Contribution to the National Contribution to the National Strategies on BiodiversityStrategies on Biodiversity

Donor’s Donor’s Expectations of Expectations of Environmental Environmental

FundsFunds

“…“….Foundations occupy an unusual role among the .Foundations occupy an unusual role among the set of institutions working to make the world a set of institutions working to make the world a better place. They are, at once, supporters and better place. They are, at once, supporters and judges, enablers and critics, advocates and judges, enablers and critics, advocates and grantors of community-based nonprofits. At their grantors of community-based nonprofits. At their best, their practices best, their practices promote genuine promote genuine participation, demystify funding parameters, participation, demystify funding parameters, support project design processes and build support project design processes and build organizational capacityorganizational capacity. These kinds of efforts . These kinds of efforts help level the playing field and create an help level the playing field and create an environment where donors and grantees share environment where donors and grantees share power and acknowledge each other’s power and acknowledge each other’s contributions. Their outreach to rural contributions. Their outreach to rural communities, communities, system of checks and balances in system of checks and balances in governance and grant-making processes,governance and grant-making processes, and and funding criteria promise to get resources funding criteria promise to get resources in a fair in a fair and strategic wayand strategic way to those isolated from donors.” to those isolated from donors.”

Betsy Campbell, “Grantmaking for Sustain able Betsy Campbell, “Grantmaking for Sustain able Development”Development”

I.I. Which Donors and Which Donors and what are their what are their

objectives?objectives?

U.S. Total Flows to the Developing World in 2000: $70.5 BNU.S. Total Flows to the Developing World in 2000: $70.5 BN

US Private Lending & Investment

39%

Personal Remmittances

26%

USG ODA14%

US Corporations4%

US Foundations2%

USG & Other Country Aid

4%

US PVOs4%

US Universities and Colleges

2%

US Religious Organizations

5%

Trends in ODA foreign Trends in ODA foreign assistance assistance

A FewA Few Drivers of ChangeDrivers of Change

Policy CoherencePolicy Coherence - reduce conflict among - reduce conflict among multiple objectives/goals of bilateral foreign aid multiple objectives/goals of bilateral foreign aid

Manage for ResultsManage for Results - manage more - manage more strategically, clarify goals and align resources strategically, clarify goals and align resources and get greater resultsand get greater results

Effectiveness PrinciplesEffectiveness Principles - apply the - apply the effectiveness principles to foreign aid (e.g effectiveness principles to foreign aid (e.g good governance, economic freedom, …)good governance, economic freedom, …)

II. Donor Expectations of II. Donor Expectations of EFsEFs

1.1. U.S. example (TFCA)U.S. example (TFCA)

2.2. German example (KfW)German example (KfW)

Drivers of Fund Governance Drivers of Fund Governance DesignDesign

From the grantee’s perspective:From the grantee’s perspective: They want access (to the funds) and perceived They want access (to the funds) and perceived

fairness.fairness.

From the Host-Country Gov. perspective:From the Host-Country Gov. perspective: The GOX wants access (to the funds) and The GOX wants access (to the funds) and

control (influence on their use).control (influence on their use).

From the Donor’s perspective:From the Donor’s perspective: The donor wants control (checks and balances), The donor wants control (checks and balances),

leverage ($), results (impacts)leverage ($), results (impacts) Avoid direct budgetary support for public sectorAvoid direct budgetary support for public sector

Good Governance & Good Governance & ManagementManagement

transparency transparency efficiencyefficiency effectivenesseffectiveness reliabilityreliability innovationinnovation flexibilityflexibility simplicitysimplicity

accountabilityaccountability leverageleverage representative / representative /

democraticdemocratic other…other…

What can we learn about What can we learn about donor expectations from EF donor expectations from EF

Evaluations?Evaluations?1.1. Update strategic planUpdate strategic plan

2.2. Develop fundraising strategyDevelop fundraising strategy(consider endowment)(consider endowment)

3.3. Develop communications planDevelop communications plan

4.4. Become a learning organizationBecome a learning organization

5.5. Rationalize administrative costsRationalize administrative costs(streamline project cycle, review operations (streamline project cycle, review operations

policies)policies)

6.6. Improve reporting of impactsImprove reporting of impacts7.7. Improve Board operations Improve Board operations (clarify roles, (clarify roles,

responsibilities; delegate to committees; train responsibilities; delegate to committees; train new members)new members)

8.8. Ensure proper and consistent board Ensure proper and consistent board representationrepresentation

9.9. Explore new ways to engage Explore new ways to engage partnerspartners

10.10. Update and integrate information Update and integrate information technologiestechnologies

Lag Time in Grant Making:Lag Time in Grant Making:TFCA FundsTFCA Funds

0 10 20 30 40 50 60 70

Months

BotswanaGuatemalaParaguayJamaica

Panama IIColombiaPanama I

PhilippinesPeru

El SalvadorBelize (PACT)

BelizeBangladesh

Chronologicalcal

First Grant IssuedClock Starts as Signing of TFCA Agreements

1.1. TFCA Evaluation TFCA Evaluation ScorecardScorecard

GovernanceGovernanceThe Fund:The Fund: established goals & objectives complement programs established goals & objectives complement programs

of othersof others established all internal operational policies and established all internal operational policies and

procedures..procedures.. implemented a M&E plan for impact reporting implemented a M&E plan for impact reporting

The Board:The Board: meets regularly and achieves a quorum.meets regularly and achieves a quorum. has a written strategic plan w/ specific objectives, has a written strategic plan w/ specific objectives,

funding priorities, and dates and regularly evaluates funding priorities, and dates and regularly evaluates progress toward the key objectives and adapts as progress toward the key objectives and adapts as necessary. necessary.

conducts an annual performance review of itself conducts an annual performance review of itself

Implementation of AgreementsImplementation of AgreementsThe Fund:The Fund: becomes operational within one yearbecomes operational within one year in compliance with all agreement conditions (incl. in compliance with all agreement conditions (incl.

legal registry) legal registry) completes and makes accessible, annual audits, completes and makes accessible, annual audits,

plans and reportsplans and reports

Grant MakingGrant Making total funds disbursed is consistent with the total funds disbursed is consistent with the

expenditure plan.expenditure plan. grant making processes are competitive. grant making processes are competitive. grant disbursement periods are reasonable.grant disbursement periods are reasonable. grant agreements follow best practices and require grant agreements follow best practices and require

reporting on conservation impacts.reporting on conservation impacts. monitoring and evaluation plan of grants exists. monitoring and evaluation plan of grants exists.

Financial ManagementFinancial Management

The Fund:The Fund: has established a financial plan (w/ budgets, has established a financial plan (w/ budgets,

income & expenditure forecasts).income & expenditure forecasts). has established a written investment policy.has established a written investment policy. has kept within the administrative costs ceiling has kept within the administrative costs ceiling

limits.limits. has established investment monitoring has established investment monitoring

capabilities capabilities has diversified its sources of revenue has diversified its sources of revenue

2.2. KfW questions of EF KfW questions of EF governance structures governance structures [April [April

2007]2007] BoardBoard Which are the major considerations when Which are the major considerations when

nominating a Board (e.g. skills and level-of-effort) nominating a Board (e.g. skills and level-of-effort) and managing the succession of its members?and managing the succession of its members?

Which governance structures are particularly Which governance structures are particularly conducive to balanced and objective decision-conducive to balanced and objective decision-making? (e.g. to prevent hijacking of resource making? (e.g. to prevent hijacking of resource allocation by special interests.)allocation by special interests.)

What is the balance necessary between levels of What is the balance necessary between levels of ex-anteex-ante and and ex-postex-post monitoring and control of monitoring and control of Fund activities relative to the desired efficiency Fund activities relative to the desired efficiency and flexibility?and flexibility?

KfW questions of EF KfW questions of EF Management Management [April 2007][April 2007]

Grant MakingGrant Making Which enabling conditions have proven necessary for Which enabling conditions have proven necessary for

transparent, participatory and efficient Fund mgt? transparent, participatory and efficient Fund mgt? Which approaches to technical and financial auditing Which approaches to technical and financial auditing

of grants have proven effective and efficient?of grants have proven effective and efficient? Which indicators have proven most effective in Which indicators have proven most effective in

allocation of Fund’s resources?allocation of Fund’s resources? Which grant selection criteria have been particularly Which grant selection criteria have been particularly

effective for allocation of Fund resources?effective for allocation of Fund resources? What is the appropriate level of administrative layers What is the appropriate level of administrative layers

in the grant approval process, and why?in the grant approval process, and why? What are acceptable administrative expense ceilings, What are acceptable administrative expense ceilings,

and why?and why?

What does Success Look What does Success Look Like?Like?

EFs which attract additional $EFs which attract additional $ Demonstrate shared principles with donors.Demonstrate shared principles with donors. Demonstrate host-country government support.Demonstrate host-country government support. Offer attractive governance & management structure Offer attractive governance & management structure Develop a remarkable track record (brand)Develop a remarkable track record (brand) Avoid being identified too much with a particular Avoid being identified too much with a particular

donordonor Offer economies of scale or value-addedOffer economies of scale or value-added Offer incentives (e.g. subsidized admin costs)Offer incentives (e.g. subsidized admin costs) Offer a compelling strategyOffer a compelling strategy Work in areas of particularly high biodiversity valueWork in areas of particularly high biodiversity value

Avoid Unnecessary Avoid Unnecessary ComplexityComplexity

Dualing board – Different visionsDualing board – Different visions Mission Creep (e.g. becoming Mission Creep (e.g. becoming

implementers) implementers) Multiple tiers of authorityMultiple tiers of authority Lack of delegation of authorityLack of delegation of authority Creation of unnecessary layers or bodiesCreation of unnecessary layers or bodies Complex fund management agreementsComplex fund management agreements

How did we do this to ourselves?How did we do this to ourselves?

““When it comes time to make a choice, When it comes time to make a choice, most of the act of choosing has already most of the act of choosing has already

been done.”been done.”

Much of a fund “decision space” can Much of a fund “decision space” can be limited by early agreement be limited by early agreement clausesclauses

Complexity of Fund design is Complexity of Fund design is frequently the result of frequently the result of accommodating diverse accommodating diverse perspectives.perspectives.Complexity Flexibili

ty

Legal and Policy TiersLegal and Policy TiersFor flexibility: Push conditionality to lowest For flexibility: Push conditionality to lowest

level possiblelevel possible

U.S. statuteU.S. statute Host Country Gov. Host Country Gov.

StatuteStatute

Bilateral AgreementsBilateral Agreements

Incorporation DocumentsIncorporation Documents

By-lawsBy-laws

Operational PoliciesOperational Policies

Management AgreementsManagement Agreements

Con

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