FundingPool Pattern

Making strategic funding decisions is a knowledge-intensive activity that benefits from ecnomies of scale. A virtual “pool” of funding that tracks investments from multiple funding sources into a “portfolio” of targeted projects can reduce cost of "due-diligence" and create a more integrated funding strategy for projects.

Possible Aliases: Funders Network, Funders Alliance

Context

Within a DevelopmentCommons^? in which a clear SharedVision^? is held, opportunity is created to better coordinate invested resources from a variety of sources.

Challenge (or Problem)

No one funding source can adequately address systemic, societal challenges. Furthermore, making strategic funding decisions is an knowledge-intensive effort that is difficult for even well-endowed foundations to do in isolation.

Examples

• Funders often find it difficult to adequately research the projects they fund.
• Funders tend to fund specific phases of project development (e.g. startup) and neglect others. This encourages unhealthy growth of projects.

Forces

• Strategic investment (due-dilegence) is a knowledge-intensive activity that benefits from economies of scale.
• Philanthropy itself is a competitive field in which funders may be resistant to sharing information with other funders.
• Many funders are adequately endowed such as to provide a disincentive to collaborate.
• Funders are always interested in leveraging their investments.
• Some funders prefer to have an intemediary between themselves and the projects they fund.

Design Solution

Therefore, create a virtual “pool” of funding that tracks capital from multiple sources invested into a “portfolio” of targeted projects. Create mechanisms for sharing information and services to reduce risk and cost of investing in and tracking projects.

Resulting Context

A FundingPool can benefit by shared ProjectTracking^? and have more leverage to encourage ServiceLinkage^?.

Rational

Some benefits and design possibilities for FundingPool:

• Leverages multiple sources & types of capital.
• Funds are not actually held in pool, they are merely tracked.
• Matches various types of “investment” (i.e. grant, loan, equity) to appropriate phase of project development.
• Managed like a venture fund in that investments are linked to rigorous project assessment and tracking.
• Potentially tracks non-conventional investments such as sweat-equity and in-kind services.

Examples

• National Rural Funders Collaborative
• The Funding Exchange
• Creating Opportunities for Aligned Funding - This article describes an effort to build collaboration among funders in the area of education. It provides an excellent indepth discussion of the benefits that resulted from getting funders to work together and the kinds of services and practices that attracted funders to the effort.
• US-Mexico Border Philanthropy Partnership - Partnership of funders working on border issues. McCune is one of the partners.

References & See Also

Contributors

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• LynnwoodBrown