Case: Predictable funding to India
We are thrilled to be able to start presenting cases of innovative funding in foreign aid and sustainable development. There are a lot of things that can improve funding, and effectiveness in funded activities, that can have a great impact if more organisations get access to the resources needed to use them.
(Also: Check the post about how we helped Social Initiative get more funding by lowering transaction costs!)
In this post we are exploring how Social Initiative has been able to provide local partners with predictable long term funding by working together with their private sector donors.
Social Initiative is working actively with the question of qualitative funding, and since 2017 all projects receiving support will be ensured a more predictable funding without exchange risks.
Giving partners predictable funding enables them to plan better, resulting in higher quality projects. This initiative is being made possible through the cooperation of funding partners working through Social Initiative, who takes on the financial risk.
One local partners reaping the benefit from this solution is the Door Step School, who provides education to the poorest children in the Mumbai slums.
An important part of the funding for the Door Step School comes from foreign donors. As the Indian Rupee is a highly volatile currency, the Door Step School has since its start in 1989 been battling with uncertain funding. The value of foreign funds fluctuates with Rupee exchange rates, often as much as 25 percent in a year. This has previously meant that Door Step School just can’t know how much their foreign funding will be worth, once funds are exchanged.
Since 2017, Social Initiative has initiated a program where their funding partners have agreed to manage the financial uncertainty for the Door Step School.
From now on they can budget in Rupee, and be confident about their future funding. Through this initiative, the Door Step School will be able to plan its operations in a manner not possible before. The result is that the organisation can ensure the resources needed for its work, to the benefit of the children receiving a much-needed education.
In this case, Social Initiative has managed to ensure predictability through advocating the benefit with the financial donors. Making the case of quality in planning and budgeting, and the importance for results have enabled a solution. But while this is not always possible, there are many more options available that can improve predictability in funding.
We will be exploring more options in coming posts — and build a lot of practical tools directly into our service!
