One in five grants comes up against unforeseen obstacles, yet only a minority of funders make provision for such contingencies. This is among the findings of a survey by specialist contingency funder, the US-based Open Road Alliance. Its solution is to set up The Unexpected Fund (TUF), which it hopes will encourage other funders to help their grantees overcome unforeseen challenges and, at the same time, make risk management an integral part of grantmaking practice.
Founded in 2012, the central purpose of the Open Road Alliance is to provide fast, flexible contingency funding for the philanthropic sector. Its model is based on speed and financial leverage. The application process is simple and decision-making quick, because relatively modest amounts are involved (the current average gift size is $76,000) and because Open Road is able to leverage the existing due diligence of other funders.
TUF will operate as follows. An original donor nominates an NGO faced with a problem in implementing a project. Provided the nominee meets the four criteria (projects must be mid-implementation, the problem must be unexpected, the funding must be for a discrete element and there must be donor co-funding), TUF will provide matching funding with the original donor to overcome the problem up to a maximum of $100,000. In return, the initial donor agrees to share its due diligence materials on the project with Open Road and to take part in future surveys on donor attitudes to contingency and risk. This learning element is a key part of the rationale for TUF.
Open Road sees its addition to the portfolio as a way to open much-needed dialogue between donors and charities about confronting emergencies in their work. Ultimately, because of the evidence it generates, it will increase the amount and the habit of contingency funding, as well as more immediately helping projects faced with stumbling blocks to achieve what they set out to do.
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