Why donors need to rethink funding for greater impact

“It was for us … a great experience participating in the first round of your call. It has allowed us to make questions and take our conversations on where the project needs to go … what we need to be asking, researching, and so on.”

Should we pay for results?

If Global Development funders want to achieve “results” or “impact” against development challenges, they should hold organisations accountable for demonstrating “results” or “impact”, right?

This seems obvious - it feels odd even to question it.

Unfortunately, the reality is very different.

If we fund (and consequently manage contracts and performance) based on “results” or “impact”, it can lead to a corruption of data. We get good-looking data, but it's good-looking because we’ve paid organisations on the basis that they deliver good-looking data. We also miss out on hearing stories of genuine impact.

If we specify desired results in advance, we take decision-making power away from those working and living in the places we serve. It feels like everyone in the development world knows this, but people have seemed strangely reluctant to change funding practices.

How can funding be done better?

Short answer - If we want complex systems to produce better outcomes, evidence strongly suggests that we must fund collaborative experimentation and learning. We would like to share with you a work in progress for how this can be done in development and humanitarian practice.

It’s important to say we are at the halfway point of this programme. Here are our reflections on the process so far.

Participatory grantmaking for learning and adaptation

In 2022, SIDA and EIT Climate-KIC, as part of their collaboration under the Systems Innovation Learning Partnership (SILP), created the SILP Experimentation Fund. The Centre for Public Impact has supported them as a critical friend and sounding board. It is a funding programme purposefully designed to enable people working in complex environments to:

• Build collaborative learning relationships amongst actors in local systems;

• Design action research experiments and explorations together;

• Learn together about the changes these experiments and explorations create in the systems they are part of.

EIT Climate-KIC recruited a team of Community Grantmakers - bringing together different forms of knowledge and experience - to help design this funding programme. This itself was a learning journey. Based on rapid experimentation, this programme learned its way to a learning approach.

The Systems Experimentation Fund was designed using the framework of a Human Learning Systems Learning Cycle.

At the application stage, organisations described their work to identify and “understand” the complex system that produces the outcomes they wanted to change. 

• Who are the actors in this system? 

• What is the quality of their relationships? 

• What are the factors (causal drivers) in that system? 

• What collective knowledge was created when you brought together those actors to talk about those factors?

The fund received over 290 applications and reviewed them through a participatory grantmaking process. The Community Grant Makers longlisted a portfolio of projects which would learn together. Fascinatingly, they selected to create a balanced learning portfolio rather than looking just at the strengths of individual applications.

42 applications received a microgrant to help them co-design experiments and explorations.

They have used this support to design the action research programmes they are going to undertake:

• What questions are they asking? (Derived from the collective knowledge of how their systems work)

• What actions will they undertake to explore those questions?

• What data will they collect?

• Who will make sense of this data?

Of those, seven have been selected to receive funding for these experiments and explorations.

EIT Climate-KIC has built a learning infrastructure and processes to support reflection at:

What we’ve learnt so far

At the halfway point, we’ve learnt interesting things about how to fund in ways which challenge existing power dynamics and purposefully support learning and adaptation in complex environments.

1. It is possible to fund differently - for learning and adaptation. We have a choice.

2. It is possible to use participatory grantmaking approaches for experimenting with funding differently.

Quotes from community grantmakers:

“There were moments to review and synthesise questions, provide feedback, and ensure alignment with the objectives. This allowed for continuous improvement and refinement of the grantmaking process.”

“So often we say in the field that we need to create good feedback loops, right feedback loops that enable us to adjust our program. Often the feedback loops come in the implementation of a project. You had a powerful feedback process right in the start that actually created the selection process. I was really impressed with how you as a team absorbed the feedback from the group, as opposed to just listen, ignore, and move on. You actually heard the feedback and made massive changes along the way.”

3. Work to help people reflect on the complex systems which create the outcomes they desire is valuable:

This feedback, from Javier Guillot and Antonia Brock from Power Compost, Colombia (one of the programme’s grantees) does a nice job of summarising some of the potential of working in this way:

By participating in SILP's Experimentation Fund, we have recognized the immense power that lies in funding for learning, for it has allowed us to develop this project without the limitations of a predetermined, fixed and rigid vision of results and rather harness the grand potential that exists within the local system to cocreate and catalyze sustainable transformations.

Through our SILP experiment, which aims to learn about how to transform the organic waste system of Chía, a municipality in Colombia, we have realized the importance of making the tacit and implicit relationships and elements of a localized system more evident, thereby increasing the potential of driving radical transformations through collective learning processes.

The approach of funding for learning has enabled us to reveal a multiplicity of paths for transforming the system, allowing us to harness the existing potential not by adhering to a logic of compliance but rather co-creating with all actors present in the system.

4. There is evidence that potential grantees are willing to collaborate and support one other, even when they’re in competition.

The long list of grantees (i.e. those that received a microgrant to support the development of a funding application) were invited to a peer-to-peer learning session to collectively explore what a ‘systems approach’ means and might look like in their application. Applicants engaged and shared their perspectives in this session, in spite of the fact that they would be competing for funds. Following this session, a WhatsApp group was set up by Climate-KIC for applicants to opt in and remain in touch. Up to the deadline, there was activity in the group of applicants asking questions and supporting each other.

What we’re seeking to learn next

In the next phase of the work, we hope to learn:

• What patterns will emerge in purposefully designing a learning programme that connects several experiments, experiment teams, and local contexts and systems? What can this tell us about how to work in a development context more effectively?

• What capabilities and capacities enhance this type of work and lead to positive change and impact? What is shared across the various stakeholders in this programme? What might be different? Where are there gaps and opportunities?

• When managing a grant programme, what does it mean to focus on learning questions and individual and collective reflection/sensemaking rather than predetermined outcomes? 

• What risks and/or opportunities arise for the grantees, stakeholders, funders, and collaborators in this more distributive, participatory, learning-centred, and collaborative approach?

• What space and opportunity do we create for the different actors involved after the formal granting period and learning programme? 

• Last but certainly not least, how can this learning influence and encourage experimentation in various layers of the development funding system?

From what we’ve learned so far, we think this approach to funding offers donors exciting opportunities to challenge power dynamics and promote learning and adaptation. If you’d like to find out what else we learn, look out for the first part of the case study of this work and all the updates to come.