By Juan Lozano
Based in Colombia, Innpactia is a social enterprise which provides an online platform to match funders with social impact organisations and projects in Latin America. In this piece, founder and CEO Juan Lozano discusses the problems with traditional funding processes and how Innpactia is aiming to address them. He also reflects on the role civil society organisations (CSOs) have to play in the cultivation of a healthier funding system, and how they can benefit from its realisation.
The relationship between social impact initiatives and those seeking to fund them is often a deeply flawed and challenging one. The problems of the funding system are often viewed primarily from the side of the recipients, and those problems are real – such as the heavy burden of reporting imposed on grantees. But funders, too, experience challenges of their own. There are many inefficiencies in the system, and it can be expensive to invest in social impact.
At Innpactia, we have sought to analyse the problems of the traditional funding system and to contribute to a solution. We studied 400 organisations across Latin America and learned that the way that funding is distributed is extremely inefficient and costly. Worse, it is often destructive to civil society ecosystems and corrodes contexts and valuable relationships. We need a major shift in approach – one that seeks to do more than mitigate problems, but actively strengthen those ecosystems and foster healthy, supportive relationships between funders and organisations.
It is in this spirit that Innpactia’s online platform is contributing to the notion of progressive funding. There are four primary ways that the platform assists CSOs.
Firstly, we reduce the workload for CSOs seeking funding, by having them use a standardised form. We ask only for the information that is really needed, when it is needed. When we quantified the costs in administration for CSOs in the traditional funding system, we found that sometimes the cost almost exceeded the income that CSOs would receive.
Secondly, no CSO goes away empty-handed. We make it clear to donors that if they are asking organisations to spend time providing information, they must provide something in return. This could be a keynote speaker, or a training cycle, for example. This has helped us to build up training and skills development as part of the Innpactia offer. On a weekly basis, three to four experts give short masterclasses to subscribed members, on subjects like marketing, crowdfunding, M&E, and financial models for impact.
[The traditional funding system] is often destructive to civil society ecosystems and corrodes contexts and valuable relationships. We need a major shift in approach.Juan Lozano
Thirdly, it is mandatory for funders to provide personalised feedback to all applicants. They must advise CSOs what they did well, and where they could improve. Our aim is that this can strengthen CSOs for their future applications.
Finally, we offer a marketplace to connect CSOs with independent consultants. 2022 was the first big year for this aspect of the platform; it has already made consultancy support more accessible to CSOs. We expect the size of the market to grow to around $500,000 in 2023.
While Innpactia has been in its beta phase, we have already seen some positive examples of healthy relationships it has helped to foster. A grant-making vehicle owned by the Singapore-based Global Green Growth Institute (GGGI) has given seed stage grants to 15 green entrepreneurs per year in Colombia. It is about more than giving money; GGGI is also providing training, and allocating advisors and tools. They listen to grantees so that they can genuinely meet their needs, and they are not treated merely as contractors.
Looking to the future, we still have a lot of open questions, but we are confident that we need to have various forms of funder, CSOs, and social enterprises active on the same platform. They have complementary perspectives, and they are all contributing to the 2030 agenda and to the sustainable development goals (SDGs). By helping to level the playing field and recognise the valuable input of various actors, we hope that Innpactia will support the development of a healthier funding system – and unlock the potential of civil society.
This blog was constructed from an interview conducted by Andy Johnson.
Juan Lozano is the founder and CEO of Innpactia. Previously, he founded Azaí Consulting, an impact-driven consulting firm. He is based in Bogotá, Colombia.
This blog is the fifth of six in our series on modelling progressive funding. All of the outputs from this theme, including the full recording of our January 2023 online event, are collected here.
No. 1: “Modelling progressive funding” by Kate Newman
No. 2: “Modelling progressive funding: in practice” by Kate Newman
No. 3: “A change agenda that belongs to communities: approaches to resource mobilisation in Kenya” by Emilly Omudho (KCDF)
No. 4: “An approach to learning within progressive funding practice” by Alison McKinley (Comic Relief)
No. 5: “Levelling the playing field: helping to foster a healthier funding environment in Latin America” by Juan Lozano (Innpactia)
No. 6: “Modelling progressive funding – what did we learn?” by Kate Newman