Social Capital in the Operations and Impacts of Social Investment Funds

This paper analyzes the extent to which social capital is relevant to the operations of social funds.

Social funds have benefited from the development of concepts around social capital. The paper states that:

• Focusing on social capital as an outcome has expanded the basic mandate of social funds;
• In turn, social capital concepts have gained greater importance by being linked directly to investments for poverty reduction;
• Speculation, however, is emerging about whether social funds are the best way to support social capital strengthening;
• Social fund performance is ultimately judged on poverty impacts at the community level, which are often not obvious or direct;
• Lack of obvious poverty impacts makes it difficult to justify lending millions of dollars for social capital strengthening.

Adaptations of the social fund model have been increasing and include demand-driven rural investment funds, indigenous development funds, and community poverty reduction programs. The paper states that the future positioning of social funds and social capital depends on the evolution of the broader debate on community-driven development.