At the crossroads: How to use grants to tackle climate change and equity

By Joshua Presser, director, special projects, SmartyGrants

The latest analysis of SmartyGrants data reveals a fourfold increase in the proportion of grants funding aimed at climate action in the past year, up from 0.9% to 3.4% of total grant spending. That takes dollars spent by SmartyGrants users on climate action to well over the $100 million mark for the year. What’s more, the approval rate for applications concerned with climate change increased dramatically from one-quarter to two-thirds.

The trends have been uncovered by Our Community’s Innovation Lab, where data scientists are assessing the alignment of grants with the United Nations’ Sustainable Development Goals (SDGs).

Their soon-to-be-published study also reveals that spending on grants that substantially address climate issues (such as SDG goal 11 – sustainable cities and communities) now make up 17% of all SmartyGrants funding and are the top ranked segment for funding allocation. Demand for those funds vastly exceeds supply.

Most grantmakers are acutely aware of their role in creating a more equitable world, with climate and equity issues closely connected. Whether mitigating climate change is the central focus of your funding or part of your broader goals, this article examines how your organisation can make a difference to climate change and equity.

It’s climate crunch time. If unchecked, global warming could increase by more than 1.5 degrees above pre-industrial levels as soon as 2030, according to the Intergovernmental Panel on Climate Change (IPCC), which warns that warming could “trigger tipping points in Earth’s natural systems, which will lead to widespread and possibly irrevocable disaster”.

“It’s not just polar bears and koalas who are impacted by climate change ... It is profoundly a human issue impacting on all of us, but in particular the most vulnerable members of our society … Climate change exacerbates inequities for women, indigenous people, the elderly, and of course the future of our children. It is an intersectional issue that touches all of our lives in all sectors.” – Amanda Martin, CEO, Australian Environmental Grantmakers Network (AEGN), speaking at the 2021 SmartyGrants Grantmaking Intelligence Conference

Climate change represents an existential threat to our planet, potentially affecting all areas of our lives – our health, livelihoods, food security, water supply, physical security, and economies.

What is a climate lens?

Best practice grantmakers apply all sorts of “lenses” to better understand and account for the ways in which particular structural or systemic issues affect the communities they serve and intersect with the problems they are trying to address with their grant programs.

For example, a grantmaker might apply a gender lens or an equity lens to understand and overcome systemic barriers faced by women or other marginalised groups.

Similarly, in applying a climate lens, grantmakers can better understand how climate change issues intersect with their grant programs, how they can affect beneficiaries, and how they may affect the ability of their grants program to achieve their desired outcomes.

Applying a climate lens to existing programs

The challenge of addressing climate change is immense and time critical. According to the IPCC, humans have fewer than ten years to slow global warming and avert a climate disaster.

This is a huge challenge, and every available resource will be required to make this happen. Grantmakers from all sectors can contribute hugely to this global effort by applying a climate lens to their existing programs.

In addition to contributing to the global effort to avert climate change, applying a climate lens helps grantmakers safeguard or even enhance the effectiveness of their programs. Climate change represents a significant impact risk for all grantmakers. Applying a climate lens allows grantmakers to understand and mitigate the risks climate change poses to the achievement of their desired outcomes. An understanding of how climate change intersects with your program outcomes also allows the identification of opportunities to increase your impact and make your program more effective.

For example, if you were funding housing services, applying a climate lens might mean ensuring that clients were placed in properties that were energy efficient, well insulated and located close to public transport infrastructure. These initiatives would contribute to reducing carbon emissions, but would also improve outcomes for beneficiaries, protecting them from extreme climate events, lowering their cost of living, and improving access to services.

This article from the Australian Environmental Grantmakers Network (AEGN) uses the United Nations Sustainable Development Goals (SDGs) to illustrate the pervasive impact of climate change on common grantmaker outcomes such as good health and wellbeing, ending poverty, clean water and sanitation, gender equality and zero hunger.

Putting a climate lens into practice

Incorporating climate change into your eligibility and assessment criteria will help you to choose those organisations and projects that are best placed to deliver your desired outcomes (including but not limited to climate outcomes). Likewise, applying a climate lens to your monitoring, acquittal and evaluation can help you and your grantees to track progress and learn about what works, and what could be improved next time.

SmartyGrants users, for example, can easily add climate lens questions to their application, assessment, progress and acquittal forms. Some samples of these are provided at the end of this article.

Applying an equity lens to climate grantmaking

Just as non-environmental grantmakers can apply a climate lens to their work to identify and account for the complex intersections between their desired outcomes and climate change, many climate grantmakers are exploring the intersections between climate change and inequality.

Climate change and inequality are inextricably linked. The most vulnerable and disadvantaged groups in our society (e.g. people on low incomes, older people, people with disabilities, Indigenous communities) consume and the emit the least, yet they are disproportionately affected by the consequences of climate change. For example, poorer suburbs tend to have less green space than wealthier suburbs and are more vulnerable to the extreme temperatures brought about by climate change. The “climate justice” movement is premised on the idea that climate change and inequality must be addressed at the same time.

If climate-conscious grantmakers are not mindful of the often-invisible systems and structures of power and inequality when designing their programs, they risk perpetuating and entrenching inequality in their responses to climate change and leaving those most vulnerable groups behind.

Some climate solutions may successfully reduce emissions but benefit a privileged few while leaving those most vulnerable to climate change exposed to climate risks. For example, grants for rooftop solar panels or other home efficiency initiatives generally benefit homeowners, allowing them to reduce their household energy costs. But these programs are inaccessible to people on lower incomes, who often rent their homes, are more vulnerable to the effects of extreme weather, and can least afford to heat or cool their homes.

Climate change and systemic inequality are both complex interconnected issues. Solving these problems and creating real change requires systems thinking and a holistic approach that goes beyond traditional program silos.

There is no one size fits all approach, but grantmakers seeking to apply a climate lens or take a more holistic approach to their environmental grantmaking might consider these four options:

Consider the intersections and identify risks and opportunities

What risks do climate change or systemic inequality pose to your intended outcomes? What opportunities exist to enhance your program outcomes by addressing these issues?

When identifying risks and opportunities, it is important to engage with a diverse range of stakeholders, including grantees, and those most vulnerable to the effects of climate change. Broadening your networks beyond your usual contacts, engaging directly with target communities, and listening to beneficiaries will help you to better understand the ways in which climate change and structural inequities contribute to the issues you are trying to address and to design your program accordingly.

Collaborate for greater impact

Climate change is a large and complex problem, far bigger than any one grantmaker. Big and complex problems need joined up, coordinated solutions. Once you have considered the intersections, risks and opportunities, you might consider seeking out partners with whom to collaborate.

There are many benefits to collaboration. It allows grantmakers to maximise the impact of limited funds, share risks, leverage the unique skills, knowledge and contacts of partners, and fund intersectional issues.

Seattle strategy firm Intentional Futures has investigated the drivers and barriers to collaboration and identified five critical ingredients needed to “harness the power of collaboration and achieve full impact”. The firm’s Designing Intentional Collaborations worksheet is a practical guide to assist you to apply these principles to your own collaborations.

Through “funding collaboratives”, grantmakers with a shared purpose pool their funds and work together on the development and implementation of a collective grantmaking strategy. Funding collaboratives are especially effective when responding to large scale issues, where the scale of the response required is bigger than any one funder can provide.

This article outlines the benefits, challenges and key considerations for grantmakers considering starting or joining a funding collaborative.

Partner with and empower grassroots communities who are on the front lines of climate change.

“You can’t build a just and equitable society on a planet that’s been destabilized by human activities… Nor can you stop the world from warming without the experience and the expertise of those most affected by it.” – Sarah Kaplin, Washington Post, June 29, 2020

It is often said that those most affected by a problem are best placed to devise effective solutions.

Grantmakers seeking to effectively address both climate change and inequity should consider working directly with those frontline groups who are most vulnerable to the impacts of climate change.

Supporting and developing the capability of grassroots community groups enables the development of innovative and fit-for purpose solutions. The act of empowering frontline communities to solve their own problems also builds their climate resilience, breaks the cycle of disadvantage, and addresses systems and structures of inequity, ensuring that solutions are effective, equitable and just.

First Nations people have unique expertise caring for the land, honed over thousands of years. They are well placed to use this knowledge and expertise to address climate change. Indigenous people also experience systemic inequality and disadvantage and are especially vulnerable to the impacts of climate change. Supporting and empowering Indigenous communities to leverage their expertise to protect the environment and address climate change also helps to address these issues.

The Queensland Indigenous Land and Sea Rangers program provides grants to Aboriginal and Torres Strait Islander organisations to employ Indigenous rangers to care for, protect, and restore land and sea country. In addition to environmental outcomes, the program also delivers social, cultural, and economic outcomes for Indigenous communities.

Bottom-up approaches to addressing climate change are becoming more common around the world. The US based Donors of Color Network recently launched a campaign to encourage climate-conscious grantmakers to “change the way they do business”, make their grantmaking more transparent, and commit to allocating at least 30% of their climate funding to Black, Indigenous and People of Colour (BIPOC) led groups within two years.

The benefits of this approach are not exclusive to climate-conscious grantmakers, but can be extended to issue you’re trying to address. Partnering with grassroots organisations and empowering them to take an active role in devising solutions can be effective and inclusive. For more information on equitable grantmaking see the equitable grantmaking helpsheet.

Give more, for longer, and make it unrestricted funding

Giving more, for longer, and providing core or unrestricted funding can give grantees the best shot at achieving real and lasting change.

Give more because the scope of the climate problem is huge – one estimate put the price of averting climate change at $73 trillion. Every extra dollar counts.

Give unrestricted, multi-year grants because it takes time to achieve systemic change. Core or unrestricted funding allows grantees to be strategic and agile in their work, and to take a holistic approach to issues. The financial security provided by longer-term, multi-year funding agreements provides stability, fosters innovation, and allows grantees to work towards more strategic longer-term outcomes, rather than focusing on shorter-term ‘easy wins.’

It’s not enough just to apply a climate lens to your programs, or to make grants to help others to address the climate crisis. Grantmakers need to practise what they preach, look within their own organisations, and find ways to minimise their climate footprint.

Here are some possible approaches to embedding climate action into your organisation.

Goals, strategy and values

Embed climate change into your organisation’s strategy by aligning it with your high-level goals. Consider the risks and opportunities of climate change to your organisation’s mission. This will then flow through to your strategic planning and operations.

Bring people along: embed sustainability and climate awareness from the bottom up

Good leaders know that change isn’t something that is done to people; rather, it’s a journey that you must bring people on. Leaders looking to embed a culture of sustainability need to find ways to engage people in the process, to build culture and drive change from the bottom up. One approach is to set up climate and sustainability working groups or committees with ‘climate champions’ from across the organisation, at all levels, to work collaboratively on embedding climate considerations into corporate policies and processes, and then operationalising them.

Embed climate and sustainability into your organisation

An organisation’s internal policies are an expression of corporate values and are also important drivers of culture. Developing an environmental sustainability policy and embedding sustainability principles into existing corporate policies has the dual benefit of reinforcing a culture of sustainability and ensuring that your organisation is doing all it can to address climate change.

The Institute of Community Directors Australia (ICDA) has developed a best practice environmental sustainability policy template that can easily be adapted to suit your organisation’s needs.

Grantmaking organisations can also apply a climate lens to most of their existing corporate policies and procedures. For example:

• A travel policy might encourage employees to commute to work by public transport by offering subsidised public transport tickets. It might encourage cycling to work by offering secure bicycle parking and end of trip facilities and might preclude unnecessary air travel.
• A sustainable procurement policy ensures that the organisation contracts only with suppliers who have appropriate green credentials. Below are some examples of ethical procurement.
• Consider your organisation’s banking and finance arrangements. Does your bank invest in fossil fuels? Do you encourage employees to nominate ethical super funds that don’t invest in fossil fuels?
• Consider your organisation’s energy use, and switch to an electricity supplier that provides renewable energy rather than fossil fuel

Tips for funding climate change mitigation – a practical guide for funders is based on a presentation by Esther Abram from AEGN and Sue Mathews from the Mullum Trust at the 2020 AEGN Conference. It covers the basics of developing a climate funding strategy.

For grantmakers looking to get involved in funding climate change initiatives, the Australian Environmental Grantmakers Network (AEGN) has many resources to assist grantmakers looking to fund climate action.

Below are sample climate lens questions that could be added to your application, assessment and acquittal forms. As you’d expect, we’ve written these with SmartyGrants in mind. But remember, these questions should be adapted to suit your own program’s needs.