While 2021 was a year full of murky expectations, too many tragedies and uncertainties, 2022 may allow us to feel more grounded in a hopeful future. How that translates into funding will be centered on several trends: (1) Localization (2) Impact Funding (3) Climate and (4) Jobs. Specific expectations are below.

Partnerships will form based on proximity to local communities most in need of support. Funders will follow the call as best they can. No longer will the typical funding cycle of project funding, replication and scale suffice. Systems change across local jurisdictions will be sought by funders across all categories that we track (public, philanthropic, corporate.)

It’s time to build a financial return on investment into your programs, whether with your own strategy or your partners.  Philanthropic funding will be more limited in scope as impact funding becomes more lucrative and more attractive to donors that want to spend resources for long-term sustainability without injecting money into a system over and over.

Research shows that programs centered on addressing the impacts of climate change and attempting to mitigate catastrophe have received funds in the 10s of billions of dollars. Work around climate is not letting up, nor should it, with implementers, researchers, the private sector and funders intensifying their efforts particularly with vulnerable populations who bear the burden from climatic transformations. Funding around climate change initiatives also includes the all-important work of climate advocates and those ensuring a world of equity and justice. The work is closely linked. Reducing carbon, regenerative agriculture and adaptation also attracted massive funding in 2021 and will continue to be a focus for funders as key to sustaining our future.

Economic development, particularly in a post-COVID society, will hinge on (1) job creation and maintenance, (2) protecting women and maintaining their footing as a pillar in our global economy (3) addressing infrastructure needs and (4) halting the continuous spread of the virus itself. For funders, most realize that supporting women and youth with long-term economic support, jobs and equitable societal structures leads to a sustainable future. COVID has harmed women more than any other group, undoing many of the economic and social gains from the last few decades. Hence, funders will help support initiatives that build a strong hold for women’s futures as caregivers, contributors and leaders. Diversity, equity and inclusion will continue to be entrenched in the new economic paradigm along with  ensuring all vulnerable populations have equitable access to health care, water, electricity, internet connectivity and opportunities for jobs.

In trying to support economic advancement in parts of the world where conflict remains a challenge, or uncertainty hinges on weak governance structures, funders will look to strong, present local partners to build systems in place for a sustainable future.  Immigration has posed an immense challenge in Central America, and funders look to local civil, political and private partners to create job creation programs that target job creation, invest in sustainable agriculture, climate adaptation, health service and infrastructure access to stem the flow of migration into the United States. A similar challenge has presented itself in the Middle East. Collaborations to tackle the chief causes of immigration will be necessary.

Across all priority issues facing us today, addressing these challenges requires co-creation among those ‘doing’ the work and those funding the work. Additionally, funders, implementers, governments and the private sector recognized that collaboration will be a continued necessity to develop community-driven, collaborative, and solution-oriented solutions.

Impact funders will be in the mix more than ever, seeking innovative ways to tackle problems that go beyond traditional philanthropy. Impact funding has received much more  traction this year as more funders seek a return on investments that can be plowed back into more programs, reaching more, helping money and influence go further.

Looking into the next year, while COVID stands to be the most unpredictable disaster of all time, efforts to contain the spread of the virus, ensuring equitable access to healthcare, and vaccine equity will be a pervasive topic for a while. Philanthropic funders have had to chip in greatly, especially with the roll-out of the COVID vaccines, and the provision of protective gear for health workers and common people against contracting the virus. We can only hope the end is in sight.

So what questions remain unanswered? How will we truly define success in impact funding? Will success be defined by financial return, or will social, environmental or governance returns become more of the aim than currently is the case? What does this post COVID reality really look like? What does build back better really look like? How does this localization trend really address the challenges that COVID brought us? What will the future look like in Afghanistan, Ethiopia, South Sudan, Venezuela, Central America, Yemen and on and on? How innovative can the government get with their funding programs and how much can businesses step into the role that traditionally has been played by philanthropists? Where does philanthropy go from here? Does flexible, unrestricted funding really take hold or was that a panacea? Can DEI lead us into the #ShiftthePower future that we all believe is needed? What does a decolonized development strategy look like?  We stand by to track all developments as they become clear and look forward to supporting our members as they put in the hard work to overcome these and other global challenges.