183-0230: Local Governments are Making Responsive choices and Acting on them 
Effectively and Accountably 
Performance goal: Local governments increasingly represent and meet the needs of their 
citizens by improving their transparency, effectiveness and accountability
Strategic & Special Objective Closeout Report: USAID/Bulgaria 
Table of Contents 
Key Data Points 
Background 
Summary of Overall Impact at SO and IR Levels 
Summary of Activities 
· Local Government Initiative 
· City Links 
· Grant to FLGR 
· Grant to NAMRB 
· PLEDGE 
· Ethnic Integration 
· Community Foundations and Social Enterprises 
· Chitalishte 
Prospects for Long-Term Sustainability of Impact and Principal Threats to Sustainability 
Lessons Learned 
SO Level Performance Indicators Reviewed 
USAID Reports and Assessments 
Key Contacts 
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Strategic Objective Close-Out Report 
SO Name: Local Governance More Effective and Accountable 
SO Number: 2.3 
Approval Date: 1998, revised 2003 
Geographic Area: Bulgaria 
Total Cost: $54,801,000 
USAID: $54,801,000 
Mission Funding $54,801,000 
Global Support 
Total USAID Funding $54,801,000 
 
Principle Implementing Partners: 
 Research Triangle Institute (RTI) 
 International City/County Management Association (ICMA) 
Foundation for Local Government Reform (FLGR) 
National Association of Municipalities in the Republic of Bulgaria (NAMRB) 
Worldwide Strategies, Inc. (PLEDGE) 
Partners-Bulgaria Foundation (PBF) 
 Counterpart International (CI) 
 Trust for Civil Society in Central and Eastern Europe (CEE Trust) 
 UNDP (Chitalishte Project) 
Major Counterparts: 
Government of Bulgaria 
All Bulgarian Municipalities 
NGOs 
Businesses 
 
Background 
Local government under socialism was simply an extension of the central government. Under 
the successive Constitutions of 1947 and 1971, local government existed as the local body of 
state power, a highly centralized model. Local managers were intended solely to implement the 
policies and plans developed at the central level, exercising little local initiative. During the 
later phase of socialism, local governing structures included 28 oblasts (regions or districts) and 
municipalities, each with a people’s council and an executive committee that, in effect, 
managed the locality. 
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Following the democratic election of a Grand National Assembly in 1990, in which seven 
political parties were represented, the former local government councils and committees were 
dismissed. New, temporary committees were appointed based, in part, on political party 
representation in the Grand National Assembly. In many localities, this brought into power a 
new set of actors with no prior governing experience, but the desire to govern differently. 
Although temporary, these committees gave many new aspiring local politicians visibility and a 
chance to demonstrate leadership. At the same time, the change required them to exercise new 
management and decision-making styles. In May 1991, the new Constitution was approved. 
Along with a new parliamentary structure, it created local self-government and regional 
administration. Subsequently, the new Parliament passed the Local Self-Government and Local 
Administration Act (LSGLAA). It defined the powers of local government with a directly 
elected mayor and a proportionally elected municipal council. The first democratic local 
government elections were held in November 1991. The profound nature of this transition 
should not be underestimated. First, it brought a new degree of independence to local decision 
making. In midsized and larger cities, the new leadership embraced this independence, but with 
little knowledge of how to implement it. Conversely, in many of the smaller municipalities, 
where the Socialist (former Communist) Party dominated, local leaders looked for strong 
guidance from central party headquarters, reflecting the earlier power arrangements. However, 
in the early days of the transition, the central government was concerned with its own transition 
and offered little support to the fledgling local governments. In addition, few citizens 
appreciated the freedoms provided under the democratic Constitution so the desire to express 
opinions and participate in democratic decision making was extremely low. Indeed, many 
citizens reacted against the forced participation under the socialist regime - democratic culture 
was only nascent at best. Although municipal councils were generally dominated by one party, 
several parties were represented, requiring tolerance for opposing points of view and additional 
negotiation to make decisions. Municipal elections were successfully held at four-year intervals. 
A core of reform-minded mayors emerged, often those willing to cross political boundaries for 
the good of their localities and willing to introduce new, Western-style management techniques. 
Groups of municipalities realized that by creating regional associations (RAMs), they could 
share experiences and help each other through uncharted waters. In 1992, the Rhodope Regional 
Association of Municipalities and the Regional Association of Black Sea Local Authorities 
were established. In 1995, the Foundation for Local Government Reform (FLGR) was 
established by a group of reform-minded mayors who had lobbied for changes in the LSGLAA. 
The FLGR was established as an “independent professional resource center supporting local 
democracy.” The National Association of Municipalities of the Republic of Bulgaria (NAMRB) 
was created in 1996, replacing previously partisan-based municipal associations, through 
considerable effort by a core of mayors from both the left and right political parties who argued 
for a single voice to represent municipal interests. 
USAID provided more than $50 million between 1991 and 2007 under a series of Local 
Government Initiatives and direct grants to local government support organizations (LGSO) and 
community-based organizations to reform and decentralize Bulgaria’s local government system 
to make it more effective and accountable. USAID assisted selected municipalities as well as 
municipal organizations and associations. Intensive training programs and study tours, twinning 
of Bulgarian municipalities with U.S. counterparts, technical advice, and small grants all helped 
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local governments strengthen their capacities and develop new models for better serving their 
constituents. These models included the highly successful “one-stop shops” to improve service 
delivery, data systems to manage municipal information needs, local economic development 
offices, and public-private partnerships for developing infrastructure. All of these and other 
models were widely replicated by other municipalities. 
More effective and accountable local governance can be achieved when both municipalities and 
local communities engage more actively in community building. The ability of the municipal 
governments, NGOs and the private sector to address community building issues and to preserve 
social peace through conflict prevention and resolution and further inclusion of marginalized 
groups in policy-decision-making primarily shapes citizens’ perceptions of good local 
governance. Bulgaria is a relatively tolerant country that has avoided the violence and extremism 
of its neighbors. However, there are groups in the society who the government and the majority 
members of the society have marginalized and made vulnerable by intolerance, and prejudice, 
and a mutual lack of understanding exists. While there are NGOs who advocate on behalf of 
vulnerable groups, little progress has been made to bring them into the mainstream of the 
society, to meaningfully address their needs, and to mitigate the potential for social unrest. Roma 
represent the most marginalized and socially excluded group. 
Under SO 2.3, USAID addressed also ethnic integration issues by introducing new community 
based models for conflict prevention and dispute resolution, as well as new approaches for 
improving the living conditions of minority groups by increasing their access to education, 
business opportunities and social services. USAID also introduced a new funding mechanism 
(community foundation), which seeks increased participation by businesses, citizens, local 
governments and NGO. 
Summary of overall impact at SO level and IR level 
The impact of activities under this SO is reflected in: 
The local government reforms promoted and driven by USAID’s Local Government Initiative 
(LGI) fundamentally changed the way that Bulgarian municipalities were managed and 
municipal services were financed and, in the process, altered the relationship between the central 
and local governments. The reforms were instituted on a rolling basis and culminated in 2007 in 
a constitutional amendment to allow municipalities to set their own tax rates. All key 
legislative acts in Bulgaria’s local government sector are a direct result of USAID’s local 
government programs. 
 
IR 2.3.1: Authority, Responsibility and Resources Decentralized to Local Government 
The strengthened municipal financial base is demonstrated by the dramatic increases in own 
source revenue from 524 million BGN in 2002 (approximately 262 million USD) to an estimated 
1,113 million BGN in 2006 (approximately 727 million USD); an increase of 112 percent. 
Moreover, the proportion in local revenues increased from 15 percent to 37 percent of total 
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budget sources. 
IR 2.3.2: Increased Ability to Address Community Building Issues 
The amount of locally generated resources by the community foundations in targeted 
municipalities steadily increased since 2000. Starting with almost 80% dependence from USAID 
and in spite of the reduced USAID matching over the years, in 2007 the average ratio changed to 
76% local and 24% external sources. 
Summary of activities used to achieve the SO and their major outputs: 
Local Government Initiative (LGI) 
Implementers: Urban Institute, MSI, RTI 
Recognizing the important contribution strong local governments could make to Bulgaria’s 
democratic transition, USAID began a technical assistance program in 1992. At that point, U.S. 
consultants worked with reform-minded mayors to introduce modern local government 
management procedures, such as budgeting and personnel management systems. The consultants 
served primarily as advisors to the mayors, assisting where they could. This support provided 
local leaders with the first examples of a new way of governing. Building on these steps, from 
1995 to 1998, the assistance was formalized in a 10-city program. In those cities, targeted 
assistance, complemented by a grant program, sought to 
establish institutional infrastructure, including: computer networks, economic development 
centers, and community centers. In addition, the assistance program began training in five basic 
topics—budget and finance, personnel management, strategic planning, and municipal 
councils—that would create training specialists to serve the 10 cities and beyond. At the same 
time, the USAID program provided assistance and organizational support to the two existing 
regional associations of municipalities and helped create new regional associations. Most 
importantly, the technical assistant for municipal associations helped facilitate discussion among 
a core of reform-minded mayors from across the political spectrum on the creation of a single, 
nonpartisan national association, the NAMRB. 
USAID used a variety of mechanisms to contract for the assistance under this phase, bringing 
five different contractors under the LGI umbrella. This phase laid the foundation for future 
USAID efforts by establishing the beginnings of a network of local government support 
organizations (LGSOs) and helping reform-minded mayors understand the nature of innovations 
that would modernize and democratize their local governments. Building on this foundation, the 
next phase of USAID’s assistance program (1998–2001) consolidated the gains of the previous 
phase by expanding the training program and assisting the local government support 
organizations to make them sustainable. Assistance included communications strategies for 
reaching members, grant writing, sustainable financing, and member services. While most of the 
effort in this phase focused on building capacity at the local level and within LGSOs, the 
assistance team also started pioneering work in municipal finance policy, a very timely effort 
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that corresponded with the height of the local government fiscal crisis. The policy work 
produced the first objective analyses of local government finance that armed local governments 
with sound arguments for reform, and produced the first set of comprehensive proposals for 
policy reform. This LGI phase demonstrated that sustainable LGSOs had been created and that 
these organizations were capable of leading technical assistance and directly training local 
governments. At the same time, the initial success in policy reform and the fiscal crisis in local 
government dictated the need for LGI to shift its primary focus from local capacity building to 
policy reform. In early 2001, USAID launched the third phase of LGI, primarily focused on 
decentralization of policy reform. 
The fiscal decentralization reforms promoted and driven by USAID’s Local Government 
Initiative fundamentally changed the way that municipal services were financed and, in the 
process, altered the relationship between the central and local governments. The reforms were 
instituted on a rolling basis beginning in 2003 and some, such as the constitutional amendment to 
allow municipalities to set their own tax rates, were not approved until early 2007. Nevertheless, 
the impact on the finances of the municipalities has been dramatic. All key legislative acts in 
Bulgaria’s local government sector are a direct result of USAID’s Local Government Initiative 
implemented by the Research Triangle Institute, specifically: 
• Constitutional Amendment (February 2007) allowing for municipalities to set local tax 
rates – a cornerstone of Bulgaria’s decentralization process which will have a critical and 
long-term impact on municipal economic development. 
• Local Taxes and Fees Act amendments granted local governments the authority to set 
fees for defined services resulting in dramatic increases in own source revenue from 524 
million BGN in 2002 (approximately 262 million USD) to an estimated 1113 million 
BGN in 2006 (approximately 727 million USD); an increase of 112 percent. Moreover, 
the proportion in local revenues increased from 15 percent to 37 percent of total budget 
sources. 
• Municipal Budget Acts requiring a public hearing before budget approval established 
more transparent intergovernmental relations including funding standards and 
equalization grants for resource poor municipalities. Almost all Bulgarian cities now 
routinely hold public hearings. 
• Annual State Budget Acts have increased funding for intergovernmental grants each year. 
Equalization grant funding increased from 15 million BGN (approx. USD 9 million) in 
2003 to 103.5 million BGN (approx. USD 69 million) in 2007. 
• Municipal Debt Act defining a comprehensive municipal borrowing procedure with 
greater transparency and defined debt limits increased municipal borrowing for 
infrastructure from 52 million BGN (approx. USD 30 million) in 2003 to 250 million 
BGN (approx. USD 163 million) in 2006. 
• Model Ordinances for council operating procedures providing for greater transparency 
and public participation adopted by most municipal councils. 
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The institutionalized policy dialogue through the creation in 2006 of the Council on 
Decentralization with significant municipal representation represented another significant 
achievement. The Council formulated a new Decentralization Strategy 2006-2009 with a 
legislative program that the Council of Ministers approved. The Council of Ministers established 
annual decentralization policy monitoring program with annual monitoring reports. 
City Links 
Implementers: ICMA and FLGR 
Recognizing the challenges facing local government in Bulgaria, in 1997 USAID partnered with 
the International City/County Management Association (ICMA) in helping Bulgaria find 
sustainable local solutions to the country’s unsteady march towards democracy and 
decentralization. In partnership with the Foundation for Local Government Reform (FLGR), the 
Bulgarian Technical Twinning Program (later renamed City Links) was created. Through ICMA 
and FLGR, USAID initiated a pilot partnership program in 1997 between US cities and 
Bulgarian municipalities. 
The program had five stages and ended February 2008. Each subsequent phase was designed to 
build on previous program components and successes that had made the largest impact on the 
development of Bulgarian municipalities. It also provided the potential to continue making 
changes in the way Bulgarian municipalities are managed and serve their citizens. Being a very 
successful model for creation of partnerships between Bulgarian and US cities, the program 
further fostered the exchange, upgrade and wide dissemination of experience, know–how, and 
effective local governance practices. The overall goals of the program were to strengthen the 
capacity of Bulgarian local governments in developing and applying new approaches and 
methodologies for solving current problems in Bulgarian communities, and secondly, to enhance 
the capabilities of Bulgarian local governments to facilitate economic growth. Program activities 
were performed in the following major components: local economic development and marketing; 
infrastructure management practices; and, solid waste management in rural areas.
Best practice replication became a main program instrument in completing program goals in the 
last two program phases, where US best practices were increasingly introduced with the 
assistance of Bulgarian professionals. As the City Links Program developed from phase to phase, 
it also evolved, with the traditional city-to-city partnerships giving way to new partnership 
models. Networking became a major approach for program implementation. It replaced the 
individual partnership model. The exchange of experience and best practices continued with the 
assistance of practitioners from several US cities. All program results were achieved through the 
effective collaboration and know-how transfer between Bulgarian municipalities and US 
practitioners who were providing guidance and creative solutions to their Bulgarian partners: 
• The program pioneered a professional approach to Local Economic Development
(LED). As a direct result of US cities’ technical assistance, 29 Bulgarian municipalities 
established LED offices and now apply professional economic development strategic 
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planning and operational management. In addition, 22 municipalities have established 
Economic Development Advisory Boards. Through dedicated municipal marketing, 
training and certification efforts, 120 million Euros in new investments have flowed into 
participating Bulgarian cities since 2004. Existing local companies expanded by 20 
million Euros with 1,640 new jobs created. 
• The strengthened capacity of Bulgarian municipalities resulted in better service 
provision. 
• Best practices/models implemented under the previous phases of the program were 
multiplied and the impact from their implementation enhanced. The program expanded 
and involved 55 municipalities: 39 municipalities were prepared to market their 
communities, 19 municipalities replicated the rural area composting program, and nine 
municipalities began using an optimized street and road maintenance model. 
• Program achievements were institutionalized by anchoring program activities in local 
expertise within the municipalities as well as in FLGR, thus ensuring program 
sustainability. 
Foundation for Local Government Reform (FLGR) 
USAID provided several grants to FLGR in the period 1997-2007 at the total amount of more 
than $ 6 Mln. Near 80% of this funding was channeled as sub-grants for various municipal and 
NGO projects aimed at building effective and accountable local government system in Bulgaria. 
Thanks to this assistance, FLGR developed as a first-class NGO which serves as a professional 
resource center in the area of local democracy. It provided training and customized, needs-based 
information and assistance to municipalities and NGOs with a particular focus on citizen 
participation in public policy decision-making, transparency of local government activities, green 
areas management, urban development, public-private partnerships at local level, and EU 
integration process. 
The most illustrative example of a successfully implemented FLGR initiative is the new model 
of municipal customer service delivery on the basis of one-stop shop services. Inspired by 
US and Polish experience FLGR, with USAID assistance, launched the model in Bulgaria 10 
years ago. There are currently more than 100 municipal customer service and information centers 
(one-stop shops) across the country. These centers have won nation-wide recognition as an 
innovative tool for achieving better quality of administrative services, enhanced efficiency of the 
administration, and increased transparency. The municipal “one stop shops” have become very 
popular in Bulgaria and now approximately half of all Bulgarian municipalities apply the 
concept in one way or another. Having seen the effectiveness of one-stop shops, municipalities 
now fund and develop them without USAID assistance. 
The strengthened capacity of regional associations of municipalities (RAMs) is another 
significant output of this program. Currently, nine RAMs (“Trakia”, “Maritza”, “Black Sea”, 
“Rhodope”, “Danube”, “South-West”, “Yantra”, “Stara Planina”, and “Hebar”) serve as 
sustainable demand-driven local government support organizations uniting member￾8
municipalities on the bases of geographic proximity and common regional and local 
development issues. 
National Association of Municipalities in the Republic of Bulgaria (NAMRB) 
NAMRB is one of the most prominent legacies of USAID assistance in Bulgaria. Created in 
1996, it quickly established itself as one of the most influential advocacy and largest membership 
organizations in Bulgaria. NAMRB led Bulgaria’s fiscal decentralization efforts, helped 
institutionalize a dialogue between central and local governments, developed and clarified local 
government service standards and responsibilities, and raised the profile of local authorities and 
municipalities throughout the country. All 264 Bulgarian municipalities belong to the NAMRB. 
It also serves as a widely recognized role model for other national associations in Southeastern 
Europe. 
USAID provided several grants totaling $ 1.8 million to NAMRB in the period 1997-2007 to 
strengthen its unique role as a publicly recognized and statutory voice of Bulgarian 
municipalities, advancing the local government legislative agenda, and assisting member￾municipalities in improving their administrative and policy-making capacity. The increasing 
interest in the services provided by NAMRB, alongside with its achievements over the last ten 
years, enabled the Association to enter a new stage in its institutional development as it set up in 
late 2007 a new large Training Center for Local Authorities where local government officials and 
employees will acquire practical knowledge in all areas of municipal development and further 
develop their professional expertise. 
NAMRB demonstrated an impressive track record in terms of gradually improved financial 
sustainability, with currently more than 2/3 of its budget coming from membership dues. 
PLEDGE 
Implementer: USDOL/World Strategies, Inc. 
The Partners in Local Economic Development and Government Effectiveness (PLEDGE) 
Program, developed by Worldwide Strategies, Inc. (WSI) and funded by USAID through the 
U.S. Department of Labor (USDOL), was launched in September 1998. The PLEDGE 
methodology integrated national development policy with the economic challenges and 
opportunities facing workers, businesses, and communities. Collaborating with national and 
local government, PLEDGE focused on local economic development, otherwise known as 
community economic renewal. PLEDGE stands for a successful, local economic development 
program which created jobs, started new businesses, supported local NGO development and, 
most importantly, developed lasting community capacity to make better economic decisions, 
take greater responsibility, be more inclusive, and demand transparent action. 
From September 1998 through September 2004, PLEDGE completed LED projects in 55 
communities or 21% of Bulgaria’s 264 municipalities. All but one of these communities now 
embrace the program’s core value: people, not money, create positive change. Communities 
learned to trust in themselves and hold the belief that working as a team leads a community 
down a more stable and propitious economic path. 
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Working with staff from the NGO, public and private sectors, PLEDGE trained volunteers to 
become Industrial Adjustment Specialists (IAS) responsible for organizing a broad base of local 
partners into a strategic planning team. Community teams were then trained to identify local 
economic problems and opportunities and to design sustainable projects that would create jobs. 
Through this community participation process, PLEDGE brought about the following significant 
change in 54 communities: 5,251 jobs created, 941 jobs saved, 188 businesses started, 283 
businesses expended, 130,744 decars of fallow and reclaimed, 361 follow-on LED projects using 
PLEDGE process, 634 local level improvements in financial, regulatory, physical infrastructure, 
and services 
Ethnic Integration and Conflict Resolution 
Implementer: Partners Bulgaria Foundation (PBF) 
The transition from a state-run economy to a free market system in many cases served to 
exacerbate the problems faced by Bulgaria’s Roma and Turkish/Muslim population. The poor 
educational, social and economic status of the Roma and Turkish populations placed them in an 
unequal position in the new realities of the emerging market economy. In 2000, USAID signed a 
cooperative agreement with Partners Bulgaria Foundation (PBF) to address Roma and 
Turkish/Muslim re-integration in Bulgarian society by improving economic, social and 
educational opportunities and promoting interethnic relations in thirteen Bulgarian municipalities 
with multiethnic populations and high levels of unemployment. Launched initially in the towns 
of Lom, Vidin and Kyustendil, the program expanded in 2003 to include four more communities 
with mixed Roma and Turkish/Muslim population. In 2004, through its Global Development 
Alliance Initiative (GDA) with Partners Bulgaria Foundation, USAID leveraged additional 
resources to include six more Muslim communities in the program, bringing the total number of 
communities to thirteen. Recognizing that reducing discrimination against and promoting 
inclusion of ethnic minorities is a precondition for EU accession, at the GOB request, USAID 
provided through PBF technical assistance in the developing a comprehensive Strategy for Social 
Inclusion of Roma People. 
 
USAID’s Ethnic Integration and Conflict Resolution Program established sustainable 
mechanisms of inter-ethnic and inter-sector cooperation between local municipal authorities and 
the local Roma and Turkish/Muslim communities. The program provided assistance to facilitate 
cooperative planning processes between local authorities and minority representatives to develop 
initiatives that focus on economic development, educational advancement and social support for 
minorities. In the same time, the program built inter-sectoral and inter-ethnic relations, thus 
promoting ethnic integration and participation in policy decision making. Altogether more than 
200 grassroots level projects were supported. A total of 1,062 people were trained in cooperative 
planning, communication and negotiation skills, project development and project management 
and about 300 people learned mediation. 
USAID introduced the conciliation commissions as a working model for solving urgent problems 
of minorities and facilitating positive ethnic relations within a local community. A total of 431 
individual cases were resolved through mediation services. Being a legacy of the program the 
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conciliation commissions (supported by the local government, NGOs and local legal consultants) 
will remain as Mediation Centers to help local communities resolve ethnic-based conflicts in 
Bulgaria. Originally launched as the Roma Leadership Institute for development of Roma 
leadership capacity, the Minority Leadership Institute was transformed into an informal training 
institution for building management, leadership, and networking skills of Roma, 
Turkish/Muslim, and Bulgarian leaders. A total of 365 participants graduated from the 
Leadership Institute training initiative in all thirteen municipalities. 
Community Foundations and Social Enterprises 
Implementer: Counterpart International 
The Community Foundation and Social Enterprise Program 2001-2006, implemented by 
Counterpart International, introduced viable models for community development and citizen 
participation (community foundations, social enterprises and social contracting) in Bulgaria. The 
program assisted the creation and development of ten community foundations in Blagoevgrad, 
Chepelare, Gabrovo, Lom, Pazardjik, Sliven, Stara Zagora, Tutrakan, Vratsa and Yambol. They 
were created with the vision to become permanent local sources of funding for NGO activities. 
USAID provided training and technical assistance, seed funding, matching grants to money 
raised locally for immediate disbursement, and general purpose grants. The community 
foundations stimulated public-private partnerships and managed to leverage local government 
money with funds coming from the private sector in implementing important social projects. 
Besides stimulating giving, the community foundations also stimulated civic participation in 
setting local development priorities. In some communities, such as Stara Zagora, Gabrovo and 
Chepelare, the community foundations developed significant technical expertise and positioned 
themselves as leaders of civil society development, able to bring together NGOs and other 
stakeholders for solving local problems. 
USAID helped establish an Association of Community Foundations (ACFB) in Bulgaria in April 
2005. ACFB’s main goal is to support philanthropy development by promoting the community 
foundation model and building the capacity of the existing community foundations. 
Under this program, USAID pioneered the concept of social enterprises in Bulgaria. The 
program provided training, technical assistance, loans, and small grant funding to 45 social 
service NGOs to start or develop existing business ventures. By developing income-generating 
ventures as a social enterprise, and by enhancing the entrepreneurial culture, these NGOs 
overcame major challenges to financial sustainability while creating opportunities for 
disadvantaged groups and communities. USAID also emphasized social contracting as a 
mechanism for improving social service delivery and social inclusion through public-private 
partnerships. USAID assisted 17 municipalities in contracting-out social services to NGOs. As a 
result, more than 3,000 disadvantaged people received access to social services for: day care 
centers for children with disabilities; rehabilitation centers for the elderly; soup kitchens and 
public laundries for low-income families; vocational training facilities for youth with disabilities, 
and shelters for the homeless. 
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In September 2006, USAID entered into a strategic partnership with the Trust for Civil Society 
in Central and Eastern Europe (CEE Trust) and the Charles Stewart Mott Foundation. The 
objective of the partnership was to enhance the growth of community foundations in Bulgaria. It 
built on the successes and legacies of USAID’s Community Foundation program and increased 
the capacity of community foundations to serve as effective grant-makers by providing a match 
to money raised locally. While the USAID grant to CEE Trust ended in early 2008, Mott 
Foundation funding to community foundations will continue through 2009 and potentially 
beyond. 
Chitalishte Project 
Implementer: UNDP 
USAID, along with the Dutch Government, jointly supported the United Nations Development 
Program’s “Community Development and Participation through the Chitalishte Network 
Project.” “Chitalishte are a unique Bulgarian institution, literally meaning place for reading or 
reading rooms. They arose in the mid-19th century as a place where Bulgarians could read books 
in their own language, meet with each other, learn and perform traditional dance and songs, and 
most importantly, to find ways to work together to improve life in their community. They played 
an important part in the revival of Bulgarian national consciousness which contributed to 
Bulgarian independence. In the early 1990s they still existed but after years of Communist rule, 
had moved away from their community ownership. 
The Chitalishte Project, active from 2001 until 2004, had several project aims: building the 
capacity of the chitalishte as community centers; stimulating community participation and local 
development through the chitalishte network, and promoting access to modern Information 
Technologies (IT), mainly in IT-isolated communities. Activities included 67 one-year 
chitalishte demonstration projects and 25 internet centers established in chitalishtes. The 
Bulgarian Ministry of Culture and the UNDP report 43,440 demonstration project beneficiaries; 
of these, over 7,000 were Roma and more than 1,300 were of Turkish origin. Almost 1,900 
people with disabilities benefited from the demonstration projects as well. Income from 
economic activities of chitalishte demonstration projects totaled almost BGN 50,000 (or the 
equivalent of $33,000); while the IT centers generated about BGN 325,000 (or $203,500). 
Community contributions to chitalishte activities totaled BGN 257,741 (or about $172,000). A 
Chitalishte Development Foundation was established to carry on the work of the Project, as was 
an Association of Chitalishtes. 
Key Lessons Learned 
With approximately fifteen years of technical assistance, USAID/Bulgaria’s local government 
program constitutes one of the longest, and possibly one of the most successful, governance 
programs in Eastern Europe. The program produced significant reforms in the legislative and 
policy framework for local government, it created one of the strongest networks of sustainable 
local government support organizations (LGSO) in the region, and it built capacity in local 
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governments and defined a new standard of performance that is widespread. These three areas 
can be considered as the pillars of a 
strong local government system. A number of valuable lessons can be drawn from the success of 
the program. 
Building strong and accountable local government takes a long and consistent effort 
USAID’s initial effort was limited and opportunistic, acknowledging that the most receptive 
audience consisted of a small number of reform-minded mayors. As interest grew, the program 
broadened, but maintained its local level focus as there was little interest, if not clear opposition, 
with successive central governments. However, this initial focus paid dividends because it built a 
strong constituency with a common vision of accountable local government and strong LGSOs 
to build capacity and lobby for municipal interests. It also built a team of local experts, who, 
after having been paired with expatriate advisors, became legitimate, home-grown specialists. 
When there was an opening for policy change after the parliamentary elections in 2001, USAID 
was able to step in forcefully to support reform. Still, it took time to build the legitimacy of the 
policy issues, establish the working relationships among the stakeholders, and familiarize high￾level officials, particularly MPs and the leadership of the political parties, with the issues. In the 
2001 parliamentary elections, only one party had a local government plank in its platform and 
decentralization was not discussed. But, by 2005, local government reform was a debated issue. 
Taken as a full entity over the years, USAID’s local government initiatives were comprehensive 
and addressed all aspects of a democratic local government system. This was largely because it 
was able to respond to changes in the Bulgarian environment, take advantage of entry points as 
they opened, and build strong indigenous LGSOs which served as key driving forces for local 
government reform. 
Policy dialogue is essential for successful policy reform 
Prior to 2001, relations between local governments and the central government were antagonistic 
and full of partisan rhetoric. Reform was based on power politics at the central level. At the 
beginning of 2001, USAID presented a different paradigm that included dialogue in which 
stakeholders’ legitimate interests had to be recognized. The Local Government Forum, organized 
in November 2001, was the first time that all local government policy stakeholders—local 
governments, central ministries, LGSOs—met to discuss a common policy agenda. It succeeded 
in building a consensus that supported a broad range of reforms. The forum also succeeded in 
building a model for dialogue that became institutionalized in the Fiscal Decentralization 
Working Group, responsible for producing the initial reform proposals; and later, the Municipal 
Debt Working Group that produced the Municipal Debt Act. Finally, a sustainable model of 
policy dialogue was created with the establishment of the Decentralization Commission in 2006. 
Each of these groups incorporated the principle of adequate stakeholder representation and 
dialogue on policy issues as integral to the reform process. 
Policy reform support occurs when technical assistants engage in the political process 
Policy reform is often viewed by technical assistance programs as a technical process of 
presenting and discussing policy options among technical groups. The process of passing 
legislation is left to senior staff from the ministries. USAID firmly engaged in the parliamentary 
process, not as a partisan in support of one political party or another, but as an advocate for 
sound local government policies and laws. In this role, USAID provided technical assistance to 
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key parliamentary committees, training for MPs, briefings for parliamentary groups, assistance in 
drafting and reviewing legislation, and study tours that included MPs. One of the reasons that 
USAID was perceived as legitimate and dependable in policy reform was because of the value of 
the analyses and data it provided for discussion in place of the partisan rhetoric that characterized 
most policy reforms in Bulgaria. USAID’s LGI served as an objective source of information for 
all political parties. This role was greatly facilitated by the growing number of former municipal 
officials who were successful in running for Parliament. Approximately 25 percent of the 
members elected to Parliament in 2005 had prior local government experience. In the final years, 
USAID helped establish a Local Government Caucus in Parliament, a loosely structured group of 
MPs, most of whom had served previously in local government. 
The “making noise” approach is effective in fomenting change and reform support 
USAID’s formal capacity-building strategy consisted primarily of conventional training 
organized on the effective principles of adult learning. The reform program was built on 
stakeholder forums and working groups, both lines of activity working with a variety of partner 
organizations. However, stepping back for a broader perspective made visible a more complex 
reality, in which a variety of channels and messages about innovation and performance 
excellence as the means to more effective and accountable local government were delivered 
through a variety of channels. These channels included: 
• The growth of vibrant national and regional associations of municipalities that lead information 
sharing and mutual problem solving among their members and serve as critical forums for the 
discussion of municipal issues; 
• The two Local Government Forums in which building strong and accountable local government 
was the rationale for reform; 
• The development of the FLGR’s Innovative Practices website and annual award program that 
has become highly competitive and well publicized; 
• The growth of professional associations (city secretaries and municipal legal experts) that give 
identity to those positions, allowing peer-to-peer exchange and a focus on improving 
performance; 
• The growth of the NAMRB’s annual Day of the Municipality celebration and annual Day of 
Dialogue between local and national government, which has become the best attended showcase 
for the discussion of municipal issues and presentation of good practices. 
The messages through these activities and organizations shared a vision of stronger, more 
responsive, and more modern local government and promoting a new ethos. 
 
Improving the performance of municipal councils is critical, but difficult. 
While USAID helped strengthen the role of municipal councils and introduce innovative 
practices, many stakeholders agreed that progress was fundamentally constrained by the mode of 
election—the party list—which built council member accountability more to the political party 
than to the local electorate. However, reforming the mode of election is a politically charged 
issue, because changing the election procedure could threaten party control at the local level and 
would introduce an alternative to the way in which the national assembly is selected. 
Ensuring nation-wide replication of successful ethnic integration models 
14
While earlier USAID efforts on minority issues focused mainly on giving ethnic minorities and 
the disadvantaged a voice in society, later efforts focused more on improving their integration 
into society with a more multi-faceted approach. However, the USAID approach to minority 
support programs remained fragmented in search for models and structures to sustain the effort. 
Simply put, it should have been given more strategic direction and thought at the outset to ensure 
nation-wide impact and sustainability of results. 
Need to diversify the scope and impact of community foundations 
Notwithstanding their growth, community foundations (CF) continue to raise money for specific 
projects rather than for broader causes. They often operate as intermediaries between the donors 
and the beneficiaries, matching specific donor interests with specific projects, and thus activating 
local philanthropy for specific preliminary identified objectives. There are some limitations to 
this approach. The main limitation is that unrestricted donations are rare, which gives little 
freedom to the CF to respond to pressing community issues, or to support creative and innovative 
projects that do not correspond to their current donors’ interests. Financial sustainability of the 
CFs through relying primarily on local sources of funding does not seem a foreseeable goal yet. 
Local fundraising is insufficient for covering the administrative costs of the CFs. At the same 
time, the most abundant external sources of funding in the next few years will be coming from 
the EU, but as a rule they cannot be used for grant making purposes. Thus, all CFs will be 
challenged to find a balance between local fundraising and applying for EU grants in reinforcing 
their identity as local grant makers. 
Social contracting is naturally linked to social enterprises.
Including both components in a civil society program from the start may lead to greater results. 
The way that social services are funded in Bulgaria gives financial incentives for the 
municipalities to continue providing social services through institutions for which they get state 
funding, rather than by contracting out to NGO social service providers which they would have 
to pay for from their own municipal budgets. Thus, attention should be paid to the status of the 
decentralization of social services before embarking on a social enterprise/social contracting 
activity in a country. Experience with Counterpart’s social enterprise program suggests that the 
legality of making loans should be determined before implementing a loan activity. Newly￾formed social enterprises are not likely to be able to service such loans, so consideration should 
be given to capacity of the likely recipients as well. 
Prospects for Long-Term Sustainability of Impact and Principal Threats to Sustainability 
The prospects for long-term sustainability of impact of USAID-promoted local government 
reforms are very good in view of the substantial progress made under the SO, especially in the 
area of local government administration. The LGSOs (NAMRB, FLGR, RAMs) are on a 
sustainable path towards continuing USAID agenda – to advocate for further local 
government and decentralization reforms and to ably assist Bulgarian municipalities to 
perform effectively and accountably. 
However, the stronger and more independent NAMRB becomes, the greater the attempts of key 
political parties to interfere during the election process for NAMRB’s managing board and to 
15
make the association a hostage of the parties’ short-term political interests. In this regard, 2008 
proves another challenging year for the association given the significant BSP-GERB rivalry at 
national level after the last local elections. 
A key challenge for all stakeholders will be to continue building adequate local government 
capacity to absorb EU structural funds. Notwithstanding the positive results achieved so far, the 
lack of transparency in delivering public services and corruption in public procurement at local 
level remains a key challenge, especially in the larger municipalities where vested economic 
interests are at stake. The EU structural funds, worth several billion euros, afford a tempting 
target. In the case of Bulgaria, the local government elections in the fall of 2007 were marred by 
vote buying and other election irregularities on a scale not seen in recent years. Reportedly, 
shady business interests are now represented on many Municipal Councils and positioned to 
influence public procurement as significant amounts of EU structural funds start to flow to the 
regions in the fall of 2008. The Bulgarian public has become increasingly cynical about the 
election process, mainstream political parties and government officials, opening the door for 
powerful, corrupt local oligarchs. 
The last decade was a time of wide-ranging donor support to stimulate and support change at the 
local level with a focus on minorities and ethnic diversity. Many have tested various approaches 
to empowering minorities and embracing diversity, or influencing one or more aspects of 
community development and local self-governance in ethnically diverse communities. However, 
most of the lessons about what works remain fragmented at the local and central levels, without a 
central body of knowledge guiding or demonstrating inclusive community development. With 
EU accession most bilateral donors have ended their funding. Thus, a new phase starts for civil 
society and local development with a different type of support to local initiatives. With very 
limited local philanthropy and few private donors, especially for minority issues, most of the 
funding will be within the framework of the European structural funds. This requires capacity 
development linked with cross-sector partnerships and regional and local development, requiring 
consultative processes with various stakeholders as projects are developed, funded, and 
implemented. 
Replicability of the CF concept in new communities around Bulgaria is currently not foreseeable 
without external financial support. Some potential replication could be expected with the gradual 
growth of local philanthropy, when a sufficient number of donors recognize the need of 
intermediaries in giving. The dissemination of the existing knowledge and skills of the 
community foundations by their Association strongly depends on the availability of external 
grants that will allow the Association to liaise with new communities. The Association has the 
potential (people with knowledge and skills) to play the role of a mentor of new community 
foundations but it lacks the financial resources for undertaking this task. The main legacy of the 
community foundation program remains the endowment of people with knowledge, skills and 
commitment to develop further their community foundations as trustworthy local grant makers. 
These people have contributed to the success of the existing community foundations and will 
eventually assist the creation of new ones when favorable conditions exist for doing so. 
SO Level Performance Indicators 
16
Indicator 1: Index of Local Government Effectiveness and Accountability 
This is a composite index measuring the overall effectiveness and accountability of local 
governance in Bulgaria. The Local Government Index (LG Index) is a numerical value 
integrating the results of a survey for the presence of objective indicators (introduced practices 
and mechanisms in local government) and subjective perception (of representatives of the local 
authorities, citizens, the media, businesses, NGOs) on various local government issues. The LG 
Index is an average of two sub-indexes. The effectiveness sub-index measures administrative 
effectiveness, effectiveness in public service delivery and economic development at local level. 
The accountability sub-index measures information dissemination from municipalities to 
citizens, citizens’ participation in decision-making, and the municipal decision-making process. 
USAID used a primary data source for this indicator - a Local Government Effectiveness and 
Accountability Survey commissioned annually. Alpha Research conducted four consecutive 
surveys in the period 2004-2007. 
The surveys demonstrated that the index of local government effectiveness and accountability 
increased progressively and stably over the years. (minimum value - 0, maximum value -1). 
2004 2005 2006 2007 
LG Index 0.561 0.591 0.621 0.643 
 
USAID Reports and Assessments 
Bulgaria Democracy and Governance Assessment (May 2001) 
Local Governance Assessment (2001) 
Conflict Vulnerability Assessment (March 2002) 
Freedom House Nations in Transit Index, published annually, www.freedomhouse.org 
Foster, Barbara Barrett, Grossman, David A. and Young, April L. “Phase I Local Government 
Program Evaluation: Democracy Activities in Poland and Bulgaria,” Technical Support 
Services, Inc., September 1994. 
“Evaluation of Local Government Activities in USAID Programs in Central/Eastern Europe,” 
Technical Support Services, September 1995 
Bulgaria: October 1995 Municipal Election Report, the International Republican Institute, January 
1996 
Birch, Larry. Kappler, Burke. Kosinski, Susan. Tennant, John. Fujimoto, Brad. “Bulgaria 
Municipal Development Strategy”, ENI Technical Staff and USAID Mission Staff, April 1995 
17
Bunce, Glenda. “Local Government and Public Administration, University of South Carolina Final 
Report,” University of South Carolina, April 1997. 
Hoffman, Michael. Shopov, Giorgi. Ivanov, Stefan. “Baseline Data for Strategic Objective 2.3: 
More Effective and Accountable Government”, the Urban Institute, May 1997 
Althaus, William J., Nichols, J. Hugh and Ivanov, Andrey. “Bulgaria Local Government 
Strategic Assessment,” by Development Associates, September 2000. 
Fiscal Decentralization Issue Paper, the Local Government Initiative/Research Triangle 
Institute, November 2001 
 “Bulgaria Democracy and Governance Assessment,” Management Systems International, June 
2001 
Kapitanova, Ginka. Minis, Henry. “Case Study on Bulgaria: From Totalitarianism to Democratic 
Local Governance” Foundation for Local Government Reform and RTI, August 2003 
McCullough, James. Savov, Emil. Ivanov, Stefan. “Mid-Course Review of Fiscal 
Decentralization”, the Local Government Initiative/Research Triangle Institute, June 2003 
Brinkerhoff, Derick W. Goldsmith, Arthur A. "Strengthening Local Government Associations in 
Bulgaria”, draft report by RTI, September 2004 
DeAngelis, Michael. Udma, Viorel. Eneva, Mariana. “Strategy for the Development of the 
Bulgarian Municipal Credit Market”, the Local Government Initiative/Research Triangle Institute, 
June 2004 
Expanding Municipal Own Revenue, the Local Government Initiative/Research Triangle 
Institute, November 2005 
SEED Act Implementation Report, Support for East European Democracy, FY 1998 – FY 2004 
Annual Reports, Office of the Coordinator of U.S. Assistance to Europe and Eurasia 
US Government Assistance to and Cooperative Activities with Central and Eastern Europe, FY 
2005 - FY 2007 Annual Reports, Office of the Coordinator of U.S. Assistance to Europe and 
Eurasia 
USAID/Bulgaria Annual Reports 1998 - 2006 
USAID in Bulgaria: 1990-2007, A Story of Partnership and Progress, July 2007 
18
Key contacts 
USAID/Bulgaria 
Gene Gibson, Democracy Officer 
ggibson@usaid.gov 
Kiril Kiryakov, SO 2.3 Team Leader 
kkiryakov@usaid.gov 
Partners 
RTI International 
Henri Minis, Ex-CoP, 3040 Cornwallis Road, Post Office Box 12194, Research Triangle Park, 
NC 27709-2194, tel. 919-541-6000, fax 919-541-5985, www.rti.org, minis@rti.org 
International City/County Management Association 
Brancy Finkler, Program Manager, 777 North Capitol St, N.E., Suite 500, Washington, D.C. 
20002-4201; tel. 202-289-4262, fax 202-962-3500, http://icma.org 
Foundation for Local Government Reform 
Ginka Kapitanova, Executive Director, Mladost, Jerusalem Blvd., Bl.51-Office Building, 1784 
Sofa, tel. +359 2 976 8989, fax +359 2 976 8930; e-mail: flgr@flgr.bg 
National Association of Municipalities in the Republic of Bulgaria 
Ginka Tchavdarova, Executive Director, 23 Golash St., 1111 Sofia, tel. +359 2 943 4465, +359 2 
943 4584, fax +359 2 943 4431; e-mail: namrb@namrb.org 
Worldwide Strategies, Inc. 
Virginia Stacey, President, 5212 W. Franklin Road, # 84, Boise, Idaho 83705, tel. 208-345-0751, 
e-mail: 
contact@w-s-i.net
Partners Bulgaria Foundation/Ethnic Integration and Conflict Resolution Program 
Daniela Kolarova, Director, 2A Yakubitsa St., tel. +359 2 489 6920, +359 2 962 3174, e-mail: 
partners@partners-bg.org 
Counterpart International, 2345 Crystal Drive, Suite 301, Arlington, VA 22202, 
www.counterpart.org 
Trust for Civil Society in Central and Eastern Europe 
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20
Rayna Gavrilova, Executive Director, 22 San Stefano St., 1054 Sofia, tel./fax +359 2 9442350; 
e-mail: trust@ceetrust.org 
UNDP 
Maria Zlatareva, Assistant Resident Representative, UN House in Bulgaria, 25 Khan Krum St., 
PO Box 700, 1040 Sofia, tel. + 359 2 96 96 100, fax +359 2 981 31 84, 
maria.zlatareva@undp.org