Impact Funding in the time of COVID-19

Photo source: The New Humanitarian

The global pandemic COVID-19 has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs, and well-being. It has changed the social sector landscape and will continue to impact the sector for the next few years. In the short term, since March 2020, change in the funding trends is already being witnessed by non-profits, especially of the CSR in India, with majority of them contributing to the PM Cares, CM Relief Funds and contributions towards local relief work like food and PPE distribution. The unexpected crisis created due to migrant labour returning to their home states, we are witnessing some of the bigger CSRs channeling their funds towards ‘Rehabilitation during and post COVID-19’ phase with a focus on re-skilling, sustainable livelihoods and job creation, BCC, and food & nutrition security.

Until the next 12-18 months, there will be opportunities for partnerships under the ‘rehabilitation lens’ across geographies, but more focused on states like Bihar, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, Odisha, Assam, and Jharkhand. Apart from relief & rehabilitation, Health (preventive health, strengthening local health systems at block and village levels, and co-morbidity diseases like TB, HIV/AIDS, Diabetes, etc.) and Education (especially working with a sudden increase in out-of-school-children due to in-migration, and skilling School teachers in rural and sub-urban India in virtual classrooms, course development and delivery, and digital communication) are other areas, where donor funds are potentially going to be invested. In other areas, especially environment and climate change (unless CSRs & foundation’s core focus is environment), it is bound to be severe funding cuts (40%-60% from pre-COVID times) over short to mid-term.

Non-profits need to continue building strong partnership with their existing CSR Partners, to continue getting support to even those projects that are not COVID aligned, and build new partnerships using COVID aligned models. It is expected that Government funding will increase and so will partnership opportunities in most of the areas like livelihoods, education and health using innovative implementation mechanisms and digital communication. The World Bank has announced large assistance programs for India, which will be implemented through state governments and may bring non-profits with the opportunities of large partnerships between now and 2025. The current changed funding trend will more or less continue in 2021. However bigger CSR and foundations will see a potential downside of 30-50% in their funding allocations.

As restrictions are being eased world-wide, the path to global economic recovery remains highly uncertain with 6-7.5% negative growth in 2020, it is expected to climb back to around 2.8-3% in 2021 and move slowly towards recovery. In the long run, 2022-25, when both national and international economies are strongly on the recovery path, it is expected that several international aid agencies, which had stopped direct funding in Indian development sector, once again will open a window for 3-5 years of funding, and number of funding opportunities for India and other developing countries will increase. Historically, post mega disaster comes the golden period of funding for impact sector. It is a phase, and it too shall pass. Together, we will continue to drive change and together we will prevail.

Disclaimer: The opinions expressed are those of the author and do not purport to reflect the views or opinions of any organization, foundation, CSR, non-profit or others.

Social Trading Platform India

The idea is to provide a capital market for social good. This can bring about social consciousness to the global financial markets. It holds the potential to increase access to capital for enterprises with a social mission. On a bigger scale, it will help social enterprises further develop the professionalism of their operations and create a whole ecosystem around it to support social enterprises. This will become India’s first social trading platform, providing a trading platform and an efficient capital raising mechanism for Indian Social Enterprises (SEs), including both for-profit and not-for-profit entities with a social mission. The Platform will connect these SEs with impact investors seeking to achieve both a social return and an economic return on their investment while providing capital to fund innovative social businesses. This platform will also enable philanthropic donations.

Such an exchange will bring all the relevant players in the ecosystem together, speaking the same language and assisting one another in creating greater social good. It will encourage the governments, civil societies, academics, investment banks, research companies, auditing bodies and social enterprises to agree on a framework to measure social value, common terminology, transparency, and social and financial goals.

Social enterprises seeking to list shares or bonds on the exchange will go through proper social and financial auditing (third party validation) and report regularly to investors on both their social and financial results. Investors purchasing shares and bonds on the exchange will be attracted by the transparent disclosure of social returns and will evaluate companies based on both their social and financial returns. They will understand that a social enterprise may not maximize its earnings due to the cost associated with fulfilling its social mission. And they will be willing to accept a limited financial return in order to support this mission. Of course, given the current dismal state of the market for profit-maximizing businesses, any economic return topped with a social return may feel like a windfall to an investor.

The Platform will push the envelope on the existing socially responsible investing, bring forward social enterprises and social purposes companies (in addition to microfinance) in energy, water/sanitation, media, fair-trade, health, education, and cottage industry and bring to the attention of these investors a whole new set of enterprises which would not have been noticed otherwise.

Such a platform/exchange cannot be created overnight. It will take years before The Exchange is a robust trading platform. However, with the proper assistance and support from other members of the social investing ecosystem, it can become the cornerstone of a potentially very large social enterprise economy.

Note: I am working on its operational model, and will post it once am done.

How to design LogFrame

LogFrame (Logical Framework) is a widely popular tool for project design, planning, monitoring and evaluation. It is however most often used in the planning or re-planning of a project.  The method was first developed in the early 1970s.  It is used by bilateral and multilateral agencies including the World Bank, the Asian Development Bank, the Food and Agriculture Organisation (FAO), Overseas Development Agency (ODA) and the US Agency for International Development (USAID), and most Non Profit Organizations across the globe today.

Logframe is most useful in helping to identify the elements of a project and the linkages between them in a logical, concise and objective manner.  It introduces order and discipline into the project design process and helps place the project in the larger context of a program or sector plan.  It also serves as a tool for logically identifying inputs, assumptions for success, outputs and indicators for monitoring progress and evaluating performance.

The term LogFrame is often loosely used to refer to both the process or concept of project analysis and the matrix outcome of this process.  The Logframe concept is often referring to the thought process, and the matrix is the visible result. LogFrame involves the following procedures:

  • Setting project objectives
  • Defining indicators of success
  • Identification of key activity groups
  • Defining critical assumptions on which project is based
  • Identification of verifying project accomplishments
  • Defining resources required for implementation.

Basic Steps

The guiding methodology of LogFrame is the concept of causality, or cause and effect.  It suggests in any development activity or project, resource inputs are used with activities to produce outputs; outputs are expected to achieve project purposes; and the achievement of purposes is expected to contribute to the achievement of a higher order goal.

The basic premise is that there is a hierarchy of objectives, and the achievement of success on higher levels in the hierarchy is often subject to factors beyond the control of planners and managers.  As a result, the achievement of a level may not be sufficient for the achievement of the next level.  The linkage or progress from one level to the next is therefore conditional on the continuing validity of stated assumptions.

The following are the basic steps for developing a project design using a Logical Framework.  The basic principle is to go from the general to the specific.  That is, begin with the Narrative Summary and several key assumptions, then try to put indicators and targets on the general statement of objectives.

The Narrative Summary refers to the first 4 steps which include:

  1. Define the Purpose
  2. Define the Outputs for achieving the Purpose
  3. Define the Activity groups or Components for achieving each output
  4. Define the overall Goal
  5. Verify the vertical logic with the If/then test
  6. Define the Assumptions required at each level
  7. Define the Objectively Verifiable Indicators (OVI) at Purpose, then Output, then Goal levels
  8. Define the Means of Verification
  9. Put costs on the Activities: the Performance Budget
  10. Consult the Checklist for the Logical Framework
  11. Review the Logical Framework design in the light of historical experience with similar efforts

Step 01: Define the Purpose

This is to define WHY the project is being done.  The Purpose describes the desired impact we hope the project will have, or how the situation is envisaged at its completion.

For example, a Purpose typically describes the development expected: to develop sustainable water supplies for the people of a certain village; or to develop a manageable rural health service accessible to all in a certain region.

As a rule of thumb, a project have only one Purpose although a project may have more than one purpose.  The reason for this is practical.  Experience demonstrates that it is easier to focus project Outputs on a single Purpose.  Multiple purposes diffuse project efforts and weaken the design.

Step 02: Define Outputs for Achieving the Purpose

Outputs are WHAT the project is to accomplish, or the direct, identifiable and measurable results expected from the provision of inputs together with the execution of activities.  These are the deliverables or Terms of Reference (TOR) for the project, the results for which the project can be held directly accountable and for which it is given resources.

Step 03: Define the Activity Groups or Components for Achieving Each Output

Activities are the discrete tasks undertaken using resource inputs to achieve defined outputs.  Description of the activities should include the basic actions of the project team: the summary schedule, meetings, monitoring events and evaluations.

Step 04: Define the Overall Goal

The goal is the rationale of the program or project.  The higher-order objective that this project, combined with others, will achieve.  Usually this a program or sector objective.  Very often a portfolio of projects will share a common Goal statement.

Step 05: Verify the If/Then Vertical Logic

By definition, each project has this If/Then or cause and effect logic embedded in it.  If we produce certain outcomes under certain conditions, then we can expect certain other outcomes to result. LogFrame forces the team to make this logic explicit, but it does not guarantee a good design.  The validity of the cause and effect logic depends on the quality and experience of the design team.

Step 06: Define the Assumptions Required at Each Level

Assumptions are statements about the uncertainty factors between each level of objectives, external factors over which the project chooses not to exert or does not have control.  This is the external logic of the project. Determine the Assumptions by asking, what conditions must exist in addition to my objective (Activity, Output, Purpose, Goal) in order to achieve the next level? It is important to clarify Assumptions although there is never 100% certainty of success in any project.  However, the lower the uncertainty, the stronger the project design.

Step 07: Define the Objective Verifiable Indicators (OVI) at Purpose, then Output, then Goal Levels

Objectively Verifiable Indicators (OVI) are performance indicators.  They demonstrate results. Begin with the higher order objective and work backwards through the causal chain: Goal then Purpose, then Outputs, then Activities.            Indicators are often stated in terms of Quantity, Quality and Time (and sometimes place and cost).  The act of putting numbers and dates on indicators is called TARGETING.  It is not true that higher order objectives are not measurable.  We may choose not to put targets on them, but Goals, Purposes and Outputs can all be given indicators and targets.         The fewer indicators the team uses the better.  Use only the number of indicators required to clarify what must be accomplished to satisfy the objective stated in the Narrative Summary.

Step 08: Define the Means of Verification

The Means of Verification (MOV) describes the sources of information that will demonstrate what has ben accomplished. If we decide that a survey is needed, then we may need to add some action steps to the Activities List.  If this costs money, we must add this to the budget. The rule is: the indicators you choose for measuring your objectives must be verifiable by some means.  If they are not, find another indicator.

Step 09: Put Costs on the Activities — the Performance Budget

The budget in the LogFrame should be a simple, line item budget for completing the Activities.  Frequently the budget will be followed up by an attachment of a detailed budget spreadsheet.

Step 10:  Consult the Checklist for the Logical Framework

Use the Design Checklist and ensure that your project meets all the requirement of a well-designed LOGFRAME.

Step 11: Review the Logical Framework Design in the Light of Historical Experience with Similar Efforts

Consult other projects or colleagues in the field and compare your design to similar project designs.  This will give you more insight into your own project.

Note: If you need an external reviewer to go through your LogFrame, feel free to write to me at: I will be happy to help.

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