Annex I

TERMS OF PARTNERSHIP (TOP)
between the
DISTRICT DEVELOPMENT COMMITTEE DDC, __________
and
SUSTAINABLE COMMUNITY DEVELOPMEN PROGRAMME
for implementation of the Sustainable Community Development Programme

This is the TOP agreement between the District Development Committee of _________ district (hereafter referred to as the DDC and the UNDP funded Sustainable Community Development Programme (hereafter referred to as SCDP which is being executed by the National Planning Commission (NPC), for mutual collaboration, sustenance and support to implement the SCDP Programme in ________ district.

1. Scope of the Partnership

• The Sustainable Community Development Programme SCDP also called the Nepal Capacity 21 Programme, has been formulated to support the government's efforts to promote sustainable human development in Nepal. The Nepal Capacity 21 Programme was formed in line with Agenda 21 which was adopted at the 1992 Earth Summit. The Programme supports environmental conservation and protection in selected watershed areas of the district by facilitating the formation of self-governing community-based organisations CBOs and providing alternative economic development opportunities to Programme participants. The Programme emphasises the strong linkages between the social, economic and environmental aspects of development.

• Implementation of all Programme activities will be based on the following: "The Programme will focus on protection and conservation of natural resources taking watersheds as the spatial boundaries for implementing activities. In order to have protection and conservation of the environment, there is a need to promote the social and economic well-being of the communities. Thus, priority will be given to support the implementation of social, economic and environmental activities that are directly related to the sustainable use and conservation of natural resources."

• One of Environmental Management/ Social Development/ Economic Development will be selected by the support organisation (SO) as the initial entry point for implementation of the Programme activities. Initial entry point selecttion will be based on the priorities and needs of the communities in the district. Eventually the Programme will cover the other two entry points as well. The Programme will be implemented in several phases as follows:

Phase 1: During this phase, the SO will concentrate on mobilisation and formation of self-governing Community-based Organisations (CBOs) of men and women at the settlement level, initiation of entrepreneurial activities, and other activities which can be mutually discussed between SCDP and the SO.

Phase 2: During phase 2, the SO will initiate activities related to the first entry point. Entry point activities will be identified by the CBOs and implemented through CBO-formed functional groups.

Phase 3: During phase 3, the SO will work together with the communities to initiate activities related to the second entry point. This will be one of the remaining two entry points, and the second entry point will be selected by the SO. The second set of entry point activities will be identified by the CBOs and implemented through CBO-formed functional groups.

Phase 4: During phase 4, the SO will work together with the communities to initiate activities related to the third and final entry point. The final set of entry point activities will also be identified by the CBOs and implemented through CBQ-formed functional groups.

Phase 5: Based on the lessons learned, the SO will develop manuals and documents on the processes followed and methods applied for implementing the Programme's activities. The SO will work together with the CBOs and other concerned institutions to consolidate the Programme's achievements for higher impact and sustenance.

The District Development Committee and SCDP agree to the following conditions of partnership for implementation of the SCDP Programme activities:

• The DDC and SCDP agree to implement the Programme activities in the district, covering a maximum of ________ VDCs which form a watershed.

• The DDC will form a sub-committee under the DDC Act (2048-B.S) called the Sustainable Development Committee (SDC). The members of the (SDC). will be as follows: [1] The DDC Chairman will be the Chairperson of the sub-committee; [2] the National Programme Manager of SCDP will act as Member Secretary of the committee; other members of the (SDC). will be the Local Development Officer (LDO) and the District Forest Officer (DFO). The (SDC). thus formed will be endorsed by the District Council and will be recognized as a district level authority or Board that deals with environmental, watershed and natural resources management issues for the DDC The (SDC). will have a Secretariat that supports the DDC for natural resources management. SCDP will act as Secretariat to the SDC during the initial stages of the Programme.

• The DDC will provide office space and logistic support for the SDC and the Secretariat [if required]. The DDC will also commit to mobilise resources and support from line agencies within the district, local authorities and other organisations, as required so as to support the implementation of the Programme activities.

• joint efforts will be made to establish an information system related to natural resources management at the district level. The DDC will provide support staff as required and as determined by the two parties. Information generated will be utilised to develop district level natural resources management plans and programmes for use by the DDC to promote conservation and protection of natural resources.

• Joint efforts will be made by DDC and SCDP in finalising the selection of VDCs based on the criteria that the VDCs must be part of degraded watershed and the VDC must agree to provide: [1] office space for the SDF, [2] support for data collection, and [3] a minimal financial contribution from the VDC budget to support SCDP efforts.

• SCDP and, DDC in line with the Programme documents, agree that implementation of the Programme activities in the district will be done through an NGO or a Support Organisation. The Support Organisation will have a structure that is capable of implementing the Programme activities successfully. SCDP will manage the formation/development of the Support Organisation or selection of the NGO in coordination with the DDC.

• SCDP will provide financial resources, through the Support Organisation for implementation of the Programme activities, as follows:

1. Total input will be US$ ________
2. 15-20% of the total input can be allocated for operational costs of the SDF (depending on the geographical location of the district)
3. 50-60% is allocated to the SDF Credit Capital Fund, which is used to provide credit to CBO members
4. 15-20% is allocated to the SDF Seed Grant Fund, which is used to provide grant assistance for rural infrastructure development and environmental management activities in the Programme VDCs
5. 10-15% is allocated to the SDF Human Resources Development Fund, which is used to support training activities and other capacity building activities

• the returns from the Credit Capital Fund loans and interest earned from the other accounts will be used to sustain the operations of the Support Organisation.

• The SCDP will provide financial resources to the Support Organisation under a separate Contractual Agreement between the Support Organisation and SCDP

• All accounting will be completed in Nepalese Rupees according to the UN ex-change rate at the time the funds are released.

• In addition to the support activities mentioned above, SCDP) will make provisions for in-country study tours, primarily to other SCDP) Programme sites and other conservation-oriented development projects. SCDP) will also arrange for networking among the participating (VDCs) and NGOs that are implementing SCDP) activities, and for training and developing a cadre of professional personnel to support SCDP) related activities in the district. SCDP) will provide financial resources to the Secretariat once proposals for implementing the above activities are developed and approved.

• The (DDC) commits itself to sustain the efforts of SCDP) and will mobilise the support of line agencies, government agencies and other agencies.

3. Duration of Support and Provision for Amendments:

• SCDP) and the (DDC) agree that the provisions made under this partnership agreement are subject to change based on mutual consent.

• The TOP will remain valid from _________ to the end of ______________ unless otherwise extended. However, establishment of the Sustainable Develop ment Facility is expected to create conditions for continuation of SCDP) efforts in the selected (VDCs) through the support of the NGO/ Support Organisation. Mutual agreement will be made at the end of SCDP's direct support as to how the operations of the Sustainable Development Facility and the Support Organisation will be continued in the future, primarily with local resources.

Both the (DDC) and SCDP) agree to the above arrangements for implementation of Programme activities. By affixing our signature below, we the undersigned on behalf of the SCDP and DDC hereby fully agree to be abide by the conditions contained within this TOP document prepared on __________. This TOP is drawn up in two originals, one for each signing party.

This is the LOA between the Support Organisation, ___________________ of ____________ District, (hereafter referred to as the SO) and the UNDP-funded Sustainable Community Development Programme (hereafter referred to as SCDP which is being executed by the National Planning Commission (NPC), for mutual collaboration, sustenance and support to implement the SCDP Programme in __________ district.

1.1 This is the LOA between the SUSTAINABLE COMMUNITY DEVELOPMENT

PROGRAMME and of district, which will serve as the SUPPORT ORGANISATION (hereafter referred to as the SO), that is responsible for implementing SCDP activities in district.

1.2 The SO agrees to implement the SCDP activities based on the general provisions mentioned in this LOA and will consult the SCDP management for further guidance during Programme implementation. The SO shall be totally responsible for implementing Programme activities. The SO is required to refer to the SCDP Project Document and the Terms of Partnership (TOP) agreement between the District Development Committee (DDC) of the district and SCDP The SO recognises that the SCDP is process-oriented and is directed at developing SO-DDC partnerships, strengthening the capacity of the SO, disseminating information and networking with other non-governmental organisations (NGOs) and community-based organisations CBOs and implementing the SCDP model for sustainable human development which links social, economic and environmental aspects of development.

Under this LOA, the SO will make arrangements for implementing Programme activities in up to _ Village Development Committees VDCs that form a watershed in the district. Selection of VDCs will be done by the SCDP management in coordination with

the DDCs based on analytical information related to the environment. The VDCs will be covered as follows:

• Programme activities will be initiated in 3 VDCs at first, to develop partnerships with the respective communities and learn which approaches are most effective. Based on the initial experiences, the Programme can then be expanded into a total of ________ VDCs.

• The SO will make arrangements for expansion and replication of Programme activities into new VDCs based on the recommendations of the SCDP management, and expansion will be carried out in consultation with SCDP management.

2.1 The SO will implement SCDP activities with Environmental Management / Social Development / Economic Development (circle one) as the initial Programme entry point. The SO will implement the SCDP activities according to the following phases:

• Phase 1: During this phase, the SO will concentrate on forming self-governing Community-based organisations CBO at the settlement level. The CBOs can be all women, all men, or mixed (both men and women). Once CBOs are formed, the SO will help the CBO members initiate CBO level savings and credit schemes, entrepreneurial activities, and other activities which can be mutually discussed between the SCDP and the SO. The SO and the CBOs will maintain a database on their members' savings status.
• Phase 2: During phase 2, the SO will initiate activities related to the first entry point (either environmental management, social development or economic development). The SO will assist the CBOs to develop entry point work-plans, which identify the activities that the CBOs will undertake related to the entry point. The entry point activities identified by the CBOs will be implemented through CBO-formed functional groups.
• Phase 3: During phase 3, the SO will work together with the communities to initiate activities related to the second entry point. This will be one of the remaining two entry points, and the second entry point will be selected by the SO. The second set of entry point activities will be identified by the CBOs (in a work-plan) and implemented through CBO-formed functional groups.
• Phase 4: During phase 4, the SO will work together with the communities to initiate activities related to the third and final entry point. The final set of entry point activities will also be identified by the CBOs and implemented through CBO-formed functional groups.
• Phase 5: Based on the lessons learned, the SO will develop manuals and documents on the processes followed and methods applied for implementing the Programme's activities. The SO will work together with the (CBOs). and other concerned institutions to consolidate the Programme's achievements for higher impact and sustenance.

2.2  Phase 1 activities will be initiated after the SO staff are trained by SCDP The SO will be solely responsible for determining when a new phase will begin. However, a new phase of activities will only be initiated after the SO team has been trained and oriented by SCDP on the tools and techniques that pertain to the new phase. It is recommended that the SO follow a "quarterly approach" to implementing new activities and new phases.

2.3  The SO will identify CBO members and/or functional group members as potential candidates for becoming Programme auditors. The SO will train the selected candidates to be management, finance and performance auditors. All organisations will procure the services of the auditors and all audits will be done transparently and publicly.

2.4  SCDP will ensure appropriate consultation with the DDC and the DDC sub-committee [the Sustainable Development Committee (SDC)]. Ideas put forth by the DDC and the sub-committee will be relayed to the SO by SCDP SCDP will provide funding to the SO for networking activities. Networking activities should contribute towards the formation of revenues or resources for sustenance of the Programme activities. Networking activities should be geared towards sharing experiences and developing new ideas for improving the performance of the Programme. Networking activities will be carried out among the CBO members, functional group members, and entrepreneurs, at the VDC and DDC levels.

2.5  SCDP, the DDC and the DDC sub-committee will mobilise resources from the local authorities and the concerned line agencies to support the Programme activities. SCDP will make special efforts to mobilise resources from the agencies represented in the DDC sub-committee (the Sustainable Development Committee (SDC)].

2.6  The SO will initiate activities related to each phase based on mutual agreement and understanding between the SCDP and the SO. The SO will be responsible for organising consultative meetings with the SCDP as required to initiate a new phase, or to obtain support for innovative ideas that develop either during the implementation process or through the SO's interactions with the communities.

2.7  Implementation of all phases and activities will be based on the following: "The Programme will focus on protection and conservation of natural resources taking watersheds as the spatial boundaries for implementing activities. In order to have protection and conservation of the environment, there is a need to promote the social and economic well-being of the communities. Thus, priority will be given to support the implementation of social, economic and environmental activities that are directly related in the conservation of natural resources."

2.8 The SO will utilise the manuals developed by UNDP to guide the formation of self-governing institutions (CBOs). SCDP will ensure that SO is provided with the manuals and that SO staff are trained. The following manuals are recommended:

• Formation of settlement-based Community Organisation (manual developed by the Local Governance Programme or the Participatory District Development Programme or the Parks and People Programme);
• Manual on "How to Form Cooperative Self-help organisations" prepared by the Local Governance Programme.
• Manuals on "How to Organise User Groups" prepared by the Participatory District Development Programme.
• "Manual on Savings and Credit" prepared by the South Asia Poverty Alleviation Programme;
• Other documents as provided by the SCDP or developed by the SO itself in consultation with the SCDR

2.9 SCDP will provide the SO with a copy of the implementation strategy prepared by SCDP for implementation of the Programme activities.

3.1  Initiation of Programme activities by SCDP will be based on a Terms of Partnership (TOP) agreement between SCDP and the DDC. Under the arrangement between the DDC and SCDP, the DDC is to form a sub-committee (based on the DDC Act) called the Sustainable Development Committee (SDC) which will be responsible for guiding the Programme activities in the district.

3.2  The Programme activities will be implemented by the SO in accordance with this LOA arrangement with the SCDP Ownership over the Programme at the district level will rest with the DDC and the DDC sub-committee (the SDC). SCDP and the SO will provide technical support to the DDC. The SO shall operate the Programme under the title "Sustainable Community Development Programme".

3.3  The SO will responsible for forming a team of professionals who will implement the Programme activities. The SO will be responsible for determining the structure and composition of the team. SCDP will provide a minimal contribution towards the cost of operation, as is indicated in this agreement, however, the SO may mobilise its own resources or resources from other sources to support its professional team. The minimal composition of the team should be as follows:

• Sustainable Development Coordinator, or Team Leader - preferably with social forestry or natural resources management background.
• Natural Resources Management Officer- with background and experience in forestry or agriculture.
• Technical Officer- with engineering related background.
• Credit Officer- with background in savings and credit related work.
• Community Officers- preferably one for every 3 VDCs, with forestry related background.
• Community Activists- preferably one (woman) for each VDC should be from the local area itself

3.4 The SO will recruit or form a team of project staff from the local area itself, as far as possible. The SO will also follow its own administrative and personnel policies to implement the activities. The SCDP may advise the SO and the team of how to strengthen the institutional capabilities of the SO and the team during implementation of SCDP activities. Building the institutional capabilities of the SO and the team is also an objective of the SCDP

3.5 Only candidates who have been trained on SCDP approaches and practices will be eligible to be part of the project team. The SO will seek advice from the SCDP management before recruiting project staff to ensure that selection of candidates is based on the evaluations made during the SCDP training.

4.1 The total funding available for Programme activities is US$ _______ (funding will be done in Nepalese Rupees at the UN exchange rate of US$ _____ applicable at the time of fund release). SCDP will provide funding to support Programme activities as follows:

• 15-20% of the funds, i.e. US$ will be allocated to the SO to meet the SO's operational costs. The SO will be entirely responsible for use of the operational cost funds. The SO will inform the SCDP management of its operational costs and of it's use of funds.

• US$ ______ will be allocated to the Sustainable Development Facility Fund (SDFF) which will be used to support Programme activities. The Sustainable Development Facility Fund will be further divided into 3 funds: the Credit Capital Fund (CCF) US$ ______, the Seed Grant Fund (SGF) US$ ______, and the Human Resources Development Fund (HRDF) US$ _____. The SO will provide loans to the CBO members from the CCF. Infrastructure development and environmental management activities will be co-funded through the SGF, and the SO will use the HRDF to fund training and capacity building exercises. The SO will be responsible for developing institutional mechanisms which will guide the use of the Sustainable Development Facility Fund at the community level. The SO will consult with and seek the endorsement of the SCDP on the institutional system that is developed and utilised. Formation of the SDFF will take into consideration the following minimal requirement:

• Interest rates to be applied for provision of support from the CCF will be based on prevailing local market areas.
• Resources from the CCF will be utilised based on using the ideas of social collateral, i.e. the formation of organisations and also based on assets these organisations are able to generate for their own development.
• Both the interest and principle amount will be returned to the SDFF.
• 1-2% of the interest returns on CCF loans can be utilised by the SO as "incentives" for the staff.
• The remaining interest from CCF loans (total interest minus 1-2%) will be utilised to meet the operational costs of the SO.

4.2  Except for the operational budget, the resources allocated for the SO will be utilized under joint approval of the Sustainable Development Coordinator / Team leader as appointed by the SO and the representative officer from SCDP SCDP reserves the right to make amendments as to how the Facility Fund is to be utilised in the long-, term.

4.3  Resources allocated for operational costs will be managed solely by the SO. The SO will provide reports on all expenditures to SCDP on a monthly, quarterly and annual basis.

4.4  All equipment and other forms of support provided to the SO by SCDP will remain under the ownership of SCDP unless it is officially handed over to the SO or any other organisation by SCDP

4.5  SCDP will release funds to the SO on a quarterly basis as per approved work-plan (see 5.2) and budget.

4.6  As each of the four SDF funds are meant for specific purposes, transferring funds form one fund to another is not allowed. As per the UNDP rule and regulation, SCDP will carry out an annual audit of the Programme.

4.7  All financial transactions mentioned above will be completed in Nepalese Rupees according to the UN exchange rate at the time the funds are released.

5.1  The SO will be responsible for developing and maintaining a database on social, economic and environmental issues in the Programme VDCs. The database should be a monitoring tool which can be used to measure the impact of the SO efforts (and the SCDP's investment) in terms of improving the lives of the communities and also in the management of natural resources by the community-based organisations. The SO will be responsible for conducting a baseline survey prior to entering a VDC and assessing the impact of the Programme on the communities on an annual basis.

5.2  In accordance with the demands of the Programme CBOs the SO will prepare annual and quarterly work-plans for implementing the Programme activities. Workplans will be completed according to the work-plan format developed by SCDP The work-plans should include the following information: [1] the activities to be undertaken; [2] the location of implementation; [3] the beneficiary institution(s); [4] the schedule for implementation; [5] the budget, and [6] the process involved. The workplan should specify in which VDC the investment will be made.

5.3  The SO will closely observe and maintain the following information: [1] the initiatives taken by community-based organisations and functional groups; [2] the activities undertaken by CBOs both with and without SCDP support; [3] the total number of members in each CBO, and the division of gender in mixed CBOs [4] the investments made and activities undertaken; [5] the per capita cost of the activities the cost-benefit ratio; and [7] other pertinent information.

5.4  The SO will prepare quarterly and annual progress reports which should outline the progress being made in the VDCs. All progress reports must contain information regarding the processes undertaken and document successful activities.

5.5  The SO will organise quarterly and annual review meetings during which the SO and SCDP will review the SO's performance and develop the SO's next work-plan.

5.6  The Monitoring and Communication Specialist, with support from the Research and Training Specialist, on behalf of the SCDP will independently monitor and document the SO's activities through action research.

6.1  This LOA can be amended under mutual consultation.

6.2  SCDP will reserve the right to terminate this agreement (with one month's notice) if SCDP is convinced that the SO is not capable of or is not implementing Programme activities based on this agreement or based on mutual consultations.

6.3  Any conflict that may arise between the SO and SCDP during the implementation of this Programme should be resolved through consultations between the SO and SCDP If such conflicts can not be resolved through consultations, and if the conflicts are not supportive of the Programme, SCDP reserves the right to terminate this agreement and utilise another agency to continue the operations of the Programme.

6.4  If this agreement between the SO and SCDP is terminated, all remaining resources provided by SCDP to the SO will be returned to the SCDP within 15 days from the date of agreement termination.

7.1 This LOA will be valid, until and unless it is extended, from ______ until the end of ___________

Both the SCDP and DDC/SO agree to the above arrangements for implementing the SCDP Programme activities. By affixing our signature below, we the undersigned on behalf of the SCDP and the SO hereby fully agree to abide by the conditions contained within this LOA document prepared on _________. This LOA is drawn up in two originals, one for each signing party.