Summary of the report

What the report is about
Institutional arrangements are known to have an impact on capacity building. The work discussed in this report was undertaken to investigate the role that institutional arrangements in rural Australia play in helping and hindering capacity building, and identifies changes to institutional arrangements that would improve capacity building in rural Australia.

Background
Macadam et al (2004) (funded by the Cooperative Venture for Capacity Building (CVCB)) explored the concept of capacity building1 and developed a set of five propositions for effective capacity building in rural Australia. One of these argued that: ‘Effective capacity building depends on political and institutional commitment to the goal of capacity-building programs and the alignment with it of strategically important organisations.

The CVCB funded this research to review the institutional arrangements that affect capacity building in rural Australia. It follows on from work that explored the concept of capacity building2 and developed a set of five propositions for effective capacity building in rural Australia. One of these argued that: ‘Effective capacity building depends on political and institutional commitment to the goal of capacity-building programs and the alignment with it of strategically important organisations.
Macadam et al (2004).

Who is this report targeted at?
The target audience for this report is policy makers in State and Federal Government. It will also be useful to the Regional Bodies responsible for natural resource management in much of Australia, and to industry groups and associations.

Objectives
The aims of the study were to:

1. Review current published work on funding of capacity building activities in rural Australia
2. Prepare an inventory of organisations which fund capacity building activities in rural Australia
3. Undertake a regional case study
4. Determine the distribution of capacity building activities
5. Explore the constraints and opportunities created by the funding patterns for capacity building

Methods used
The data on which the study was based were derived from a review of literature and the web, the compilation of an inventory (based on website searches and telephone interviews) and two case studies. Entries were completed by first identifying that the organisation was involved in capacity building through documents and a website search and then followed up by contacting representatives from relevant organisations.

The first case-study looked at capacity building in the Glenelg-Hopkins Catchment Management Authority in South-West Victoria. The second looked at capacity building with respect to water use efficiency. In all, over 90 people were interviewed.

Results
The inventory has approximately 140 entries of organisation which fund capacity building. They include:

• Commonwealth Government departments
• State Government departments
• Local Government Associations and Local governments
• The research and development corporations
• Statutory bodies such as catchment authorities
• Philanthropic organisations
• Foundations and trusts.

The inventory covered the funding of capacity building, the division between public and private providers, the recipients and relevant institutional arrangements. One of the prime objectives of the inventory was to ascertain the scope of capacity building and the quantum of funds devoted to that endeavour. Forming a total picture was an impossible task for two reasons:
 

1. funding of capacity building was often not separated from other monies
2. what was described as capacity building by funders was not according to the definition used here.

It was found that 73 organisations funded 137 different capacity building programs across the public and private sectors. While the dollar figures were not always available, it appeared that the bulk of the funds come from the Commonwealth, and a much lesser amount comes from the State. Industry and private funds contribute only a small amount relative to the Commonwealth. Given the definitional difficulties mentioned earlier, this ratio also has to be read with caution. What was surprising was the range of government programs included, with, for example, 12 Commonwealth Departments involved.

The investment in capacity building at a Commonwealth level can be seen in the inventory. The main recipients of funding were both public and private providers but some funds went directly to researchers and the community. A number of recipients also act as donors.

Institutional arrangements
The most prominent institutional arrangement was that the vast majority of all funds were dispersed on a short term, competitive, project basis. There were another four dominant arrangements:
 

1. Intergovernmental agreements which were quite prescriptive, especially in the NRM field;
2. Requirement for cash or ‘in-kind’ contributions to the project such as the FarmBis contributions;
3. Much of the funding for NRM projects was tied to regional plans; and
4. Partnerships created as a consequence of the institutional arrangements of funders varied between those where the funders see a benefit for themselves and form their own partnerships, where collaboration arises cooperatively or where funders insist that applicants form partnerships.

Constraints
The constraints caused by the institutional arrangements were identified to be:

• An institutional culture which puts values on material and economic outcomes over social outcomes and which assumes it is possible to tie capacity building to set outcomes.

Organisations did not realise that generalised capacity building will increase the capability of producers to determine their own futures and not necessarily the futures prescribed for them by industry or government.

• The timing of funding rounds caused difficulties for a number of reasons such as the timing of payments not coinciding with project objectives. In some cases there was a surfeit of funds because two funding rounds arrived at the same time.
• Competition with other groups for funding was not well regarded by some groups. It was seen as unproductive by these groups and led to less sharing and cooperation between community groups who anticipated competing for the same funds.
• Application processes were seen as too difficult, especially by community groups. This, and the uncertainty of funding, was amongst the most commonly heard complaints. Often the amount of the funding was not commensurate with the time and effort involved in preparing the application.
• Funding availability was limited by specific requirements of funder organisations which were often seen as favouring one group (such as youth) or, for example, by making applications industry or sector specific.

Capacity building as a policy instrument
From the discussions with those interviewed the main messages regarding capacity building as a policy instrument were:

• Compliance needs capacity building for it to work
• Regulation alone will not work in natural resource management
• Capacity building is not a tool that should be used for coercion of change
• Women are change agents in rural industry
• Building capacity is critical for sustained, long term outcomes

Criteria for funding capacity building
One of the objectives of this work was to identify patterns in the funding of capacity building. One of the most important themes to arise from the data was the lack of planning and organisation for capacity building or discernible pattern of funding on the part of the funders.

Institutional arrangements would be greatly aided, in our view, if there was a more systematic approach. In this context the following two main criteria for the funding of capacity building have been developed:

• The concept of lower to higher order capacity building;
• The notion of public and private good.

Lower to higher order capacity building
There is a need to see the building of capacity as a progression rather than as the product of a  model.

In this research project, the focus was on those activities that can be regarded as building capacity and because of this we concentrated on three extension/education models used in agriculture: Group facilitation/ empowerment, Technology Development, and Mentoring (Coutts et al 2005). While activities using these models certainly build capacity, looking at them in isolation does not describe how the capacity of individuals, groups or organisations develops. In many situations there is a discernible progression from the development of basic level skills such as being able to perform a task, to higher order skills such as evaluation of the task. Criteria for the application of this continuum are developed in this project in relation to two groups: the clients of capacity building and the providers of capacity building. Funders could consider how applicants propose to deal with, and plan for, the lower to higher progression for both clients and providers.

Private v public good
A second way to look at capacity building outcomes is to consider the outcome for the person or organisation involved. Is the increase in knowledge, skills or attributes for the private or public good? This question has implications for funding capacity building. The level of contribution to the cost of capacity building required of a participant should be highest where there is a private good outcome and reduce to no contribution where the outcome is solely public good. This is not the case today.

The FarmBis subsidy, for example, does not discriminate between the private and public good.

There was little or no evidence in the data of the differentiation between lower or higher order capacity building (as described in Coutts and Roberts [in press]), for example, or between the public and private good.

Discussion
An inventory of organisations that fund capacity building was developed and analysed to identify the constraints and opportunities created by the funding patterns and institutional arrangements. The results from the research showed that there is adequate funding for capacity building at both the public and private levels. Capacity building is occurring in agricultural industry, natural resource management and in community development. The most negative of the institutional arrangements is the use of competitive short term funding dispersed on a project basis. Given that funding is likely to remain short-term, this study has focused on identifying ways in which the institutional arrangements can be applied within that parameter

Recommendations
The recommendations from the research fall into four categories:
1. Capacity building and its relationship to culture, attitude and practice. Capacity building funders should:

• Deal with issues associated with how capacity building is seen (for example, the value of economic/material compared to social outcomes), the misconception that capacity building is a tool to deliver external outcomes, the need to target groups other than single male farmers and the effect on capacity building of external factors such as infrastructure.
• Understand that building capacity is about empowering individuals to take control and manage their own futures. This is not always translated into an increase in productivity but it does translate into a rural community that has a better chance of managing change and being sustainable
• Improve the application process and in particular ensuring that the effort in making an application is commensurate with the amount funding being sought.
• Provide better resources for those involved in capacity building at the various levels.
• Focus on the needs of a particular group or an issue.

 2. Fostering better and new partnerships. Improvement would include better links between local researchers, practitioners and universities, more efficient ways to channel monies for capacity building, funding regional scholarships, an increased role for local government and the role of supplementary funding

3. Long term funding. This should be provided especially where there have been proven gains. The need for a long term approach relates to the progression from lower to higher levels of capacity building, amongst other factors.

 4. A regional approach to capacity building. Such an approach is valuable especially with regard to extension and community development.

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Capacity building is defined by Macadam et al (2004) as externally or internally initiated processes, designed to help individuals and groups in rural Australia to appreciate and manage their changing circumstances, with the objective of improving the stock of human, social, financial, physical and natural capital in an ethically defensible way.

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Last updated: November 2006
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http://www.rirdc.gov.au/reports/HCC/06-125sum.htm