Trust Funds
a strategy for self-sustainability
More self-sustainability means having more autonomy and less reliance on external funding, expertise or decisions. It means having a larger capacity to choose and negotiate with other initiatives what’s best for your project and what’s not. It means an increasingly equitable participation, which will lead to development models that are more comprehensive and relevant for all, that is, more sustainable. Know more
Several projects increase their self-sustainability by setting up trust funds – a resource management strategy that favors equity in the negotiation and implementation of development initiatives.
Trust funds are a legal instrument that can help an initiative’s donors, participants and beneficiaries feel confident in the reliable management of funds and negotiate their interests and needs under fairer terms. A trust is a contract between a donor, an initiative and a Trustee (usually a bank or an institution in charge of managing the funds), where all parties agree on how much money will be donated and how that sum will be spent. The Trustee is in charge of overseeing the contract’s fulfillment (“The money will be used to build houses and the bank will supervise that they are built in a certain way”, for instance). When the money is actually being spent as the development project is implemented, the Trustee monitors that the conditions are in line with the contract.
For many initiatives, trust funds can be an important strategy to increase their self-sustainability because, in the development field, donors are often afraid that their funds will be wasted as a result of corrupt practices, political processes or poor project organization and management. Donors then place many conditions on resource management and allocation, which forces initiatives to work top-down, always prioritizing donor interests instead of focusing on fostering community engagement in development processes.
Trust funds can help address these concerns because under this scheme, money is not given directly to initiatives but to the trust, and this gives donors clarity and confidence and may even attract new sources of funding. In addition, all stakeholders’ interests are represented, and their responsibilities negotiated, defined by contract and supervised by an external agent. This helps initiatives and their beneficiaries negotiate their objectives and priorities and set terms that foster local control of the project to create contextually relevant solutions.
There are many different ways to build self-sustainability by setting up trust funds. Take a look at how these projects have done it!
If you found this self-sustainability strategy useful, perhaps you’d like to have a look at these too: