In many cases they serve as innovators and demonstrators of new methods of decentralized participatory decision-making, management, and accountability that may be adopted for broader application by public sector organizations.
During the 1990s Social Funds spread quickly throughout Latin America and Africa with the intellectual and financial backing of the World Bank and other donors.
The first generation social funds were created to serve as short-term safety nets to soften the impact of structural adjustment policies on the poor, which was mainly achieved by providing temporary employment.
Second generation social funds have adopted more explicit institutional strategies aimed at empowerment and capacity building of communities as well as local governments in the context of decentralization.
The evaluation covered social funds in Armenia, Bolivia, Honduras, Nicaragua, Peru, and Zambia in the fields of education, health, water, and sanitation projects.