Tool 10a: Developing a WSI Memorandum of Understanding

 

Quick reference

Tool “How to” develop a Memorandum of Understanding (MoU) and an annotated outline highlighting key aspects that should be agreed among WSI participants.
Related Key Activity
  • Assign appropriate roles and responsibilities; clarify expectations of WSI behavior.
Questions Addressed
  • How can we establish a baseline understanding related to the objectives of the WSI, level of expected performance, and intent of WSI participants?
Purpose Mitigate integrity risks related to reputational issues by specifying decision-making structures, expected levels of performance, and adherence to good practice:

  • Establish the ground rules for WSI activities.
  • Align efforts according to the WSI’s objectives.
  • Increase transparency and accountability of a WSI’s governance.
Possible Users WSI participants.
Level of Effort Much of the work needed to successfully develop an MoU takes place in earlier phases, so the actual write-up of the MoU should be minimal.
WSI Phase 2. Formalization

 

Guidance for implementation

The diagram below lays out the key steps to undertake to develop an MoU Tool10aDiagram

Supporting Guidance

An MoU expresses a convergence of will among the parties of a WSI, indicating an intended common line of action. It is often used either where parties do not require a legal commitment or where the parties cannot create a legally enforceable agreement.

An MoU provides a reference in the event of dispute, differing interests, or undesirable behavior by a participant. It also outlines and makes transparent the decision-making structure of the initiative, thereby reducing the risk of collusion that can lead to misuse of the WSI. Given its formal character and the requirement that it be signed, the process of establishing an MoU contributes to raising awareness about the roles and responsibilities of the WSI participants. MoUs can also mitigate reputational risks to the WSI and partners by specifying certain expected levels of performance or adherence to good practice. For example, some MoUs specify participant commitment to mutually agreed codes of conduct (Tool 10b), environmental policy, or disclosure of conflicts of interest. Establishing a clear agreement can help prevent conflict and reputational harm because expectations are established at an early stage, leaving less room for misinterpretation by the participants.

The purpose of an MoU within a WSI is to formally agree on the shared objectives, roles, and ground rules of an initiative. Even where an MoU is not legally binding, it poses an important mutual commitment and should be signed by senior staff of each participant organization and be followed up with regular performance reviews. Ideally an MoU should be signed by all WSI participants to create a level playing field and establish a transparent reference point. To create legal security, it can be advisable to establish separate contracts (e.g., financing agreements) with individual participants for major activities that require additional detail and legally binding contracts.

Where the WSI participants have chosen to enter into a contractual relationship, a change in responsibilities is generally accomplished by signing an amendment to the agreement. To avoid spending scarce resources on regular amendments to early contracts, it may be recommendable to establish bilateral expressions of intent (or where appropriate, contractual agreements) for the process of forming a WSI, and to develop an MoU that applies to all participants, once the initiative is formalized.

Practical Tips:

  • If it is not yet possible to define some aspects of the working relationship, preliminary expressions of intent or other such statements should be specified in addenda on how gaps will be addressed later on.
  • It is important to clarify how amendments to the MoU will be agreed upon and how additional parties can enter the MoU at a later date.

 

Table 10 suggests sections that should be included in an MoU for WSIs. It includes a tentative set of aspects that should be covered for each section. The table is based on “The Partnership Paperchase,” where more detailed information on each section, including example clauses, can be found. Annex 1 of the same document also provides a summary of key discussion areas and issues to consider when drawing up an MoU.

Table 10: Potential Sections of an MoU for WSIs

Section Tentative set of aspects to be covered Further guidance and sample phrases from The Partnership Paperchase
Background
  • Context of MoU including the purpose and objectives of the WSI, participants’ backgrounds and interests, participant representatives, etc.
  • Presentation and description of the parties
  • Incentives for each party to engage in the WSI
See pages 14–15 for more guidance and example phrases.
Purpose and objectives of the WSI
  • General description of the purpose and objectives of the WSI (if the MoU is signed after objectives have been defined) or agreement to engage with other WSI stakeholders (following the signing) to develop the WSI governance and objectives that will be included as addenda or amendments
  • Guiding principles and success criteria that govern the relationship
  • Time frame of commitments
See page 15 for example clauses.
Governance and management
  • Decision-making procedures and governance arrangements for the initiative, possibly including external oversight
  • Communication, internal and external
  • Operational procedures (e.g., related to payment, ownership of assets, reporting, etc.)
  • Monitoring, progress reporting, and evaluation
See page 21 for sample phrases and guidance on decision-making procedures and communication channels.
Roles and responsibilities
  • Overview of responsibilities and commitments (e.g., of staff and resources) of WSI participants as delineated in Tool 9: Managing Roles and Responsibilities within a WSI
  • Expectations for conduct (can refer to Tool 10b: Code of Conduct)
  • In the likely event that partners are not yet able to precisely define their roles and responsibilities or their respective contributions and expectations for conduct, they shall agree to further define these key elements through an amendment to the MoU within a period of XX months.
See page 19 for an example of a code of conduct.
Amendments Make provision for future amendments regarding the constellation of participants, objectives, and governance of the WSI See pages 27–28 on considerations about amendments.
Dispute Describe conflict resolution arrangements or agree to jointly develop them in the near future, and include them in an amendment. See page 25 for guidance on disputes. See page 27 for a sample clause.
Binding effect and termination Describe the nature of how participants are bound to each other and how the relationship may be transitioned or ended (Tool 12). See page 27 for further guidance. Example clause for termination:
<This MoU becomes effective on the date of the signature by all parties and continues until modified by mutual consent or unless terminated with 60 days’ written notice by any party. This MoU should be reviewed annually and amended or revised when required.
Annexes
  • Can include relevant local laws and regulations that shall be followed by all WSI participants
  • Can include expected workplan, including key activities and deliverables

Source: Barbara Evans, Joe McMahon, and Ken Caplan, “The Partnership Paperchase: Structuring Partnership Agreements in Water and Sanitation in Low-Income Communities” (London: Building Partnerships for Development (BPD), November 2004), www.bdpws.org.

  • Barbara Evans, Joe McMahon, and Ken Caplan. November 2004. “The Partnership Paperchase: Structuring Partnership Agreements in Water and Sanitation in Low-Income Communities.” (London: Building Partnerships for Development (BPD)).www.bdpws.org.
  • Global WASH Cluster. 2009. “WASH Accountability Resources: Ask, Listen, Communicate.” (New York: Global WASH Cluster and UNICEF.) N.B.: See p.37-on for an example of an MoU.

For information on how to choose and draft dispute resolution clauses, see:

 

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