Walk On Washington

Environmental funds have been set up in many countries during the past decade as a way to providelong-term financing for biodiversity conservation and other environmental activities. They are typicallycreated in and managed by private organizations, and are capitalized by grants from governments anddonor agencies, the proceeds of debt-for-nature swaps, and from taxes and fees specifically designatedfor conservation. They seek to provide more stable financing for national parks and other protectedareas, or grants to private organizations and community groups for projects to expand understanding ofconservation and to conserve biodiversity by using resources more sustainably.

Typical steps in the creation of an environmental fund

 

1. Define general vision – who and what the trust fund will support, and why. This is usually done in a consultative process in which the proponents of the fund convene a series of meetings with potential stakeholders and stakeholder groups.
2. Organize a steering committee. It needs to include both “workers” – people who have the expertise and time to work out the detailed design, and people with clout, who can secure the necessary high-level agreements and meetings (government ministries, international donors, etc.). The committee should also be representative of stakeholders.
3. Develop a list of potential donors and begin meetings – they should be approached by government, together with influential members of steering committee.
4. Secure financial support for planning/development phase – usually this is at least $100,000 not counting the time of people on the steering committee. Expenses generally include consultant and legal fees, meeting expenses, and travel for fundraising and other purposes.
5. Develop a more specific vision and strategy – this should be done by the steering committee in an open process that stakeholders can participate in. Questions to address:

- Role of the trust fund in the national context – relation to national plans and strategies, government, private sector, etc.
- Legal structure of the fund (trust, foundation, etc.).
- Governance (structure and composition of governing body).
- Focus of grantmaking program – purpose, objectives, who is eligible to receive grants, criteria for selecting them. Obviously this will change and develop over time but a well-developed starting point is essential.
- Financial projections – how much money will the fund need? What percentage will be endowment, what percentage long-term sinking or replenishing funds? This should be commensurate with the objectives of the grantmaking program – enough to achieve a reasonable percentage of the objectives. If that calculation runs into an impossible figure,
narrow the objectives.
6. After thorough discussion of the above points, draft conclusions into a proposal for the establishment of the fund. Consultations with donors should have been ongoing through the process. The committee is now ready to present the proposal to them. This may involve meetings with in-country officials as well as at the donor’s own national or international headquarters. See Chapter VII, “Raising capital” for more discussion of this point.

7. AFTER there is reasonable expectation of a donation (it’s in process with the donor) hire a lawyer to draft papers of incorporation and statutes or by-laws. These will define the processes for electing the governing body.
8. Incorporate the fund and elect the governing body (which should include mostly people who have served on the steering committee).
9. Receive initial funding, hire staff, open office, initiate grant program. If there is a delay between steps 8 and 9, and if there is sufficient start-up money, this period can be spent developing the board, preparing the operating manuals, drafting the terms of the first call for proposals, developing application forms, etc. Public meetings for interested parties and potential recipients explaining what the fund is all about should also be ongoing during this period.

 

The Handbook is available here. The contents are as follows:

 

I. Preface

II. What is an environmental fund, and when is it the right tool for conservation?

III. Environmental funds in the national context

IV. Legal structures of environmental funds

V. Governance

VI. Operational issues

VII. Raising capital

VIII. Asset management

Global List of Environmental Funds

 

Established Funds, Funds in the Process of Establishment and Possible New Funds p. 107

Environmental funds are appropriate when the threats to the environment that are being addressed are long-term and require a sustained response over a number of years. EFs are not the solution when the environmental issue in question faces major, urgent threats requiring mobilization of significant amounts of funding in a short time.

 

Photo Source for Solution Icon