Creating Space for Innovation with Current Funding

Insight

Public systems are often asked to innovate without any extra time, money, or flexibility. The tools they rely on (like government grants or legacy funding streams) can be seen as constraints.

We invite you to consider this: the problem isn’t always the tools. Rather, it’s the restrictive rules that govern them, or the perception of these rules.

Traditional funding mechanisms can unlock innovation if they’re designed to support experimentation, learning, and collaboration, not just delivery. This means the rules around the money do have to change to create an environment that encourages innovative approaches.

If we want different outcomes, we don’t always need more money. We need to structure the funding we have to encourage and empower creativity and flexibility among those closest to the problem.

Insight in Practice

Five ways to use traditional funding mechanisms to unlock new thinking and better results:

• Use small grants to create space for partnership and planning.
  Innovation happens upstream—before programs launch. Small-scale planning grants help partners align on goals, build relationships, and clarify roles. They create protected space for co-design, especially across sectors.

• Set aside resources for experimentation.
  Not everything has to “scale” on day one. Allocate a small percentage of funding—and set the right KPIs—to test new approaches. When recipients aren’t penalized for trying and learning, better solutions emerge. The goal isn’t polished performance metrics—it’s discovery.

• Fund outcomes, not process.
  Service providers often face rigid requirements that dictate how services are delivered. Instead, funders can define the problem and desired outcomes, then offer technical support and flexibility so providers can design their own “how.”

• Reward what works, and share it.
  Public funding doesn’t have to feel like a zero-sum game. Create a positive culture of competition by celebrating what’s working and getting specific about how. Facilitate cross-site learning, feedback loops, and peer exchange.

• Reflect on existing policy frameworks.
  Reflect on how existing policy frameworks and funding mechanisms might inadvertently perpetuate existing challenges. Identifying these areas can guide adjustments that encourage genuine innovation and transformation.

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Case Study

The Global Innovation Fund (GIF) stands out as a pioneering non-profit investment fund for its flexibility, openness to diverse ideas, and a steadfast focus on measurable impact.

GIF supports groundbreaking innovations through a tiered funding model, providing grants and risk capital ranging from $50,000 to $15 million. This approach nurtures early-stage pilots, testing, and scaling of successful initiatives.

By prioritizing outcomes over processes and promoting bold experimentation, GIF empowers innovators to address critical challenges head-on. As an example, it supports early warning systems for climate shocks, which are bold in their focus on proactive adaptation rather than reactive measures.

To see the transformative effects of their investments, explore GIF’s 2023 Impact Report, which highlights the global reach and influence of their work in social innovation.

Question to Consider

What would change if your funding mechanisms were built to support exploration and growth, not just delivery?

Quote of The Week

“Innovation is not about having the right ideas. It’s about handling the uncertainty that comes with trying them.”

– Tim Harford

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