8 minutes read
This article is co-authored by Dr. Sherria Ayuandini
Addressing the challenges of our time requires addressing complexity
In today’s world, simple problems are increasingly difficult to find. As Rittel and Weber (1973) foresaw, many of the issues that confront policymakers and practitioners are “wicked” problems without clearly-defined solutions that can themselves be difficult to define precisely. Such issues have very negative, potentially irreversible consequences if not addressed, but are characterised by asymmetric, incomplete or even contradictory knowledge that is highly context-specific. They also involve multiple stakeholders with subjective views, different objectives, and a high degree of interconnectedness leading to feedback loops that are difficult to either foresee or forestall. COVID-19, climate change, and advances in new technologies such as artificial intelligence that may catalyse tremendous systemic change for better and for worse are all recent examples, as are the more longstanding but ever-evolving issues of gender, migration, poverty and inequality.
Complex is not the same as complicated. In a merely complicated environment, risks to stakeholders may be high but remain knowable and can be mitigated by foresight and planning. However, in complex environments, neither risks nor stakeholders can be completely known or understood and both may be subject to multiple nonlinear interdependencies. This, in turn, leads to greater uncertainty and potential negative spillovers over time and space. In this context, addressing complex problems with simplistic, one-size-fits all solutions may lead in fact to worse outcomes than taking no action at all.
Complexity Contributes to the “Missing Middle”
To be able to deliver sustained positive change in a complex world, organisations working on the ground need to build short-term agility as well as longer-term institutional strength to manage unanticipated shocks and to seize emerging opportunities. The most successful organisations are likely therefore to be the ones that are able to build relationships, refine their practices, and continually reimagine their work as needs and conditions evolve.
Organisations’ efforts to secure the external capital required to establish these capacities may be confounded by the difficulty – or even fundamental impossibility – of articulating, executing and verifying highly-specific plans of action. On the other side of the gap, funders face the mirror-image of these challenges. They not only deal with greater environmental uncertainties but also poorer quality signals around grantees’, ex-ante potential, and ex-post efforts in order to guide selection, accountability for and attribution of outcomes.
A complex environment not only creates gaps but also expands disparities by disadvantaging certain groups. Those without dedicated resources for monitoring and evaluation, those working towards less tangible goals, and those working in the most challenging and rapidly evolving circumstances will face higher barriers to accessing funding or forging wider relationships. In particular, complexity can drive the “missing-middle”: the small or midsize organisations. They may successfully operate in local communities within which they have established strong expertise and relationships but struggle to articulate and fund growth, as the latter requires addressing significantly more uncertainties at a larger scale as well as longer-term organisational and systemic issues. At the same time, donors may also resort back to limiting risk by reserving larger investments for a fundable universe that is more “proven” or easily measurable, but less innovative and less inclusive, and ultimately potentially less impactful.
How does collaborative funding help?
Collaborative funding models address some (but not all) of these barriers. Like syndication in venture capital, pooling resources enables individual funders to better achieve impact through a shared portfolio with the benefits of diversification.
At the same time, coordination avoids wasteful duplication of efforts and capital, while enabling gains from mutual learning and shared expertise. It also provides access to a wider range of philanthropic opportunities through their collective network and reputation. There exist as well the potential benefits of a network of intermediaries to support the process of screening and governance. Grantees benefit from the scale of funding as well as the value-add of a wider pool of potential advisors.
How does unrestricted funding help?
Unrestricted funding models also address some of these barriers directly. Firstly by recognising that overly rigid selection and governance frameworks that call for strict accountability to predetermined targets can be counterproductive. This is especially true in environments where biased signals generate perverse incentives to fulfil outdated targets or when targets are set to favor the more easily measured over the meaningful. Flexibility can be provided on a spectrum that varies by context, from allowing variations within a project-based frame to having completely unrestricted project-, programme- or even organisation, with or without specific outcome targets.
Flexible funding allows for innovation, emergent action, and sustainability, which are especially valuable in times of uncertainty and shifting contexts. Beyond the immediate, however, it supports longevity by opening up opportunities for grantees to set out institutional vision and strategy while investing in resources to address critical internal deficits. Multi-year, unrestricted funding in particular empowers grantees to assess, determine, and allocate where grant money is needed the most – which could mean operational expenses, team skills development or even programmes. For a longer-term strategy, grantees also value the ability to put funding towards overhead costs or investments across multiple projects that are not easily defined or apportioned, including investing in talent. By making it easier for grantees to recruit and retain the effective leaders and staff they need to achieve their long-term objectives, funders demonstrate that they value the work their impact organisation partners do and are committed to in their longer-term vision.
The unique value of collaborative unrestricted funding
Collaboration alone cannot mitigate the effects of inappropriate one-size-fits-all funding approaches that pathologise the diversity of actual results. On the other hand, unrestricted funding at a large scale is not likely to be feasible for the vast majority of single funders acting alone. Moreover, such schemes may be well-intended but ultimately result in exclusive capture by organisations with pre-existing relationships.
A potential way forward is collaborative, unrestricted funding: funding that is raised and managed collaboratively among donors but disbursed unrestrictedly in support of a common thematic interest to address (rather than a specific problem to resolve). For grantees, this enables the type and scale of investment needed for a broader vision of sustainability. For smaller or less-experienced funders, risk-sharing supports the exploration of unrestricted grant making where it is most needed, done together with more experienced peers. For established funders, this is an opportunity to practice leadership and the more inclusive form of grantmaking at the core of trust-based philanthropy.
However, for collaborative, unrestricted funding to best succeed, it is critical to recognise that removing restrictions on funding does not equate to removing governance and accountability. What it translates to is allowing for more diverse yet rigorous ways of establishing contribution and sharing lessons learned, both quantitatively and qualitatively. Funder members of AVPN highlighted the urgent need to focus on Monitoring, Evaluation, and Learning (MEL) including developing common frameworks and strengthening the capacity of grantees to evaluate impact. Ex-ante clarity and ex-post transparency around reporting the use and impact of funding are critical to enable consistency of focus among grantees and to sustain funders’ commitments, especially when the latter may face internal reporting requirements outside the collaborative pool.
Equally critically, both funders and grantees should be strongly aligned with the principles of trust-based philanthropy in which deep relationships are nurtured through more open and more intensive repeated interactions within and across networks of funders and grantees. Several AVPN grantees from previous thematic funds emphasised the importance of cultivating not projects but relationships and a shared community.
What can Trust Based Philanthropy members do to support this model?
- Start small by choosing what to focus on first. Funders can start their path towards unrestricted funding by first deploying small multi-year programmatic grants as a way of building trust with grantees. As the relationship strengthens, funders can move more comfortably towards larger, unrestricted grants, as exemplified by AVPN members, the Lord Mayor’s Charitable Foundation and Freedom Fund.
- Have conversations with grantees on the terms and the use of unrestricted funding. Experience shared during AVPN’s first sharing circle for funders showed that both funders and grantees could reach a consensus on how to best use funding and treat each other as equals within the first meeting.
- Be willing to unlearn what might be familiar on the part of funders. It is no easy task to change the way that grantmaking has been done for decades. Grantmaking under trust-based philanthropy requires funders not only to change behaviour but also to bear more of the brunt of grant-management and delivery. This includes but not limited to building the MEL capacity of grantees, supporting grantees in data collection, helping them use the monitoring data to continuously improve their programme implementation, and opting for economical data collection solutions so that grantees do not spend their time collecting data and reporting when they can use the time for implementing the programme.
- Find the right partners. Different funders have different trust thresholds. Intermediaries like AVPN can play an important role in aligning the interests of these diverse stakeholders by being flexible and adaptable in the onboarding of individual funders. Depending on the funders, some might be more willing to wholly trust in the approach, while others might want more information in order to build the initial trust both in the intermediaries and in the grantees.
- Shift the focus to ‘how’ rather than ‘how much’. With flexible and unrestricted funding, grantees have the freedom to use the grant in the way that they think would be most impactful for the communities. Funders should therefore use MEL to learn the process and the way impact happened instead of focusing on strictly measuring impact in quantity.
- Internally promote the model among each other. With collaborative unrestricted funding since the risk gets distributed, the champion funders should rally in those funders that are otherwise risk averse and would not support innovation.
Research For Impact is an external evaluation partner of the AVPN Primary Healthcare Pooled funds. They independently evaluate the impact of the pooled funds on the grantees, and the communities they work with. Dr. Joanne Yoong, Founder, Research For Impact, is also an independent advisor for the AVPN Philanthropic Funds.
This article is part of an ongoing AVPN initiative on Trust-based Philanthropy were we share our learnings, develop insights with our partners, and lead the conversation about this essential and evolving approach to giving in Asia. To learn more and get connected please click here.