ABSTRACT
Domestic funds are local institutions whose boards hold title to their assets. Their capital, however, can be invested domestically or offshore. Domestic management of funds can increase local management capacity as well as the perception of national ownership, and can even contribute to domestic awareness and community participation in environmental issues (Mikitin, 1995). However, domestically managed funds can suffer from political instability, thin capital markets, currency devaluation or legal status conflicts with other countries. Bolivia’s domestically managed National Environmental Fund, for example, lost much of its autonomy when a new government took control in 1993 (ECOFONDO, 1996). Domestic management of the fund, along with the fund’s close ties to the national government, led to significant political influence on the fund, which impaired the fund’s activities and undermined its principles.
