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Financing a project

Financing a project. Pre-conditions. A project description/document that is: Convincing Believable Realistic Complete Worthwhile: benefits greater than costs Clear description of financial needs & sources Clear description of management system – especially financial management.

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Financing a project

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  1. Financing a project ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  2. Pre-conditions • A project description/document that is: • Convincing • Believable • Realistic • Complete • Worthwhile: benefits greater than costs • Clear description of financial needs & sources • Clear description of management system – especially financial management ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  3. Describing financial needs Distinguish between • Capital and recurrent costs • Project and post-project finance • Fees and “reimbursable” costs • Possibly different conditions apply Advantage: makes you think in terms of financial sustainability ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  4. Sources of finance • Own organisation • National programmes • Local, National & international interest / donor organisations • Internal & external loans • Special arrangements with private sector Link to component: capital, recurrent, project, post-project… ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  5. Own organisation • How does your organisation finance its operations? • What are the budgeting rules/conditions? • Will your finance dep’t help you find funds? Explore these options first. Many external financiers expect contributions from applying institution, including assurance for post-project financing. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  6. National Programmes • Is your project eligible for any funds under an existing national programme? • What are the limits and conditions? Does your project meet them? • Investigate national level Development Investment Fund, or similar source, if any. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  7. Interest groups, other donors • What charitable or faith-based organisations exist in your community? • Do they have any financing facilities? Does your project match any of their stated goals? • Check embassies, bi-lateral, or inter-national organisations, like ICLEI, UNEP, UN-Habitat, WHO (“Safer Cities”), Cities Alliance, Metropole. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  8. Internal / external loans • Pre-condition usually include some form of guaranteed re-payment system. • CDM funds may fall into this class also, where CDM funds provide the repayment mechanism in basis of results achieved. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  9. Public-private partnerships • Many types and vaierties • Check: • What your legislation allows • What is appropriate for your organisation & project ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  10. Special fund-raising • May be done in special relationship with a CSO • Target users & beneficiaries • Adopt ideas similar to savings clubs • Reduce financial costs with in-kind contributions, e.g. volunteer labour ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  11. Ground Rule • View the financier as key stakeholder! • Look for financier with interests that are coincident with your project goals. Study financier policy/strategy papers, annual reports. • Know financier’s priorities, use its “language.” • Sustainability, gender, poverty alleviation, participation, (good) governance, climate change, decentralisation, results based management ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

  12. Last points • If you don’t already have project finances, expect finding funds to take time – reflect this in your time-line; • Project design needs to meet the conditions of expected financier. • Start the search for funds early on… • Support in principle on basis of ideas & goals – get any details on conditionalities & formats • Definite commitment as project design progresses • Good idea to involve potential financier early in project formulation phase – both for format/ content issues, and for building relationship. ADVANCED INTERNATIONAL COURSE IN LOCAL ENVIRONMENTAL MANAGEMENT IN URBAN AREAS 2010 AFRICA

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