Community-based development in the context of within-group heterogeneity

With a great deal of determination, the international donor community has recently adopted a new approach to fighting poverty known as the community-based development (CBD) approach. Such an abrupt shift in donors' aid strategies is questionable, not because the approach is wrong (the opposite is actually the case), but because massive injections of aid funds into CBD projects have given rise to the entry into the field of numerous agencies with little or no experience in participatory development and a pressing need for quick and visible results, both of which threaten to undermine CBD's effectiveness in reducing poverty. The worry arises from the elite capture problem, which risks deflecting a large portion of the resources devoted to CBD into the hands of powerful groups dominating target communities. This paper both documents the elite capture problem and discusses the use of sequential and conditional disbursement procedures as a way of surmounting it. It also examines bow various elements of the aid environment, including the pressure of competition among donor agencies and the availability of aid funds, influence the share of CBD aid that reaches the poor. Finally, multilateral reputation mechanisms and intra-commumity competition for leadership are assessed as possible alternatives to sequential disbursement procedures.