food companies, and NGOs/PVOs. GAIN will make grants to
developing countries in support of food fortification and other
sustainable micronutrient interventions in order to save lives and
improve health and productivity. GAIN will combine the strengths of
public and private sector organizations to mobilize private industry,
international donors, and US foundations in support of food
fortification, tapping the expertise and resources of the corporate
sector in technology transfer, business development, and trade. Total
funds for the first year of grants are estimated at \$20 -- 25 million.

Within USAID, the implementing office is the Global Health Bureau, Jill
Mathis: 202-712-4817.

### Bosnia Orphans

USAID/Bosnia, the U.N. Foundation (UNF), and UNICEF/Bosnia are
collaborating with the Government of Bosnia/Herzegovina to respond to
the needs of orphaned children at risk of institutionalization and to
improve the conditions of institutions where children have been placed.
To do this, USAID has made a grant to UNF, which will provide a 100%
match and transfer the USAID and matching funds to the United Nations
Fund for International Partnerships (UNFIP). UNFIP will then transfer
all the funds to UNICEF for UNICEF Bosnia. By utilizing this mechanism,
USAID's \$100,000 contribution leveraged an additional \$100,000 from
UNF as well as \$30,000 from UNICEF/Bosnia and \$10,000 from another
UNICEF/Bosnia donor. Civil society partners are also involved, in order
to increase the capacity of local partners. UNICEF has active working
relationships with the government, NGOs, foster networks, professionals
and media. While this activity is currently focused largely on analysis
and planning, UNICEF and the relevant local organizations have the
capacity to influence change across the board: preventing children from
being placed in an institution; improving conditions for those already
in institutions; and providing alternatives so institutionalized
children can be reintegrated into families and the community again.

At USAID/Bosnia, the contact person is Ellen Leddy, Tel. 387-33-667-900.

### The Armenia Vaccine Program

This program, begun in Fall 1999, is an endowment that cuts across two
USAID operating units -- the Armenia Mission and the Global Health
Bureau. The success of this endowment lies in its clear and tangible
goal: *Get vaccines to children*. The proposed endowment funding level
is \$1.4-\$1.6 million. USAID's grant was to the [Ani & Narod Memorial
Fund](http://www.ani.org/) (ANMF). USAID has obligated \$400,000 in core
funding (\$300,000 from the Armenia Mission and \$100,000 from the
Global Health Bureau) and ANMF has committed to contributing \$1million,
with its chairman of the board personally investing \$250,000 in core
funding. In establishing the endowment, USAID's role was to put provide
initial grant funding and the necessary technical assistance. ANMF
provided the financial expertise. USAID stipulated in the agreement that
the vaccines must be obtained through UNICEF (for purposes of quality
assurance). This alliance is expected to have both a demonstration
effect, as well as real results, since it is replacing the discontinued
government vaccine program. As a model, this kind of endowment may be
useful as a national immunization program especially where diaspora
provide significant resources back into their home countries.

The point of contact is Emily Wainwright, CEDPA's Senior Technical
Advisor for Infectious Diseases, BGH/HN/EH, tel. 202 712-4569.

## *Parallel Resources*

### *Sustainable Cocoa Alliance*

*USAID has recently developed a strategic alliance with the U. S.
Chocolate Manufacturers\' Association, several key member companies, and
other organizations. There is growing concern that some agricultural
goods finding their way to developed country markets are being produced
with exploitative forms of labor practices. In West Africa, cocoa and
chocolate have become a focal point for issues regarding*
[]{.mark}abusive child labor and trafficking practices used in cocoa
production. Consistent with concerns expressed by the U.S. Congress and
human rights groups, the Chocolate Manufacturers Association and others
have signed a protocol for cocoa beans and their derivative products to
be grown and processed in a manner that complies with the International
Labor Organization Convention 182 on child labor.

Industry groups need a sustainable, environmentally sound, socially
aware and profitable community of suppliers of high-quality cocoa on
which their industry depends. As a result, USAID-assisted farmer groups
have benefited from in-kind contributions of technical assistance,
research findings, and preferential purchasing terms. The chocolate
manufacturers, for instance, are contributing over \$1 million per year
in-kind and in cacao-purchasing premia to these collaborative efforts.
More recently, the high-tech information industry has also taken an
interest, as a basis for \"bridging the digital divide\" through
e-commerce and remote sensing and geographic information systems (GIS)
technologies to assure product source and quality.

Within USAID, the contact for additional information on the Cocoa
Alliance is Jeff Hill in AFR/SD. (<jhill@afr-sd.org>), tel. 202
219-0465.

### Coffee Companies and the Specialty Coffee Association of America (SCAA)

Additional examples of strategic alliances that have developed recently
involve the SCAA and some of its member companies. Starbucks has
partnered with Conservation International, with partial USAID funding,
to work with small farmers in Mexico. SCAA itself has been involved in
developing coffee producer groups in Guatemala, East Africa and
elsewhere. Technical assistance and other resources are being provided
to coffee producers in Peru, through an alliance with USAID/Peru,
Winrock International, and [Seattle's Best
Coffee.](http://www.usaid.gov/economic_growth/coffeemou/sbc_notice.htm)

As above, Jeff Hill is the contact person for the Africa Bureau. In the
Latin America/Caribbean Bureau, the contact points are John Beed (tel.
202 712-0761) and Carol Wilson (tel. 202 712-0506).

### Public-Private Agricultural Research Programs

Over the last 10 years, USAID has directly supported several
public-private agricultural research programs. For example, USAID,
Monsanto, the University of Missouri, and the Kenyan Agricultural
Research Institute (KARI) collaborated to train Kenyan researchers in
the development of virus resistant transgenic sweet potatoes. This was
the first USAID biotechnology-related public-private partnership. USAID
provided initial seed funding (roughly \$200,000), first through a
direct grant to Monsanto and later to the University of Missouri with
funding from USAID/Kenya. KARI donated the human resources, including
sending two of its top researchers to live and work in the U.S. for two
years. The University of Missouri managed the program and provided
technical assistance. Monsanto, whose contributions to date total
roughly \$2 million, provided the laboratory for sweet potato research
and eventually transferred the intellectual property rights for the
virus-resistant sweet potatoes to KARI. A lesser-known partner, Robert
Beachy of Washington University in St. Louis, was the originator of the
sweet potato research. The KARI-Monsanto partnership has continued long
beyond direct USAID support or funding and has expanded to South Africa.

USAID's points of contact are Josette Lewis, G/EGAT/AFS/AEMD,
202-712-5592, and Dennis Weller, AFR/SD/ANRE, 202-712-1406

#  {#section-3 .unnumbered}

# Attachment G: Bilateral Donor CSR Strategies and Activities

From Development Agency Round Table on Corporate Social Responsibility

28-29 January 2002

**COUNTRY OVERVIEW PAPERS**

**CSR Strategy and Activities**

**[Australia]{.underline}**

Selected Excerpts from Australia's "Country Overview Paper on CSR
Strategy and Activites."

**Poverty Reduction and Sustainable Development**

The Australian aid program\'s objective is to *advance Australia\'s
national interest by assisting developing countries to reduce poverty
and achieve sustainable development*. The aid program\'s strategy for
achieving this objective is based upon 4 pillars:

-   promoting inclusive growth

-   enabling the poor to increase their productivity

-   encouraging accountability of governments and institutions, and

-   reducing the vulnerability of the poor.

Each pillar incorporates an emphasis on good governance, recognizing its
pivotal importance to effective development.

**Good Governance Framework**

Good governance is the largest component of Australia\'s aid program,
accounting for approximately 21% of direct aid flows (\$360 million in
2000-01). Australia\'s governance assistance targets four priority
areas:

-   improving economic and financial management;

-   strengthening law and justice;

-   increasing public sector effectiveness; and

-   developing civil society.

The aid program\'s role in strengthening good governance can provide an
environment for pro-poor economic growth, improve accountability and
provide better access to basic services, resources and decision-making
by the poor. It also creates the conditions for development of a healthy
and productive private sector, which, as the driver of economic growth
and improvement in living standards, is central to the achievement of
long-term poverty reduction. Development of this enabling environment is
arguably the most important consideration in promoting corporate social
responsibility (CSR).

The aid program can contribute significantly to the development of a
private sector that is efficient, accountable and serves the broader
sustainable development interests of developing countries. It does this
through support for legal, institutional and administrative reforms,
economic and financial capacity building, the strengthening of the rule
of law, development of democratic processes and participatory approaches
for the delivery of basic services, promotion of sound trade and
investment opportunities (particularly in poorer areas), and creation of
equitable and efficient taxation systems.

*Anti-Corruption Assistance*

A key area of focus for Australia\'s governance assistance, particularly
as it relates to the promotion of CSR, is corruption. This assistance
recognizes the negative impact of corruption on effective government and
broader development, as it deters investment and restricts economic
growth. Activities include legal and public sector reform, public sector
accountability measures (e.g., independent audit functions),
establishing or strengthening channels for public representation (e.g.,
ombudsman), and introducing policies that encourage a stronger and more
competitive private sector.

*Corporate Governance*

The aid program also provides limited assistance for a number of
programs covering corporate governance, general business knowledge and
corporate management issues in order to improve the management capacity
of private sector enterprises. This is complemented by Australia\'s
support for activities that promote trade and investment opportunities
in developing countries.

**Industry Code of Ethics**

A new code of ethics governing the operations of Australian firms
undertaking activities on behalf of the Australian aid program will be
developed in 2002. This voluntary code of ethics will cover areas such
as accountability and transparency of operations, rule of law, gender,
environment and general respect for the individual in those communities
with which Australian firms will work. AusAID will work closely with
Australian industry in developing this code, which will complement
existing contractual requirements of firms that undertake business on
behalf of AusAID.

**Environmental Protection**

The aid program is also developing a detailed environmental management
guide to assist companies undertaking activities funded by the
Australian aid program. This is to ensure that all aid activities likely
to have environmental impacts are properly assessed and managed. These
guidelines are consistent with Australia\'s *Environment Protection and
Biodiversity Conservation Act* of 1999.

For further information on the above, please consult the following
documents on AusAID\'s website (<http://www.ausaid.gov.au/>)

[Reducing Poverty: the Central Integrating Factor of Australia\'s Aid
Program (April
2001)](http://www.ausaid.gov.au/publications/pdf/povertystrategy.pdf)

[Good Governance: Guiding Principles for Implementation (August
2000)](http://www.ausaid.gov.au/publications/pdf/good_governance.pdf)

[Private Sector Development Through Australia\'s Aid Program (January
2000)](http://www.ausaid.gov.au/publications/pdf/privsectordevel.pdf)

**[Canada]{.underline}**

**Excerpts from "Overview of CSR Activities at the Canadian
International Development Agency (CIDA)"**

**Development Agency Roundtable on Corporate Social Responsibility**

The issue of corporate social responsibility is garnering increasing
profile in the international arena including discussions at Summits such
as FFD and WSSD+10. CIDA and DFID are co-hosting a roundtable of donors
focused on corporate social responsibility. The objectives of the
meeting are to explore the role of development agencies in promoting
pro-poor corporate social responsibility, and to explore options for
interaction in the context of preparations for the forthcoming
Johannesburg World Summit on Sustainable Development**.** Of particular
importance is to explore opportunities for collaboration and the
development of a coherent approach to addressing CSR issues both in
terms of foreign companies operating in developing countries as well as
providing support for CSR initiatives to the private sector in
developing countries.

**ODA-FDI Study** (CIDA Leads as part of Innovation and Partnership
Committee work)

As Foreign Direct Investment (FDI) in developing countries continues to
increase over Official Development Assistance (ODA), there are growing
expectations that business must systematically address and optimize its
contribution across the full spectrum of these economic, environmental
and social considerations. There is also widespread recognition of the
opportunity for FDI to further enhance its contribution to sustainable
development. As part of addressing this opportunity, the potential role
of aid agencies and ODA in increasing the social and environmental
performance of FDI has emerged as an important consideration. This
includes ODA efforts to strengthen institutions and build capacity that
contribute to an enabling environment and attractive investment climate
for FDI. As well, there are significant leverage points and
opportunities for collaboration between the private financial sector,
aid agencies and other government actors to enhance FDI\'s contribution
to sustainable development.

CIDA is undertaking a study to identify and explore key Overseas Direct
Investment (ODA) leverage points for enhancing social and environmental
performance of Foreign Direct Investment (FDI). As part of the study,
the Agency plans to engage Canadian and foreign financial sector
representatives to review leverage points and identify complementary
roles and opportunities of the private financial sector and set the
stage for collaboration. The project also aims to establish a pilot
partnership initiative to expand this dialogue to the financial sector
in developing countries. The pilot partnership will begin between the
Canadian and Indian financial institutions.

**World Bank Proposal - Strengthening developing country governments'
engagement with corporate social responsibility: a combined role for the
World Bank and IFC**

The World Bank's *[Business Partnership](#Business_Partnership) [&
Outreach Group]{.underline} (BPOG)* has approached donors including
DFID, the Netherlands Development Agency and CIDA to fund a project
aimed at strengthening developing country governments\` engagement with
Corporate Social Responsibility (CSR).

The purpose of the project is to improve the impact of corporate social
responsibility by advising the public sector within developing countries
on their potential roles, and by supporting implementation activities
led by IFC clients pioneering sustainability for sound business
objectives.

To date, little support has been available to build the capacity of
developing country governments to participate in CSR initiatives, or to
ensure that developing country businesses' practical experience plays a
bigger role in helping shape sustainability-related voluntary codes and
standards. This proposal highlights a practical way forward for the
World Bank Group and other partners to develop such assistance to
developing country governments and pioneering companies, exploring the
tools and support they may need to maximize their impact. The project
aims to build on lessons learned and tools developed through the
Business Partners for Development (BPD) initiative from January 1998 --
December 2001.

The project will work in a maximum of five countries whose national
governments wish to explore their potential roles in CSR. It will begin
by conducting a short study on examples of successful developing country
public sector approaches to creating an enabling environment for CSR
activities.

To date, DFID and the Netherlands have committed funding**.** CIDA has
submitted a request and is awaiting approval**.**

**Regional Networks on CSR and Developing Countries**

Increasingly, there are calls for 'greater involvement of business and
industry from the developing world' in the dialogue around global
sustainability and corporate sustainability. The challenges surrounding
the take-up of global corporate sustainability are certain to be central
to the discussions at the upcoming World Summit for Sustainable
Development in September of 2002.

In order to effectively understand and shape global CSR in a manner that
addresses these concerns and thus paves the way for more significant
take-up and corresponding benefits, a more substantial and focused
dialogue, primarily driven by and focused on developing country
opinions, needs to inform the broader corporate sustainability trend --
both in the policies and actions of business and governments. The
project **goal** is to create conditions for a significant positive
impact on the degree of take-up and corresponding benefits of corporate
sustainability practices by developing countries, through better
engagement, improved understanding of the challenges and opinions of,
and accelerated collaboration with developing country businesses.

The exploratory phase of the development of regional networks will be
undertaken by the *Canadian Manufacturers and Exporters*. The network
would initially concentrate on Asia where there is an interest on the
part of business associations such as the *Confederation of Indian
Industries* to spearhead this initiative. Steps would then be taken to
build on this model within the context of Africa and Central and Eastern
Europe. The network would focus on facilitating socially and
environmentally responsible, sustainable development-oriented private
sector investment, including addressing capacity building and policy
development and implementation. The network's development would benefit
from the experience of the *Empresa* network of CSR organization in the
Americas region. The *Empresa* network serves as a prototype for this
proposed global network of CSR organizations, demonstrating the value
and contribution of such a network, and is an anticipated partner for
the global network.

**Business Case for CSR - Asian Context**

During meetings with private sector representatives in Canada and in
India, representatives repeatedly brought up the need to continuously
emphasize the business case, and build a stronger business case.
Comments ranged from emphasizing what is already known about the
business case to a broader range of companies (including small and
medium-size enterprises), to needing to see more macro-economic changes
to support emerging dimensions of the business case.

Working in collaboration with the *Confederation of Indian Industries*
(CII), CIDA is planning to develop a series of business cases targeted
to the Asian context. This project will complement CIDA\`s activities
through Asia Branch as they are presently developing the second phase of
a project with CII aimed at supporting its work to raise awareness on
environmental issues within the private sector. The business case will
also provide a tool to bolster the efforts of a regional network on CSR
to provide concrete support to its network members.

######## 

**[Denmark]{.underline}**

######## 

######## DANIDA - Short summary on CSR-strategy and activities

[Strategy]{.underline}

Danida's policy on CSR is integrated in the overall strategy for the
Danish international development cooperation, which has poverty
reduction through pro-poor growth as its overriding objective. According
to this strategy, Denmark will assist in creating necessary conditions
for the development of an efficient private sector in a number of
developing countries, including the establishment of a well-functioning
labor market. Actual activities are designed in such a way as to
contribute most effectively to securing increased employment. Other
priorities include a safe working environment and acceptable working
conditions in accordance with the ILO conventions. In order to secure
pro-poor growth both the formal and the informal sectors must be
involved. There will also be focus on involving Danish businesses as
well as Danish employer and labour organisations as partners in
long-term development cooperation.

On this background, Denmark has drawn up a plan of action for the
support of business development in developing countries. Amongst other,
the implementation of this programme of action is based on the need for
responsible and sustainable business development and the need for a
commitment to this from the business sector in both the industrialised
and developing countries.

[Activities]{.underline}

*Support of multilateral initiatives primarily through the UN and OECD.*

*Example of bilateral activities:* The Danish Industrialisation Fund for
the Developing Countries is a non-profit fund that provides risk capital
for investments in the developing countries by Danish enterprises in the
form of share capital, loans and/or guarantees. All investments from the
fund are subject to appraisal regarding social and environmental
sustainability through the use of checklists on companies' code of
conduct.

[Germany]{.underline}

Germany's Actions for Corporate Social Responsibility

Corporate Social Responsibility (CSR) has become an important issue in
Germany's official development cooperation. The Federal Ministry for
Economic Cooperation and Development (BMZ) has launched a number of
initiatives over the past two years in order to foster responsible
actions by enterprises on a voluntary basis. The Deutsche Gesellschaft
für Technische Zusammenarbeit (GTZ), as the Ministry's largest
implementing agency, is playing a crucial role in setting up and running
these initiatives.

The major goal of Germany's development policy in that respect is
twofold. First, it aims at creating a growing awareness in the private
sector for their social responsibility when working in the developing
world. Second, it is geared towards singling out areas of cooperation
and launch common projects with the private sector, serving as models
for future development cooperation.

**Promoting CSR has been focusing on the following fields of action:**

-   **Raising Awareness**

The German government has initiated a round table with representatives
from several federal ministries, enterprises, trade unions and NGOs. The
group is formulating codes of conduct for private sector activities in
developing countries and is communicating these into the German business
world.

-   **Introducing Social and Environmental Standards**

GTZ is currently implementing a program to introduce acceptable social
and environmental standards in business operations worldwide. The
program targets branches of German companies in developing countries as
well as local suppliers.

-   **Promoting Fair Trade**

GTZ supports various projects to promote certification and labelling of
goods produced in developing countries. These projects aim at combining
acceptable working conditions in developing countries with international
quality standards of products and growing consumer demands for
ecologically and socially sound products.

-   **Expanding Public Private Partnerships (PPP)**

GTZ is currently implementing some 50 CSR-related projects within its
Public Private Partnership programme. In this context, GTZ is working
with both individual enterprises and business associations. From shoe
manufacturing in India, via flower production throughout Africa, to
coffee production in Mexico -- GTZ and its private partners are
planning, financing and implementing projects on a common bases, sharing
both risks and opportunities.

-   **Developing Strategies for Sustainable Private Sector Activities**

GTZ has long-term international experience in projects and programmes
that take sustainability as a prerequisite for further engagement in a
sector. In a number of conferences and workshops GTZ has lined out this
experience and gained interest within the business community involved in
projects in developing countries.

Against this background GTZ could play a vital role in (1) mainstreaming
the ideas of CSR in relation to developing countries, (2) accompanying
and advising companies in their planning and implementation activities
in developing countries. Above all long-term investment interests can,
in our view, only be achieved through integrating aspects of
sustainability and social responsibility, be it in relation to healthy
employees, a sound environment or a functioning social system. Benefits
in marketing and communication to customers and other business partners
need to be based on a real success in a triple-bottom-line business
approach.

Since CSR is no longer a topic of socially-oriented agencies but has now
through globalisation, increasing competition and shorter product life
cycles touched the business community on a much broader base, we see
potential for stronger cooperation between GTZ and the private sector.

**[Netherlands]{.underline}**

**Strategy of the Dutch Ministry of Foreign Affairs on CSR**

The Ministry of Foreign Affairs approaches corporate social
responsibility (CSR) in two ways. First of all, its aim is that Dutch
companies behave as responsible citizens in all their operations,
meaning that they will take in account all social, ecological and
economic effects of their operations. The Dutch government regards CSR
as part of the core business of an enterprise. Short-term activities,
such as sponsoring or charity, cannot be regarded as corporate social
behavior. Besides that, all companies are expected to function according
to the OECD guidelines (and to stimulate their direct suppliers to do so
too). For those companies operating in developing countries an extra
social effort is expected, such as the HIV/AIDS initiative in Ghana.
Secondly, CSR will be stimulated through programs that aim at developing
local entrepreneurship in developing countries. The ministry maintains
the OECD guidelines for Tics as criteria for CSR and fulfils its
obligations in the National Contact Point, through promoting the
guidelines and handling complaints.

To encourage CSR in developing countries, the ministry focuses on
initiating tripartite dialogues between companies, NGK's and government
so that companies, local and international, can realise what is expected
of them. A pilot project in this field has been initiated in Tanzania.
Furthermore, a strong civil society is needed to stimulate enforcement
and to keep governments and companies alert. The ministry will
strengthen local civil organisations through specific programs and
projects. The ministry also aims at broadening the discussion of CSR,
which is now a typically western discussion, to southern actors
(companies, NGK's and governments) and *in* developing countries. By
assembling best practices, experiences will be grouped and communicated,
with the help of our embassies. The Dutch centre of expertise on CSR
that will be functioning later this year will eventually take over this
function.

At the moment a lot of attention is given to social and ecological
issues. In the Netherlands, as elsewhere, human rights and social and
environmental standards form part of the discussion and are seen as
crucial. Although they are crucial, one should bear in mind that for the
developing countries other issues are also at stake. The transfers of
technology, competition or taxability are other important issues that
should be included in the discussion. The OECD guidelines focus on more
than just social and environmental issues.

One should bear in mind that CSR should not lead to new forms of
protectionism. Labelling, for example, should not lead to
counterproductive measures, blocking the market entrance for developing
countries in developed countries.

To stimulate the development of CSR, the ministries of Foreign Affairs
and Economic Affairs have decided to make it mandatory for companies
applying for specific governmental subsidies or contracts to sign a
statement that they will try to act in their regular business operations
in accordance with the OECD guidelines (introduced on 1 January 2002).
In the future, criteria will be developed for transfer of knowledge,
competition and taxability. Besides that, as of 1 February 2001
corruption, bribing foreign officials by Dutch companies, is officially
considered an offence. Finally the Dutch government is developing ways
to stimulate ethical investment. This is officially not considered to be
CSR, but the attention of the financial market may make it a part of
CSR.

[United Kingdom]{.underline}

Department For International Development (DFID)

Socially Responsible Business Team: Strategy and Activities

[Mission Statement]{.underline}

To promote and facilitate business activities that bring economic,
social and environmental value to poor people in developing countries.

## [Socially Responsible Business Team]{.underline}

The Socially Responsible Business Team (SRBT) is part of the Private
Sector Policy Department (PSPD) in the UK Department for International
Development (DFID). The SRBT was set up just over one year ago to work
on issues relating to corporate social responsibility in developing
countries and complements the work of PSPD's other teams that focus on
investment, competition and tax policy and financial sector regulation.
The SRBT leads in DFID on issues such as ethical trading, codes of
conduct, tri-sector partnerships, business and conflict, socially
responsible investment, the UN Global Compact and the OECD Guidelines
for Multinational Enterprises. It represents DFID at the
Interdepartmental Working Group on Corporate Social Responsibility
(CSR), although the Department for Trade and Industry leads on the UK
Government position on CSR. Other DFID departments lead on fair trade,
social labeling, and business and the environment.

### The role of DFID 

The role of DFID is to address the market failures that prevent socially
responsible business (SRB) practices systematically being implemented.
These include lack of, or misleading market and public information and
indices; lack of competition; lack of, or misdirected activism; poor
management; corruption; lack of business or stakeholder capacity; cost
of, or lack of access to, capital; internal company and investor focus
on short-term financial returns. We will achieve this by stimulating and
supporting the key market drivers of SRB.

#### DFID's Role in Promoting SRB

![](media/image2.jpeg){width="5.736805555555556in" height="4.1125in"}

## [Overview of activities]{.underline}

**The SRB team:**

-   supports initiatives such as the **Ethical Trading Initiative**
    (ETI), **Business Partners in Development (BPD)**, **Business Links
    Asia** and the **Resource Centre** **for the Social Dimensions of
    Business Practice** which are successfully piloting, facilitating
    and disseminating the development of best practice of Socially
    Responsible Business tools.

-   uses these tools to **influence the agenda**/rules of conduct of
    businesses and their networks.

-   **develops** **SRB tools** not just for multinationals, but also for
    the private sectors of developing countries. This will be done
    through advisory resource centres in developing countries that
    businesses in country can draw upon for country, sector and
    company-size relevant resources and information.

-   contributes to the development of international guidance on the
    implementation of standards and strategies, building on the **OECD
    Guidelines** on Multinational Enterprises and the **UN Global
    Compact**.

-   has completed scoping studies on existing **codes of conduct** and
    guidance on **triple bottom line reporting** and will work with the
    **investment community** on projects such as Just Pensions and the
    London Principles on Sustainable Finance to identify those SRI tools
    that stimulate equitable and sustainable investment in developing
    countries, and find ways to encourage them to become mainstreamed in
    the investment community.

-   supports the **World Bank** to develop such assistance to developing
    country governments and pioneering companies, exploring the tools
    and support they may need to maximize their impact.

-   builds consensus with the World Bank, the UN agencies and the UK
    Treasury to promote the role of the private sector in the **PRSP
    process**.

-   works with the **other government departments** and **other
    development agencies** to ensure more coherent and poverty-reducing
    international action on SRB.

-   works through the CARE-DFID Program Partnership Agreement to promote
    and **facilitate innovate roles for NGOs** in SRB.

-   will develop a **media and consumer awareness** **strategy** to
    communicate simply what we expect of business, and to combat false
    ideas/perceptions.

+-----------------------------------------------------------------------+
| **The Ethical Trading Initiative**                                    |
|                                                                       |
| The Ethical Trading Initiative is an alliance of companies,           |
| non-governmental organizations, and trade union organizations that is |
| identifying and promoting good practice in putting employment         |
| standards into action and is working to improve conditions of         |
| employment in the supply chains delivering goods to consumers in      |
| Britain. Its members do this by implementing, monitoring and          |
| providing guidance on a "base code" which is taken from the core ILO  |
| conventions of labor rights. They are developing guidance on the      |
| implementation of these codes and pilot projects in developing        |
| countries are implementing the code and finding solutions to the      |
| problems it raises. An increasing number of companies now want to     |
| join ETI. (<http://www.ethicaltrade.org/>)                            |
+-----------------------------------------------------------------------+

+-----------------------------------------------------------------------+
| []{#Business_Partnership .anchor}**World Bank's** [Business           |
| Partnership & Outreach Group                                          |
| (BPOG)](http://www.worldbank.org/business/03bpog.html)                |
|                                                                       |
| The BPOG, established in April 2000 and financed jointly by the Bank, |
| the International Finance Corporation, and the Multilateral           |
| Investment Guarantee Agency (MIGA), is the World Bank Group\'s center |
| of expertise on business outreach and private sector partnerships.    |
| The aim is to promote private sector engagement in developing         |
| countries that will reduce poverty, improve people\'s lives and       |
| benefit business. BPOG uses three approaches to accomplish its        |
| mission: 1) supporting business in developing countries by promoting  |
| Bank products and services; 2) promoting effective partnerships with  |
| the private sector for the purpose of alleviating poverty; 3)         |
| advocacy of the Bank's work with the private sector and how it links  |
| to poverty reduction.                                                 |
+-----------------------------------------------------------------------+

**United States of America**

**Global Development Alliance, US Agency for International Development**

Summary of CSR strategy and activities to date

Public-private alliances, as articulated by USAID's new Global
Development Alliance (GDA), are an important business model for
development assistance for the 21^st^ Century. This initiative will
serve as a catalyst to mobilize the ideas, efforts, and resources of the
public sector; corporate sector, universities, and non-governmental
organizations in support of shared objectives.

The GDA is based on the USAID's recognition of significant changes in
the assistance environment. The new reality of development assistance is
the multiplicity of actors now involved in US international development
activities. No longer are governments, international organizational and
multilateral development banks the only assistance donors. Rather, over
the past 20 years, NGO's, PVOs, cooperatives, foundations, corporations,
the higher education community, and even individuals, now provide
development assistance. In developing and transition countries,
corporate philanthropy is growing. As a result, the U.S. Government is
not the only, or perhaps even the largest, source of U.S. resources
being applied to the challenges of foreign assistance and development.

Over the past decade, it has become clear that corporations investing or
doing business overseas must be good corporate citizens. As a result,
many firms find themselves devoting considerable resources to education,
health, family planning, environment and other similar programs that are
not part of their core business expertise. In addition, it is in the
long-term business interest of corporations to take an active interest
in the welfare of the communities and countries in which they operate,
and on which they will depend for future markets. Given the expertise of
USAID and its NGO partners in implementing social services and long-term
development programs, it makes sense to facilitate linkages between
these and corporate social responsibility programs.

A small unit in USAID/Washington, the Global Development Alliance
Secretariat, is responsible for providing guidance and assistance to the
Agency field missions and bureaus in seeking, negotiating and designing
alliance activities. The GDA Secretariat reports to the office of the
USAID Administrator. In order to facilitate mainstreaming of alliance
concepts throughout the Agency, each activity will be managed by the
Agency operating unit most closely identified with the development and
objectives of the particular activity.

Global Development Alliance activities will build on the experience
USAID has already had in public-private alliances, and will be
concentrated on the three pillars of: economic growth; trade and
agriculture; global health; and democracy, conflict and humanitarian
assistance. The GDA is designed to operate at both the "macro" and the
"micro" levels. Strategic alliances can be worldwide and involve dozens
of strategic partners. They can also be highly focused and involve only
a single country, activity or pair of parties.

To learn more about the GDA, go to USAID's website at
<http://www.usaid.gov/gda/>

[^1]: Many of the ideas in this part are taken from USAID's *A User's
    Guide to Intersectoral Partnering*, November 1998.

[^2]: Further information on the triple bottom line is available from
    [**SustainAbility**](http://www.sustainability.com/home.asp).

[^3]: [See]{.underline} Donor Coordination Strategies,
    [**http://www.usaid.gov/pubs/ads/200/200sad.doc**](http://www.usaid.gov/pubs/ads/200/200sad.doc).

[^4]: [See]{.underline} ADS 303.5.10, E303.5.10, 303.5.10a and
    E303.5.10a and PVO Cost Sharing Policy,
    http://www.usaid.gov/pubs/ads/200/updates/iu2-3.pdf.

[^5]: 5 C.F.R. 2635.808 (b).

[^6]: [See]{.underline} ADS 628.5.1 and E628.5.1.

[^7]: [See]{.underline} FAA Sections 102(a), 102(b)(8) and (9), and
    601(a); and GC Opinions: FAA Section 635, No. 78 (GC/LP, Miller,
    April 7, 1997) and GG/Archives (GC/EPA, Miller, October 9, 1991).

[^8]: GG/Archives (GC/EPA, Miller, October 9, 1991).

[^9]: [See]{.underline} ADS 628.5.1.

[^10]: The broad principles in the by-laws will be supplemented by the
    Board's Framework Statement of Principles and it basic Operating
    Procedures, each the subject of a separate draft report for
    consideration by the Board.

    Note that references to the "Secretariat" and "interim Secretariat"
    in this document refer to the Secretariat of the Global Fund, not
    the GDA Secretariat within USAID.