Sharing Funding Responsibilities
Summary:
Combination of various types of funding: using concepts of Co-financing
and Contribution "in-kind" helps you add new funds to
existing funding
Funders want local commitment to be proven by the participation
of recipients in the effort you want to be funded. They will look
for a combination of available funding and the effort of stakeholders
with new financing to serve your project purposes, using monetary
and non-monetary incentives to generate participation of the stakeholders
bringing in their own resources and finances.
Funders do not like to be lone funders. They have grown wise enough
to know that, if the recipient does not put anything in himself,
it is not a priority to him. That bore a concept of funder-recipient
co-financing – ‘give something yourself and I will add
more’. This is what "co-financing" means: recipient
and funder pool their funds into one bag controlled by the same
agency for the same project for same objectives.
- For "in-kind" co-financing, you can give available
labour, space, and cover any cost in local rates, and the funder
gives you cash (either a grant or a loan) for something you cannot
pay for. In cash management, that can lead to different solutions:
effort and resources can be pooled under same control, as in co-financing
concept, or requirements can be relaxed by having different management
while targeting same objectives. In multinational projects (as
IUPM), different co-financing rates allow to equalise factual
contribution of partners in different economic situations.
 Click
to read note
- Wiser funders, who value overall effect on development more
than their own administrative influence have gone further in the
multi-funder approach, pooling resources of several funders to
provide co-financing to the recipient. Yet sometimes in such schemes
each funder is compelled to stick to his own rules (e.g. different
time-frames for disbursement and termination of programmes). These
concepts are mostly used in extraordinary funding., Applying for
and managing implementation of such co-ordinated and especially
uncoordinated multi-funder support may become a reporting and
accounting nightmare, as it always means playing according to
several systems of rules at once and may annihilate weaker accounting
capacities.
- More importantly, co-financing and "in-kind" contribution
concepts allow using existing financing to attract new funds.
Then the funder rests assured of concerted effort - that his support
does not go for something irrelevant, since the recipient is putting
considerable funds in the same effort himself.
- You will have to motivate the stakeholders. You can combine
monetary incentives (tax deduction, co-financing) with non-monetary
incentives, as offering access to information, training, finding
partners, offering facilities, and many other.
 Point
to note
Do not let these concepts confuse you in accounting terms - funders
may request many additional assurances and procurement procedures.
Yet accounting complexity can always be overcome by commons sense
supported, where inevitable, by specialist competence. The notion
of connecting existing financing to additional new funds for the
same purpose is a very important technique in quest for sustainability.
In the sense of concept, it goes beyond attracting external funders.
The same principle – leading to demonstration of commitment
by putting in co-financing - is used for attracting stakeholders’
effort, e.g. asking local businesses on a square to contribute to
costs of re-paving and new lighting.
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