Village Funds and Village Fund Allocation, what’s the difference?

Village Funds (DD) and Village Fund Allocation (ADD) often we encounter when we are discussing village governance. Although similar in terms of name, village funds are different from the allocation of village funds. Some people might understand that ADD is the nominal of DD allocated by the village. However, DD and ADD are really different in various aspects ranging from sources of funds, distribution, to the use of funds. What are the differences? Let’s look at the end!

1. Source of Village Fund & Village Fund Allocation

DD first appeared and was disbursed by the government in 2015 after the issuance of Law No.6 of 2014 concerning Villages which specifically regulates related to DD where the source of this funding comes from the State Budget (APBN) which is intended for villages and customary villages.

While ADD itself is sourced from the Regional Revenue and Expenditure Budget (APBD) of at least 10% of the General Allocation Fund (DAU) plus profit sharing funds (DBH). So in other words, DD is the obligation of the central government while ADD is the authority of the regional government.

2. Distribution of Village Funds & Village Fund Allocation

DD sourced from the APBN is then transferred through the Regency/City APBD through the Regional General Cash Account (RKUD) as a temporary storage, to then be forwarded directly to the villages through the Village Cash Account (RKD).

Whereas ADD which is the obligation of the regional government is allocated through a balance fund and then distributed to the RKD. ADD itself has a different amount of each village depending on the calculations made by the Regency/City Government which is regulated by the Government Regulation (PP) as outlined in the Regent/Mayor Regulation.

3. Function or Use of Village Funds & Village Fund Allocation

In general, DD which incidentally is an obligation of the central government is used to finance programs and activities in the field of development and empowerment of village communities. The use of DD is more specifically regulated in the Regulation of the Minister of Villages, Development of Disadvantaged Regions and Transmigration (Permendes PDTT) regarding the priority of the use of village funds issued every year before the next fiscal year is running. The priority function of the DD budget is required to provide benefits for the community in the form of; (1) improving the quality of life; (2) improvement of welfare; (3) poverty reduction; and (4) improvement of public services.

On the other hand, the priority for the use of ADD is regulated by the Regency/City Government. In addition, the use of ADD is also contained in Government Regulation Number 11 of 2019 Second Amendment to Government Regulation Number 43 of 2014 concerning Siltap and Perbekel Allowances and Village Apparatuses financed from ADD.

That’s the difference between DD and ADD. It is important for the community to know and understand the important points of DD and ADD in order to realize a critical society and also a transparent government.