Andreas Ulfsax works for IM (www.imsweden.org/en). IM is a Swedish member-based development organization supporting civil society organizations in 10 countries. As a Change Developer, he focuses on getting everyone to experiment more. For contacts andreas.ulfsax@imsweden.org
This blog post describes how IM experimented with Power Funding, a new funding modality, and the surprising results.
Can we fund better than Core/Institutional funding?
As an organization keen on supporting civil society, we have always been interested in our funding methods. Historically, we mostly provided our partners with project and program funding. But in recent years, we shifted, and now most of IM’s 70+ civil society organizations receive core/institutional funding. We see the effect; Core Funding builds civil society.
However, we have not seen the more transformational effects that we had hoped for. We therefore decided to dig deeper together with our partners in Palestine to get a more nuanced picture.
“Core funding still comes with a lot of demands that push us to be like other organizations.”
“We employ English-speaking persons for writing plans and reports, instead of the one best suited for the job.”
Not really the power shift stories we wanted…
Core funding, it seems, comes with a lot of assumptions. One assumption is that civil society actors need to be professionalized (with INGOs serving as the standard) and another is that the quality of services increases under the guidance/control of an INGO.
We also discovered that we love our documents. I do, and maybe you reading this as well? When partners’ documents are safely uploaded on our servers, we feel safe. And the organizations we support respond to this by investing in plans, reports, and organizational policies.
Power Funding; a better way to fund?
Together with our partners in Palestine, we innovated a new funding modality: Power Funding. Why that name? We hoped that the funding would shift power from us towards our partners.
So, what is Power Funding? In a nutshell, there are no proposals, budgets, and reports. The only compliance demands are a contract and an audit. Assessment is still done prior to the contract, and as always, we work closely with our partners.
Utilizing our own funds, IM supported two Palestinian civil society organizations during 2023. One was a new partner to us, a brilliant human rights organization. And we gave Power Funding to an informal/unregistered network that we have supported for several years. While these organizations are very different, they had two similarities. Both organizations are passionate change-makers, and both had previously received core funding. To capture what happened, we carried out an external evaluation.
Give it a go and guess, what was the result of the evaluation?
My own guess, when we planned this in 2022, was that partners would invest in building their organizational capacity (I was wrong…).
In the external evaluation, we compared Core funding with Power funding. The results were clear, consistent, and surprising.
Power Funding led to increased responsiveness towards the communities partners work with.
“Power Funding are intertwined between shifting power from the donor to the partner, in parallel to sharing power between the partner and the rights holders.” /Evaluation
“for the first time, youth volunteers approached us not the other way around, it’s because we were representing the street truly” /IM Power Funding partner
Why was that?
These results may seem surprising at first glance. The compliance demands are not that different between Power Funding and Core/Institutional Funding. How could the lack of reports/proposals/budgets to a single donor make any difference?
The difference was that we took less space. Without having pre-arranged results to deliver on or budgets to spend, partners looked outward. They were able to use the funds to quickly respond to emerging needs that they did not know about in 2022. The Palestinian civil society faces extreme pressure, and Power Funding was a way to handle that pressure.
Why is this important?
Core funding makes our partner more flexible. Power Funding takes this a step further by enabling partners to redistribute power to the constituencies they engage with. We will use these insights to fund our partners in a better way.
I would like to close this with a gentle encouragement to experiment more in this sector. It’s how we learn in a complex world.
Great that you acknowledged that the mass of documents, plans and reports are produced not only to help track and facilitate progress, but to make one feel better. I guess an uncertain future, creates a lot of anxiety, and one way to cope is to make a plan, even when you know it will sit on the shelf or get pulled apart by reality. But the feeling is short lived and you go back to grappling with the uncertainty. Perhaps one way through is to stay with the uncertainty, think about it, rather than denying it?
I very much agree Ajoy! We often talk about complexity, but in practise little is done to make it easier to handle uncertainty.
Love this new idea/approach of power funding. Would be interested in seeing if more donors, investors and partners embrace this sort of “no strings attached” approach.
Thanks Florence 🙂
I’m glad that you actually evaluated your approach to “power funding.” I think we don’t really know the impact of some of the “no strings attached”/trust-based” approaches to funding that we are increasingly promoting. We know the costs of the current system, but do we really know the impacts of the alternatives? There are undoubtedly real benefits, but lets really understand how they play out in different settings with different types of groups
I also suspect that there is a long term benefit to having a mix of funding modalities — with enough unrestricted money that groups can be flexible, responsive, and grow as organizations (or movements) — but with some money that encourages strategic thinking.
I know that some of the “burdensome” exercises that proposal conceptualization demands, actually helps me and my team clarify our thinking, including considering things like how one thinks change will happen? What are one’s short, medium and long-term goals? Where does power lie in the system we are trying to change?
Hi Lori – Your point about ‘a mix of funding’ reminded me of Mark Suzman (Gates Foundation CEO)’s response to a recent question about ‘whether the BMGF will move to trust based philanthropy’. He said (paraphrasing) ‘it’s great that others are, but we’ll stick to clear outcome measures’.
Hi Lori, thanks 🙂
And I agree, a mix is probably the best. But the problem our partners experience is that there is less quality funding available and our partners faces more detailed demands from their donors. So the “no strings attached funding” discussion going on seem to have little impact on the actual funding practises.
Also, the problem many partners faces is that they have several differnt donors, all having different demands. All demands may be sensible, but togheter they make it difficult for organizations to deliver change effectively.
Great example, thank you. I can really foresee the different benefits mentioned here. What about risk management? It is one key area of power imbalance and inequality that current system creates.
Would you say risk was shared more equally e.g. doing pre-assessment together and not having plans and budgets that can move most of the risks in partners hands to handle? Or how did this dynamics play out?
Hi Senja 🙂
Yes, I think that the risk was shared more equally. As the proposal was not part of the contractual agreement, there is no risk for them to not deliver results. Basically, what we asked them to do, was to spend all the funds the got from us (that they showcase in the audit).
IM’s approach is to work very close to our partners, so we still had ongoing dialogues, for example on how to handle contextual risks.