Lessons of Challenge Funds for Resilience Building

Through the GRP Challenges, GRP identifies innovative ideas with real-world impact and supports these initiatives to achieve their full potential, taking them to scale where possible. The outputs and outcomes from these Challenges are then taken up through GRP's communication work, its policy and influence agenda, and the monitoring, evaluation, and learning (MEL) workstream. GRP has commissioned two Challenge rounds: The Global Resilience Challenge (also known as Round 1 or R1 in shorthand) funded by the United States Agency for International Development (USAID), and the Water Window (WW) Challenge with a particular focus on resilience to flood-related issues, funded by the Z Zurich Foundation. Through these Challenges, GRP works with 22 projects and 21 grantee consortia in 16 countries across sub-Saharan Africa and South and Southeast Asia. A third Challenge – the GRP Innovation Challenge – was launched in March to surface resilience solutions at the intersection of Food & Water Security, Peace & Stability, and Disaster Resilience. Challenge Funds are a financing mechanism designed to surface innovative products, services, and approaches that have some important social value, such as contributing to progress toward the Sustainable Development Goals (SDGs). Examples of challenge funds include USAID's Wash for Life initiative and the Challenge Program on Water and Food, spearheaded by the Consultative Group on International Agriculture Research. Sida has defined a Challenge Fund as a financing mechanism to allocate (donor) funds for specific purposes, using competition among organisations as the lead principle. GRP has used Challenge Funds in keeping with both the HLPW and Sida definitions. Challenge Funds are different from conventional funding processes as the grantees typically have a large degree of freedom in finding and designing innovative solutions. The funds are therefore focused on a desired outcome and the means are not prescribed. In practice, GRP has used Challenge Funds to support innovative ideas with real-world impact, taking them to scale where possible. A review of literature on Challenge Funds has identified several key lessons for design of future Challenge Funds. These include getting the design right, application and selection, effective implementation, and scaling and sustainability. The review also highlights the importance of clear guidance to GRP on practice to follow or avoid, tempered by the lack of robust evidence on good Challenge Fund design. GRP's experience of R1 and Water Window Challenges has also provided valuable insights into the use of Challenge Funds for resilience outcomes. The Challenges have been used to support innovative ideas with real-world impact, taking them to scale where possible. The outputs and outcomes from these Challenges have been taken up through GRP's communication work, its policy and influence agenda, and the MEL workstream. The review of literature and GRP's experience of R1 and Water Window Challenges has identified several key lessons for future Challenge Funds. These include the importance of clear guidance on practice to follow or avoid, the need for robust evidence on good Challenge Fund design, and the importance of effective implementation and scaling and sustainability. These lessons will inform the design of future Challenge Funds and help to ensure that they are effective in delivering resilience outcomes.