Lessons from implementing the VCA’s Next Level Grants Facility (NLGF)

Since 2021, the Voices for Just Climate Action (VCA) programme has been conceptualising and implementing the Next Level Grants Facility (NLGF), a € 3.5 million small granting mechanism providing funds to the local level in seven countries, namely Bolivia, Brazil, Indonesia, Kenya, Paraguay, Tunisia and Zambia. This grant fosters a bottom-up approach to decision-making, where communities and local allies play a key role in identifying priorities and defining solutions to climate change. The VCA already disbursed over € 1 million to local groups and communities. This reflective piece highlights some of the key lessons thus far in implementing the NLGF. These lessons have been drawn from several cross-regional learning sessions that facilitated knowledge sharing and adaptative management between the NLGF’s Fund Managers.  

The VCA’s Next Level Grants Facility

The NLGF targets small informal organisations and movements that do not have the capacity to apply for and report on more formal grants but that represent local rights holders and work on local climate solutions. It also focuses on the hard-to-reach informal groups and individuals (including youth, women, rural, urban, Indigenous groups, and traditional communities) who, by their informal nature of operations, would not normally access the programme’s resources. The NLGF is managed at the local level. In each country, there is a local Fund Manager with a strong capacity to administer and monitor the grant but also be connected with community networks and spaces.  Each country developed its own framework for the NLGF which reflects the criteria, approach and governance structure for decision-making and management of the fund.

In all regions, the NLGF has two funding cycles; one for climate emergencies as a rapid response mechanism for disasters in the region and one for climate opportunities. The latter are slightly larger amounts that can be granted to local initiatives that increase resilience in a community or region. Types of emergencies include and are not limited to the protection of life and safety, access to decision-making spaces, evidence generation, campaigns and communication, capacity building, legal protection i.e. environmental activists facing harassment and response to natural disasters. Emerging opportunities include local solutions that are co-created, proposed, designed and led by local communities and that have been endorsed by the scientific/technical community and those using traditional knowledge for their potential impact on climate adaptation and/or mitigation.

Key Lessons Thus Far

Contextualising priorities makes funding more responsive to local needs

Contextualising the NLGF within the country context has been key to responding to local needs and opportunities. Core to this contextualisation was the defining of ‘climate emergencies’, stipulating the thematic and regional priorities of the fund. However, the nature and scope of climate emergencies are very diverse in the different regions. In Latin America, there was a stronger focus on issues related to environmental defenders whereas in Africa, the focus of emergency funding has been on flood and drought crises, aligned to the notion of ‘loss and damage’. Being clear, but also flexible, on how to define the most pressing needs and climate emergencies is critical to defining priorities that guide the funding selection process. Broader social issues need to be considered and included under the umbrella of climate justice to ensure that these issues are also addressed by the fund.

Community networks and inputs expand the reach and ground the process

The NLGF has fostered a strong sense of local ownership by building networks and connections to ground the granting process as a participatory approach. Having communities, local leadership and local partners involved in the scoping and the delivery of the NLGF has strengthened the reach of the funds and their impact. Having constituencies and communities involved throughout the process has both ensured that the fund is addressing community needs and also promotes transparency, accountability, and trust which is often absent from climate financing. Many of the Fund Managers already had existing networks and communities that they work with which helped them to reach broader groups. Giving local institutions and communities more direct access to finance and decision-making power over how adaptation actions are defined, prioritised, designed and implemented is key to the success of the NLGF thus far.

Low risk approaches to funding enhance impact at the local level

The NLGF was set up to have a high-risk appetite, allowing groups and projects that typically cannot access funding to do so. For the NLGF, managing risk and accountability is particularly nuanced given that the facility is targeting informal groups and individuals. Agreeing on levels of risk and appropriate mitigation measures with the Donor, the Dutch Ministry of Foreign Affairs (MoFA) was an important step in creating the space for hard-to-reach groups to access funding. To date, the NLGF is already providing evidence that risk-sensitive approaches unlock opportunities for financing at the local level that cannot be attained through traditional, bureaucratic approaches to financing.

Funding at the local level builds capacity and sustainability

Whilst the NLGF was set up with low barriers to accessing finance the process has inherently provided support and built the capacity of these groups through their engagement with the fund. Community-based organisations and groups have been involved in a grant application and management process for the first time by receiving funds. Beneficiaries have emphasized that the support received has given them new knowledge and skills in managing funds and the associated processes – whether that is opening a bank account or basic reporting. A ripple effect is that some beneficiaries have received funds from other donors due to their grant management experience with the NLGF. Direct support that targets communities or individuals at the grassroots level has proven to be a highly effective strategy, instilling confidence in the effectiveness of real climate action on the ground.

The selection criteria are core guiding principles for the process

Whilst seemingly obvious, the development of the criteria for grant selection is a central component of the small grant process. Strong criteria that outline priorities are central to the selection and decision-making process. Negotiating the criteria is an important step in determining the direction of the grant whilst providing a clear scope. All Fund Managers noted that defining the selection and eligibility criteria, alongside the grant implementation framework, was an intensive process. The criteria needed to be specific enough to target the priorities that were scoped but also broad enough to allow diverse needs to emerge.

Peer learning strengthens local approaches

Throughout the implementation of the NLGF, there have been facilitated cross-regional learning sessions held between the Fund Managers. These sessions have provided the space for implementers to share their progress, lessons and challenges with others. Peer learning has allowed the Fund Managers to understand collective issues and provide one another with tools and ideas to strengthen their approaches. Whilst there are similarities across the different Fund Managers, it has also highlighted contextual differences and nuance needed to deliver the fund. Sufficient time and resources should be set aside for peer learning and resultant adaptive management.

Resourcing for grant management is often underestimated

Appropriately resourcing the management of the grant is a challenge raised by all Fund Managers. Whilst it seems simple to manage and disburse funds, it is a complex and admin-heavy job for Fund Managers to undertake and the resourcing provided for this job is often not enough. When grant management is done in a participatory and responsive way, including emergency support, protection, safety, and access to decision-making processes for marginalized communities, it requires a significant amount of resourcing beyond the basic disbursement and granting of funds. Many of the groups as well as the individuals working with the NLGF that either access funds or provide the funds require additional support (e.g., phone calls, visits, capacity, digital literacy, cultural sensitivity) and this is often not taken into consideration. Logistics to access spaces or provide the funds to remote communities also need to be factored in. The funds also require a level of immediacy which also places additional pressure on the Fund Managers. The demands and the pressure are high but there are often not enough resources to respond appropriately.

The NLGF is an innovative mechanism that is already having an impact on the ground. There is strong evidence from the NLGF on how financing locally led approaches lead to sustainable and responsive adaptation. By strengthening and scaling financing mechanisms like the NLGF, there is the potential to secure finance that reaches communities. The VCA is working on the development of a full report to quantify the impact of the NLGF and draw out more intricate learning from Fund Managers and beneficiaries of the fund. If you are interested in finding out more about the NLGF, please reach out to tiffany@southsouthnorth.org