Policy Brief – Scaling Small Grant Financing for Climate Action: Lessons from the Next Level Grants Facility

Based on implementation across seven countries, including Brazil, Bolivia, Indonesia, Kenya, Paraguay, Tunisia, and Zambia, the brief offers a compelling case for rethinking how climate finance is delivered, shifting from centralised, compliance‑heavy models toward approaches that put communities at the centre of decision‑making and action.

WHY THIS MATTERS

Despite global commitments to locally led climate action, very little of climate finance reaches local actors directly in a flexible and timely way. This gap undermines the ability of communities on the frontlines of climate change to respond to risks, build resilience, and shape solutions that reflect their realities.

The NLGF provides a practical and tested model for closing this gap, demonstrating that when finance is devolved to the local level, it becomes more effective, inclusive, and sustainable.

KEY MESSAGES

• Locally led climate finance delivers results
  When funding is accessible and grounded in trust, grassroots actors can drive meaningful climate action across diverse contexts.
• Inclusion drives impact
  Empowering women, youth, Indigenous peoples, and informal actors leads to more legitimate and sustainable outcomes.
• Trust-based accountability works
  Replacing rigid compliance with supportive, adaptive oversight strengthens transparency and ownership.
• Flexibility improves efficiency and responsiveness
  Simplified processes and adaptive programming enable faster, contextually relevant action.
• Small grants can catalyse systemic change
  Even modest financial support can strengthen institutions, build partnerships, and influence policy at scale.

POLICY RECOMMENDATIONS

For Governments

• Institutionalise decentralised climate finance mechanisms and integrate small grants into national systems
• Recognise and partner with community-based and informal actors
• Strengthen participatory governance and inclusive decision‑making
• Invest in local capacity and financial systems

For Donors and Climate Finance Institutions

• Provide flexible, long-term funding that adapts to local realities
• Simplify and harmonise application and reporting processes
• Embed technical accompaniment and capacity strengthening
• Apply equity-based funding approaches, including dedicated support for women and youth
• Enable direct access to finance for local actors wherever possible

For Implementing Partners

• Support peer learning and collaboration networks
• Invest in adaptive capacity strengthening for grassroots organisations
• Promote accessible communication and digital inclusion
• Facilitate pathways from small grants to scaled and sustained impact
• Ensure safe, inclusive, and accountable participation

A Model for Scaling Locally Led Climate Action

The NLGF demonstrates that locally led climate action is not a pilot concept; it is a proven, scalable approach. By shifting power, resources, and decision‑making closer to communities, climate finance can become more equitable, effective, and responsive to the realities of those most affected.

CALL TO ACTION

To realise the full potential of locally led climate action, stakeholders across the system must:

1. Redirect finance directly to local actors
2. Embed flexibility in funding design
3. Adopt trust‑based, learning‑oriented accountability
4. Ring‑fence funding for marginalised groups
5. Strengthen and resource local intermediaries

This policy brief contributes to ongoing global efforts to reform climate finance and provides actionable pathways for governments, donors, and practitioners seeking to align climate investments with justice, equity, and impact.

Contact info@southsouthnorth.org  for more information.