Consider a balance of different funding sources when preparing for and maintaining projects

Posted on September 30, 2019 by Karina de Souza

Authoring Organizations:	Pacific Institute
Consulting Organizations:	2030 Water Resources Group Anheuser-Busch InBev Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) PVH Corp
Universal:	No
Applicable Phases:	Prepare, Scale & Exit
Last Updated	Apr 17, 2024

Overview

Consider a balance of different funding sources when initiating and maintaining projects. Admittedly, without confirmed funding, it may be difficult to convince partners to come on board. However, the type and distribution of funding can impact the longer-term sustainability and success of any partnership, as it may incentivize some partners to stay engaged.

Benefits

A dynamic partnership with multiple contributing partners can contain risks. A project plan with very strict funding criteria may prove too inflexible to adapt to project challenges.  Instead, seek funding sources from different partners to allow planning  for independent maintenance funding post-project. This blend of funding sources will allow for the following:

• Ownership by more than one partner and equality among partners, therefore strengthening the partnership
• Flexibility in expenditure – the project will have access to funds even if some funding sources have conditions attached or do not extend beyond a certain timeframe
• Creating income to maintain the project even if some donor partners exit the partnership longer term
• Avoiding project partner turnover (due to project funding ending) because longer term maintenance funding has been secured
   

Guidance

• Provide a funding mechanism that all essential partners can access, no matter how small their organization or their sector representation. For instance, a chamber of commerce might be viewed as the private sector as opposed to NGO or public sector, possibly excluding them from some sources of donor funding.
• Examine your potential funding sources for potential unintended consequences. For example, international aid funding alone may promote certain expectations from partners and prevent them from thinking about community ownership or creating economic value from their project, such as by selling access to their new cleaner water source or creating another service like waste management that contributes to the protection of their water source.
• Set up a secretariat that is supported by all partners to coordinate partners and manage finances independently.  This will make the partnership more credible and eligible for future funding.

Example

In Zambia, the Lusaka Water Security Initiative (LuWSI) was initially planned and designed with only lead partner involvement. Eventually the partnership grew to include 25 partners. Initially, when local partners were engaged to participate, the distribution of funding to partners was a challenge.

As the partnership developed, partners formed  a secretariat for LuWSI by  the National Water Supply and Sanitation Council (NWASCO) in response to the need for future management of funds without GIZ. NWASCO was able to resource the day-to-day running of the LuWSI secretariat. Many projects come with funding specific to the project and don’t usually consider a proportion of the budget for the secretariat administration and operations. However, LuWSI is now looking to become a legal entity which will make it eligible to receive independent funding so it will not need to be hosted by one partner alone.  It will be LuSWI’s role to plan for responsible and independent funding of the project and partnership for the longer term.