A recent report from the Open Road Alliance – a philanthropic initiative that steps in with emergency or bridge funding when grant-funded projects hit unexpected roadblocks – analyses the reasons behind these blockages.
It finds that in nearly half (46%) of the cases it has dealt with, the causes lie with the funders themselves, the three main categories of problem being delay in disbursement, changes in funder strategy, and funder policy inflexibility.
Anyone who has tried to get a project grant funded will doubtless be familiar with such difficulties – and anyone who has had a project OK’d by the GCF will certainly recognise the “delay in disbursement” phenomenon, with disbursements there running at just a few percent of project approvals, as we have regularly reported.
For more climate finance news and comment, subscribe to our free weekly newsletter.
Open Road remarks in the report that, while these difficulties are an unintended consequence of trying to professionalise funding, the good news is that it’s in the hands of funders to solve them too:
“We have become our own enemy … The philanthropic sector as a whole has spent the better part of the past decade seeking to increase effectiveness [of grant funding] through increased accountability, measuring impact, and heightened due diligence. However, [our] research suggests that efforts to professionalize our own work through increased policy and procedure and efforts to ensure fiscal accountability through restricted grants have unintended, harmful consequences that we now are seeing.
The good news is that the philanthropic community can directly affect the main threat to impact. Viewed through a different lens, these findings are highly encouraging because they point to challenges that are entirely within our control to change and prevent.”
NDCi.global has frequently called for philanthropic funders to look at how they could align agendas and simplify procedures, and it’s useful to have this research-based confirmation of the problem. There is progress: for example, the Finance Dialogue brings together a number of donors with an interest in divestment/investment issues. Also, at the ‘Macron summit’ in Paris in December 2017, one of the commitments from a number of large government and private grants providers was to create a ‘Philanthropy Taskforce’ to see how they could achieve such efficiencies. This taskforce met recently for the first time, but it’s proceedings aren’t published. Meanwhile the GCF and GEF, two of the largest public climate funds, have agreed to work towards mutually streamlining their procedures during 2018.