Once again, the topic of flexible funding is having a moment in the global development sector spotlight. This time, there appears to be renewed energy and motivation to finally make it a reality for organizations across the sector. To do this, we need to get clear on what it is, what it looks like in practice, and how we can practically pave the way for widespread flexible funding. These were the questions a panel of experts from Co-Impact, Humanity United, and Dandelion Africa tackled in Humentum’s latest webinar in our Operationalizing Locally-Led Development series. Guided by moderator Riva Kantowitz of the Radical Flexibility Fund, they dove headfirst into the challenges of operationalizing flexible funding. Read (and hear) some of their insights below.
What does flexible funding look like in practice?
For Co-Impact, the first step to operationalizing flexible funding is reducing reporting requirements for partner organizations. While many funders are doing the same, Co-Impact goes a step further. They’ve introduced a design phase grant which serves as an operational or organizational support grant. This gives partner organizations the first year to plan how to implement multi-year funding.
Humanity United also helps its partners strengthen their ability to handle funding. In addition to providing multi-year support, they ensure that all partners receive general operations support. This funding is unrestricted and flexible. As such, it allows partners to decide how project funds are used, set project timelines, and adjust as country and political situation shifts.
Flexible funding, like that from the Segal Family Foundation, has enabled Dandelion Africa to innovate and see real impact at the community level. Founder and Executive Director, Wendo Aszed explains that this funding has helped her build a strong team, prioritize the work most important to local communities, and ensure they remained sustainable as the organization developed and grew.
While the flexible funding discussion often focuses on unrestricted grantmaking, Innpactia is considering alternative models. This social enterprise works with the private sector to create funds for local and national organizations based in Latin America. Working with both impact actors and investors, Innpactia’s founder Juan Carlos Lozano ensures funds are tailored to the specific countries where they will be implemented. In addition to financial support, Innpactia also encourages funders to support capacity strengthening, technical expertise, and mentorship.
Mentorship was equally vital to Dandelion Africa’s success. When Aszed launched the organization, she had passion and a vision for change, but no formal education in non-profit management. This is the case with many founders. In addition to the initial financial support she had when launching Dandelion Africa, the capacity strengthening, informal education, and mentorship she received from funders allowed her to grow a sustainable organization. Aszed asserted that there is no organization in Africa that does not have capacity. Yet, she adds that leaders must have the space to share what they do not yet know with funders without fearing funding cuts.
What are some barriers, real or perceived, to operationalizing flexible funding?
Both Innpactia and Humanity United face barriers to flexible funding. These arise from the many disparate rules, regulations, and requirements from different funders. According to Juan Lozano, even though pooled funding among donors can be highly impactful, these funding mechanisms can also be hindered by competing funder goals, priorities, and power. Bryan Sims highlighted a similar challenge in accepting government funding. Frequently, this kind of support can be dictated by a particular leader’s foreign policy goals or priorities, rather than being driven by movements and coalitions that are responsive to communities.
Furthermore, complex reporting, legal, and due diligence requirements, often prevent government funding from reaching more informally organized groups or coalitions. These groups have the potential to make a significant impact. In such cases, Humanity United and Innpactia have turned to fiscal sponsorship models to support grassroots movements without exposing them to excessive risk.
Listen: Innpactia and Humanity United on working with and influencing other funders
The biggest barrier to funding for local and national civil society organizations (CSOs), is a matter of trust between funders and partners. Aszed shared that many funders are only interested in funding narrow projects, rather than investing in the mission and vision of a founder and their organization. While projects can produce short-term results and outputs, true systems change cannot be seen in six months or one year. And organizations cannot effect true change if they are spending the majority of their time and resources fulfilling the reporting requirements of each of their funders. A lack of trust in their ability to manage funding inevitably hinders their potential to make a meaningful impact.
How can we dismantle these barriers and pave the way for widespread flexible funding?
To counter the barrier of trust between funders and grantees, Aszed encouraged funders to move away from project-based funding and instead provide unrestricted support for an organization’s long-term vision. When Aszed started Dandelion Africa, many were skeptical of her ability to achieve her vision. However, she has demonstrated to funders that with long-term support, organizations can transform individual lives and entire communities.
Relatedly, many funders may feel like unrestricted, long-term support is less accountable or easy to monitor. Even so, Aszed noted that quality and accountability can co-exist with flexibility. For example, funders can simplify their reporting requirements by using a standardized template. Instead of submitting lengthy reports, Aszed said she’ll often join a Zoom or WhatsApp call with a funder when they require more information. At the core of these processes is a deep sense of trust and belief in an organization’s vision.
The role flexible funders like Co-Impact play in dismantling barriers to flexible funding is one of peer-to-peer advocacy. In his position as Program Manager, Abdirahman has spent a lot of time bringing together some of the biggest funders in the world, like the Gates Foundation and MacKenzie Scott. He works with them to channel their resources flexibly. These individuals and entities contribute to Co-Impact’s gender fund, allowing them to directly resource some of the most pressing social movements worldwide without burdening organizations and coalitions with reporting and risk requirements that they may not be equipped to handle. For entities like Co-Impact, these collaborative funds are ways to quickly channel large amounts of flexible funding where it’s needed most.
Where should the sector go from here?
Our moderator and each of the panelists concluded the discussion with a call to action for the sector. See what they had to say here.
Register for the remainder of Humentum’s 2023 Operationalizing Locally-Led Development series.
Learn more about The Collective Journey to Equitable Development.