Funding for systems change: From theory to practice
Emilie Romon, Yuxian Seow, Katalin Hausel, Nora Wilhelm
We are confronted with an urgent need to find and support transformative solutions at a much faster rate. Alongside efforts to address the symptoms of the current crises we are facing, we must also address the root causes of the inequalities behind social and environmental issues.
However, according to a 2020 global report, the majority of funding practices are not adapted to support systemic innovations, as they “often emphasize the financing of well-defined projects that achieve visible results within a short time frame, resulting in funding requirements and timelines that do not align well with systems change efforts, and also leave systems change leaders without important nonfinancial support.” (Embracing Complexity, 2020)
This is what a collective of foundations and changemakers in Switzerland (see list below), led by Ashoka Switzerland and collaboratio helvetica, came together to tackle. In a one-year co-learning journey, we shared insights and best practices, and developed prototypes to transform existing funding mechanisms to better support systems change.
In a previous The Philanthropist article, “Accelerating funding for systems change: A Swiss experience”, we shared our Theory U methodology, and detailed our first insights – specifically key dimensions for funding systems change – which we expanded upon in the second part of this journey and now share in an updated form here:
Change of mindset: The basis for funding systems change is a change of mindset in project holders and the different actors within foundations. Without it, any implemented ‘solutions’ are superficial and unsustainable. People working towards systems change need to understand the systems they operate in, including from the perspective of others. We need to put egos and individual agendas aside for our collective future.
Systems-informed strategies and funding mechanisms: regardless of whether a funder seeks to support systems change, a grasp of systems thinking is key to understand the (often) complex issues they are striving to address and develop strategies informed by this knowledge. For example, understanding the different levels of the challenge is relevant even for funders who provide direct service to a population, as opposed to the structures that are maintaining the problem in place. Similarly, funders need to understand how their funding mechanisms impact the system in which they intervene, and how they might inadvertently foster results that are not consistent with the foundation’s values or intentions. For example, asking project holders to compete for funding is likely to hinder collaboration between project holders in the same field.
Time – long-term horizon (no quick fixes): As systems change does not happen overnight, a great deal of patience is required. Funders, similar to investors in early-stage start-ups, invest in a vision and people they are confident can implement it. A failed strategy can be the key to finding the ones that do work. It takes courage to provide long-term funding and to invest in the organizational development of partners, yet it is key to enable systems change work.
New impact measurement and learning frameworks: Supporting systems change requires learning to be a key part of evaluation (e.g. with development evolution or a learning ecology approach). Being intentional in learning enables to adapt the strategy towards the vision we aim to achieve. Depending on whether projects aim to address roots or symptoms, adapted learning and evaluation tools need to be applied. Agreements should be tied to learning and impact rather than short-term KPIs, whilst also including support and room for failure and learning.
Awareness of power dynamics to enable true collaboration and trust-building: The relationship between funders and project holders is inherently unbalanced due to the financial transaction it entails. Other dimensions can influence the power dynamics at play, such as colonial history. Addressing this question openly will help build the trust required for true collaboration. Trust is also key between funders’ staff and boards.
Investment in capacity-building: Systems change is a cutting-edge field in which we are all learners. Funders need to invest in building their own capacity, for their staff and boards, as well as for project holders. This being said, theoretical knowledge is not sufficient. Acting purposefully in complexity and fostering systems change does not come with foolproof one size fits all templates or plans – instead it is about values, mindsets, and a way to engage with the system and its participants, while staying humble and continuing to learn by doing.
Collaboration amongst funders: Systems change work cannot happen in isolation, and requires extensive coordination and collaboration amongst the different actors in a system. Funders can jointly build an understanding of the system(s) they are a part of and its players, and coordinate their strategies and intervention to maximize impact. By sharing learnings around what worked and what did not, similar to what is being recommended to project holders, the whole system’s learning curve can be increased and we collectively get closer to reaching our goals. Further steps of collaboration, such as pooling funding, have great potential to accelerate this work.
3 new tools to move from theory to action
With these learnings in mind, working groups met regularly between February and June 2022 to design and test prototypes that could shift funding mechanisms in Switzerland towards supporting systemic solutions. The groups produced a glossary and two creative and innovative tools for funders to encourage self-reflection on their funding practices.
Funding Mechanisms Spiderweb is a visual exercise which helps funders reflect on their funding mechanisms across 12 different dimensions of the funding cycle. Its main purpose is to make funders more aware of the choices behind existing or potential funding mechanisms, so they can better understand the implications of those choices, and support the exploration of new ideas by broadening the spectrum of options.
Systemic Mindset: 17 Guiding Questions for Fundersis intended to help in the review of strategies and working methods of foundations already working on systemic impact. The questionnaire can be used when launching a strategic process or as a self-assessment exercise, at either the level of the foundation as a whole or of one of its programs. It is split into four categories that reflect different aspects of funders’ work: vision and impact, partnerships and feedback, roles and positionality, and assessment and learning. It is available in English, German and French.
Funding Systems Change Glossary is a foundational resource which provides definitions and examples of some of the key concepts of funding systems change and in the philanthropic sector.
These tools are meant to be used as widely as possible, and to inform foundations’ work in Switzerland and abroad. So please help us spread them!
What we learned from the process
As the journey we went through was experimental, we felt it was important to document our lessons learned and share them with the wider ecosystem. We traced our insights and shifts through a learning ecology approach and four surveys. Participants reported that:
They felt part of a collective, supported and a high degree of trust within the group.
They had an increased understanding of systems change, while also experiencing discomfort with the complexity of the challenge (which is a good sign of learning and the needed humility when faced with systems change!)
They experienced a growing sense as to what systems change funding could mean for their organizations,
They identified the building of new personal relationships which may be the basis for future collaborations
They learned with and from peers and other ecosystem actors that were part of the initiative
They are interested in continuing this work the impact of this
The timeframe of the journey doesn’t allow us to have a final verdict on the deeper impact of the work on the sector as these effects unfold over longer timelines, however the intention of participants to continue this shared process is promising. Overall, we are proud of the journey we have been on, the insights gathered, relationships built and results produced.
Our evaluation confirms what we already know about systems change work: it takes time, it is complex, and happens on different levels at once. There is momentum in this topic, as illustrated not only by the work we collectively did here in Switzerland, but interest in collaborations and disseminating these insights internationally, for example together with Catalyst 2030. Where this path to funding systems change takes us cannot be predicted, but we are looking forward to what’s next, and we warmly invite you to join us
Have you already applied the tools we developed to your organization, and would like to share some feedback? Do you have questions on how to use the tools, or need support in applying them to your work? We would love to hear from you. Contact any coalition member to tell us about your experience and your needs.