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This paper consolidates and builds on Bank reports on Social Funds with a view to distilling guidance for staff. It defines the concepts of Social Fund and explains how it differs from that of a Social Action Program. It also outlines the key characteristics of a Social Fund and analyzes the financial and institutional arrangements that are necessary for its effective implementation. To date, the Bank has supported about thirty major Social Funds in twenty-four countries amounting in total to somewhat less than US$1 billion. The first independent Social Fund supported by the World Bank was in Bolivia (Emergency Social Fund I) in fiscal 1987. A vast majority of the Social Funds are located in Africa and Latin America. They are described in the final section of this paper. Since the establishment of the Social Fund in Bolivia, there has been an increasing interest in Social Funds. At present, several countries are considering their establishment. This paper aims at facilitating the process of deciding when a Social Fund is desirable and provides guidance as to its design and implementation.
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