Country: United States
Organization: Mercy Corps
2) Sector of activity: Livelihood
3) Description of your products or services: Following the massive displacement and loss of livelihood in Aceh after the Tsunami, Mercy Corps used cash grants to communities and associations in order to jump-start pre- existing small businesses and facilitate community return. Mercy Corps extended cash grants to associations, business- owners who previously employed workers and to livelihoods groups. Cash grants were provided on a one-time basis to an employer or an association/ community with a constant membership in order to replace equipment and assets destroyed and lost, essentially serving as an ‘in lieu’ insurance payment. Approximately 350 cash grants were disbursed to a diverse range of associations in 40 communities and an additional 300 cash grants are currently in process of being disbursed. Many of the grants have benefited women with businesses such as traditional cake makers, tailors, embroiderers and mushroom producers.
That people are returning to their villages and rebuilding their lives using whatever scant resources are available to them is a testament to the potential of what one development specialist at the Harvard Business School terms a “Strategy of Emergence.” This cash-based approach encourages trade, production, and creates economic knock- on benefits, and also allows victims greater choice and control over how they will rebuild their lives, thus helping to restore their dignity as well as their livelihoods.
4) Description of innovation: Mercy Corps’ cash grant strategy promotes decision-making at a community and individual level. Traditional interventions help communities rebuild their livelihoods after major disasters by providing pre-determined material inputs (e.g. chickens, goats, seeds and tools, non-food items). Although experimental cash- and voucher based interventions have been piloted in other disaster response settings, Mercy Corps was the first to extend cash grants as a wide-spread return- and recovery strategy in Aceh. This approach was highly controversial initially, especially for institutional donors who were skeptical about the communities’ ability to manage cash grants in emergency contexts and/or the ability of an NGO to provide adequate oversight. However, international agencies recognized the merits of the cash grants approach and soon began to implement similar methodologies in their programs in other parts of Aceh.
The community, through meetings facilitated by Mercy Corps staff, picked trusted representatives from each neighborhood who became co-signatories to a bank account. The representatives were responsible for keeping records that would satisfy the needs of the community. Transparency boards were used to post project signatories and budgets, and inform community members about the status of projects in their community. These public bulletin boards also serve as resources where other active agencies can publicize their activities on-site and minimize duplication of effort.
5) Description of the financial model: Cash grants form part of a four-step process to enable the community to graduate towards regular loans: 1) Cash-for- work, 2) Cash Grants as outlined above, 3) Conditional grants (where participants pay back the money with no interest to a revolving fund) 4) Bank guarantees for entrepreneurs. Mercy Corps believes that this graduated approach builds the confidence of individuals to reinvest and restart businesses and livelihoods while giving finance institutions also the time to recover and to adopt post-disaster strategies for stimulating markets. Over time the livelihoods grants are phasing into more business- focused approaches, direct implementation and technical advice.
Cash grants were envisioned to be an important intermediate step that will enable individuals and communities to reestablish their livelihood. They were not intended as a long-term, sustainable solution. These grants will help to prepare small businesses to obtain commercial sources of funding if needed. Thus, cash grant recipients may be considered eligible to receive support from Mercy Corps’ Financial Access Program, which provides technical advice, material inputs and linkages to financial access programs.
Client fees represent this approximate percentage of operational budget: 0%
6) Key operational partnership: As mentioned earlier, Mercy Corps has partnered with ODI and Johns Hopkins University in order to improve its monitoring and evaluation systems. Johns Hopkins University (JHU) provides support and training in survey and evaluation design as well as in baseline, impact assessments and data analysis. Mercy Corps’ and JHU’ data are of interest to the larger relief community and information will be released and findings circulated as soon as they are available. Mercy Corps and Johns Hopkins University have just finalized two articles on the impact of Mercy Corps’ Cash for Work programs in Aceh which will be published in summer 2006.
Mercy Corps is furthermore participating in a Cash Interventions Study of the Overseas Development Institute (ODI) and a consortium of NGOs to assess the impact of cash infusions in post-tsunami conditions. The findings of the evaluation will be published and will form an important basis for future cash interventions in complex emergencies.
7) State of implementation:
We are at the Mature stage. Initially, Mercy Corps directly channeled its program resources to support communities’ initial returns and livelihoods reestablishment by infusing cash into the economy. Through a flexible, demand-driven approach, interventions have evolved quickly from emergency relief to longer term recovery. By maintaining demand-based programs, Mercy Corps’ interventions respond to the real needs that communities identify. While working within this framework, Mercy Corps is incorporating long-term community development principles in order to integrate sustainability strategies in target communities. The cornerstone of community development is establishing accountable and representative village structures and civic organizations. These structures are active in the identification, prioritization and implementation of community projects and advocate for needs with local authorities and donors.
What institutions, communities, populations or geographic areas have benefited most from your product/service? Cash grants have been targeted at individuals, small businesses and associations located in 40 tsunami affected communities in Banda Aceh, Aceh Besar, Meulaboh and Aceh Barat districts by increasing livelihood security through replacement of equipment and assets lost. Community cash grants and livelihoods cash grants were targeted at communities which are capable of sustaining return and motivated to re-start their livelihoods. Cash infusions are much quicker, facilitating a much more rapid return and restoration process as well as supporting the local banking industry and supporting local markets. Cash was much faster logistically than the traditional material aid and facilitated a much closer relationship with communities.
What specific partnerships do you need to be successful? Continued support of the Indonesian government at all levels, is essential for the success of the program. To date, all Mercy Corps activities have been closely coordinated with all levels of Government. Mercy Corps works directly with the Sub-Districts heads, and all village activities fully integrate the head of village or other identified leaders (many government officials died in the tsunami). Mercy Corps conducts meetings with relevant line ministries, including regular coordination with the Ministry of Public Works, Ministry of Mines, and the Department of Sanitation. Mercy Corps coordinates its activities with Aceh Reconstruction Council, specifically through submission of monthly program reports and by updating the Mercy Corps data on the newly established government database.
8) Replication strategy or expectation:
What plan, if any, do you have for replicating your disaster strategy? What policy, legal or institutional constraints must be overcome for you to be successful?
Mercy Corps is partnering with various institutions including Johns Hopkins University and the Overseas Development Institute to monitor the impact of these programs vs traditional material input programming. This will enable the agency to understand how and where they can be replicated in the future. We are also coordinating with other NGOs in Aceh who are implementing similar programs to share best practices and lessons learned.
We then plan to develop this model for sharing within the agency and with peer organizations to be considered during the early response to future emergencies.
Which specific areas - and why - in your field would benefit most from investment by corporations, foundations, and other investors:
Private investors, foundations and corporations who are interested in a non-traditional material humanitarian aid response to natural disasters can participate in cutting edge programming that may significantly reduce logistical time and effort in delivery assistance during the developmental relief phase and support the natural local economy.
9) The organization: How does the initiative fit with your overall organization's strategic goals and priorities? How did the initiative start?
Mercy Corps’ mission is to create ‘secure, just, productive communities’ through promoting the human rights principles of accountability, participation and peaceful change. Providing associations and communities with cash grants that they are then responsible for allocating transparently within their membership gets directly to the heart of the mission while ensuring that accountability and participation are fostered to reduce the uses these three principles to help individuals directly recover after a disaster.
9a) Is there a social entrepreneur behind this idea?
The initiative was born out of creative brainstorming from a small collective group of Mercy Corps staff and external advisors and cannot be attributed to any one person. Most important was that all of them shared a passion for looking for new, more effective ways to provide emergency response. In the midst of the chaos of emergency response it can be hard to create the time and space to develop new ways of doing things (there is a tendency to roll out tried and tested solutions). The fact that all of these people were able to look beyond traditional mechanisms is a testimony to their entrepreneurial spirits. This commitment emerged from the fact that all of them were experienced emergency responders and were continually challenging themselves to do better.
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10) On the mosaic diagram, which of these factors is the primary focus of your work?
- Factor: Poorly deployed external aid weakens communities
- Principle: Enable everyday changemakers to lead
Contact Information:
Name: Anna Young - Senior Program Officer for New Initiatives
Organization: Mercy Corps
Mailing address: 3015 SW 1st Ave, Portland, OR 97201
Country: United States
Email:
ayoung@mercycorps.org
Tel: 503 7966800 ext 372
Fax: 503 7966844
Website: www.mercycorps.org
Organization's legal status: 501(c)3 charitable organization
Number of Employees: 2,100
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