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Performance Based Payments Low Value Grants & On granting

E. BAQUERO. Performance Based Payments Low Value Grants & On granting. UNDP’s New Financing Instruments. 1. Performance Based Payments. Approved and Ready for Use. 2. 3. Low Value Grants. On-Granting. 1. Performance Based Payments.

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Performance Based Payments Low Value Grants & On granting

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  1. E. BAQUERO Performance Based Payments Low Value Grants & On granting

  2. UNDP’s New Financing Instruments 1 • Performance Based Payments Approved and Ready for Use 2 3 Low Value Grants • On-Granting

  3. 1. Performance Based Payments A Performance Based Payment (PBP) agreement is defined as a financing arrangement that provides funding based on achieving certain project-specific development results. i.e. the payment is ex-post vis-à-vis the targeted development result Performance Based Payments (PBPs) Pay-for-Result

  4. Key Characteristics of PBPs – UNDP Context • Increases focus on measurable and sustainable development results, validated by an Independent Assessor • Reduced payments envisaged for near-misses or partial achievement of results • Payments are ex-post delivery of results • No advances or prepayments provided to the RP. It must be financially viable and able to bear upfront costs • Accompanied by reduction in assurance and monitoring activities • Reputational risks remain and must be managed • Low Value Performance Based Payments • For low value projects, i.e. $300K (total) or less • Results validated by the Project Board (and not IA)

  5. Definition & Use 2 • Formerly known as ‘Micro-Capital Grants’ – not new instrument per se but refinement of existing instrument • Programmatic modality – NOT procurement • Positive definition based on purpose – a grantee is NOT a Responsible Party (RP) • The use of LVGs should be specified in the project document, to the extent possible, and included in the multi-year total budget and work plan. LVGs may be one component of a broader project, or the sole purpose of the project may be to deliver LVGs • Can still be used for credit activities in certain cases but must follow protocols (now under development by UNCDF) Low Value Grants Low-value grants are cash awards – selected via programmatic decisions – to civil society and non-governmental partners intended to generate and solicit development solutions for which no repayment is typically required.

  6. Purpose 2 Low Value Grants • Potential purposes of using LVGs (not exclusive): • Strengthening the institutional capacity of entities critical for achieving development objectives; • Supporting community-based self-help initiatives; • Supporting NGOs and community-based organizations involved with nature-based solutions, climate change actions, gender equality and poverty eradication activities; and/or

  7. LVGs versus other modalities 2 Low Value Grants • An LVG cannot be used in lieu of an appropriate modality to provide goods or services to the project or implement standardized project activities and/or produce outputs which could otherwise be done more cost effectively through procurement actions • Innovation Challenges are defined as prized challenges that Business Units (Country Offices) organize to solicit innovative ideas and solutions to address development challenges which cannot be achieved through traditional solicitation processes. Policy is in Procurement Section of the POPP. • Cash thresholds for innovation challenge prizes are lower than for LVGs (max 40k per award) and they can be awarded to private sector entities

  8. ¿What has not changed in the new policy? 2 Low Value Grants • Private sector and for-profit entities, as well as government organizations, are not eligible for LVGs. • FRRs limit funding provided by an implementing partner directly to any individual grant recipient to $150,000 per individual grant • And $300,000 on a cumulative basis within the same programme period.

  9. Restriction on LVGs in certain projects 2 Low Value Grants • LVGs should only be used in projects where the donor funding the development project has approved their usage as a programmatic instrument. • For example, UNDP is currently restricted from using Low Value Grants in development projects funded by the Green Climate Fund (GCF)

  10. Definition • NEW modality under LVG Policy • Indirect grant-making process since UNDP and the grantees have no direct relationship as in direct granting • Entity must show that they have capacity to take on role – NEW on-granting capacity assessment (44 questions on grant design, solicitation, assessment, award, monitoring/ reporting) • UNDP’s role to entity can include technical assistance Arrangement where UNDP provides funds to an IP or RP, who then awards grants to Grant Recipient(s), following certain specified guidelines and appropriate due diligence of their capacity 3 On-Granting

  11. Key Features • Grant-making institution is responsible for managing the grant program, including: • Selecting grant recipients based on clear criteria and transparent processes • Disbursing funds to grant recipients • Performing periodic monitoring and assurance activities • Consolidating reports (financial and narrative) from grant recipients and submitting to UNDP • UNDP is responsible for assessing the grant-making institution to ensure it has the programmatic, financial and management capacities and systems to effectively undertake its roles, i.e.: • A framework/system for undertaking grant proposal evaluation and due diligence • Appropriate governance and risk management capacities • Relevant track record in managing resources through grant awards • Transparency, including systems and processes to make information on grant recipients public • Thresholds are lower if made through RP (cannot exceed $60,000 per individual grant and $120,000 on a cumulative basis) 2 On-Granting

  12. Preguntas y respuestas

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