Typically, it is a government agency that is set up as semi-independent institution reporting directly to the President or Prime Minister. Its role is to disburse grants directly to comrnunities in order to fund the construction of a public good, with the communities contributing a small proportion of the costs (varying from 5 to 20 per cent), in cash, labor or materials. The key idea behind SEFs, and other mechanisms of community driven development, is that because communities participate in choosing projects themselves, the match between what a community needs and the project it receives is much better than in a traditional "top-down" development project. Several authors have also speculated that the process of applying and obtaining funds, and constructing and managing a facility, will improve the community's capacity for collective action (e.g.: Narayan and Ebbe 1997, Rao 2001). The belief is that this will in turn result in greater social cohesion, improve the community's ability to manage its own future and set it on a sustainable path towards poverty reduction In recent months the literature on Community Driven Development, and Social Funds more specifically, has seen a spurt of growth. Conning and Kevane (2000) review the theoretical and empirical literature related to community based targeting (CBT), a specific type of CDD where the community assists in targeting poor families in order to transfer cash or food. They show that CBT possesses both positive and negative characteristics - the benefits include utilizing local information and the consequent potential improvement in targeting, but the risks are the increased opportunity of capture by elites within the community and the possibility that local preferences may not be egalitarian. Galasso and Ravallion (2001), look at this within the context of a CBT program in Bangladesh. They find that power within the community matters in how the funds are disbursed, but that targeting within the village improves with program size, lower inequality, proximity to the program office, among other things. Khwaja (2001) moves away from community based targeting to look at the community based provision of public goods in the Agha Khan Rural Support Project in Northem Pakistan. He finds that community participation in nontechnical decisions improves project maintenance, but that when communities get involved in technical decisions it results in worse projects. Repeating a theme emphasized in several papers (e.g. Abraham and Platteau 2001, Alesina et. al.) he finds that more heterogeneous communities are worse off, though better leadership seems to have a positive effect.

> The literature that focuses more specifically on Social Funds is both critical and favorable. A quantitative impact evaluation (The Social Funds 2000 study) was recently conducted by the World Bank's Social Protection Unit using micro-data from several different countries (Van Domelen, 2001). Some highlights of the findings are as follows: An analysis of data based upon randomized trials in Bolivia found that SIFs had a positive impact on educational infrastructure but did not improve educational outcomes. However, health outcomes were improved with substantial declines in child mortality. Water projects also tended to improve access and quantity of water, but did not have an impact on water quality (Newman et. al.

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