Now frustrated Indigenous rights groups are trying a new tactic to speed up change: creating their own funds in a push to boost the flow of money to frontline communities and shift away from what some see as an outdated colonial-style model driven by donors in the Global North. 

Since 2020 – and especially last year – more than half a dozen new Indigenous-led funds have sprung up, largely in forest-rich Brazil but also in developing countries from Indonesia to Mexico.  

Many are still in a start-up phase, but a few have already begun pushing money to frontline communities. They include the Mesoamerican Territorial Fund (MTF), which invested $1.3 million in 32 projects – from chocolate production to tourism and protecting traditional knowledge – in communities from Mexico to Panama last year. 

“We are aiming not only to make the funds reach the real guardians of the forest and the real guardians of mitigating and adapting to climate change, but also to support sustainability, democracy and good governance of all these territories,” said María Pía Hernández, a lawyer and regional manager for the MTF. 

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Multilateral funds can take years to approve projects and often struggle to funnel big pots of nature and climate finance into the smaller-scale projects communities need, Indigenous leaders said.  

The new funds aim to fill the gap by gathering large amounts of money, distributing it nimbly and leap-frogging the barriers faced by forest communities in dealing with traditional funds, such as onerous paperwork. 

“We aim to improve not just the condition of the territories and people who live there but also promote global climatic justice,” Hernández said on the sidelines of last week’s Skoll World Forum, a gathering of social innovators.  

Bypassing the giants 

As the World Bank and International Monetary Fund hold their Spring Meetings in Washington this week, focused in part on reshaping lending for climate action, Indigenous communities are already rethinking how to better access the resources they need to protect nature and the climate – and to ensure those on the frontline benefit from changes such as new clean energy infrastructure. 

Along the way, they are setting up new rules and structures in line with their own traditions and beliefs, after years of chafing against constraints imposed by big donors, some of them former colonial powers. 

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In Canada, for instance, many Indigenous governing bodies now run their own renewable energy utilities, providing a fifth of Canada’s renewables, said Joan Carling, executive director of Indigenous Peoples Rights International. 

“If we transform the business-as-usual and create the enabling environment and conditions to put Indigenous people at the centre of this, then we can have a truly just, equitable renewable energy for all,” she said. 

A new dashboard released last week by the Rights and Resources Initiative and the Rainforest Foundation Norway shows climate finance for indigenous and local communities rose between 2020 and 2023 to about $517 million per year, a 36 percent increase over the previous four years. 

That increase comes after governments and charitable donors promised $1.7 billion back in 2021 to Indigenous and local communities by 2025 for their role in protecting land and forests, which are considered key to protecting both the climate and biodiversity. 

Yet with much new funding still moving through big international environment organisations and other intermediary agencies, rather than directly to communities, “there is no evidence yet indicating a systematic change in funding modalities,” the groups noted in a report.

Connecting communities with cash 

Solange Bandiaky-Badji, coordinator of the Rights and Resources Initiative, said improving direct access to funding is the key issue. At least $10 billion in finance for Indigenous and local communities will be needed to meet a global pledge to protect at least 30 percent of the planet’s land and oceans by 2030, she added. 

Indigenous-led funds believe they can be pivotal to achieving that ramp-up. 

Shandia, established by the Global Alliance of Territorial Communities uniting 35 million people from 24 countries, is still in a start-up phase but aims to serve as a conduit for much larger-scale finance to Indigenous and other frontline groups. 

“Millions of dollars are moving in the world. We want to connect claims on the ground to those millions,” said Juan Carlos Jintiach, a Shuar indigenous leader from Ecuador and the alliance’s executive secretary, who was shortlisted for the Nobel Peace Prize last year for his work on behalf of Indigenous communities. 

Indonesia’s main Indigenous alliance similarly in 2023 helped establish the Nusantara Fund, while in Brazil a range of Indigenous-led vehicles, including the Podáali Indigenous Amazonian Fund, were launched last year.

Guardians of the forest – and finance?  

Anthony Bebbington, who runs the Ford Foundation’s international natural resources and change change programmes, said the last few years had seen the emergence of substantial new funds, with the potential to grow, that are challenging the traditional ways donors have worked.  

“Funds are saying to us, ‘If you trust us to be guardians of the forest – a role for which we are often harassed and sometimes killed – then there is no justification for you to also not trust us to be guardians of the finance’,” he told an event on the sidelines of the Skoll World Forum. 

In projects backed by the Mesoamerican Territorial Fund, for instance, indicators of success are changing from a simple focus on hectares of forest replanted to include things like whether more water is flowing through key rivers, said Hernández, whose fund so far gets 80 percent of its support from philanthropies. 

An Indigenous Ramas man lifts a crayfish trap in the Rio Indio river, San Juan de Nicaragua, Nicaragua on February 16, 2022.(Photo: Reuters/Antoine Boureau/Hans Lucas)

The MTF also actively seeks out and helps prepare applications from Indigenous and local communities that could benefit from its support rather than just accepting grant proposals, as traditional donors often do.  

David Rothschild, senior director of partnerships for Nia Tero, a US non-profit that works with Indigenous groups, said avoiding heavy paperwork was key to enabling the new funds take off. 

“What they don’t want is to become another entity in the system operating in a colonial way. How do they not fall into the same patterns that have been destructive, while still reporting to donors?” he asked. 

Hernández said new ways of working are developing, if sometimes too slowly. “We are not asking for blank cheques,” she emphasised. “But we deserve a little bit of consideration.”

(Reporting by Laurie Goering; editing by Megan Rowling)

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The World Bank – the fund’s expected host – said on its website last week that its own board anticipates approving a formal plan to become the fund’s “financial intermediary” by mid-April, with a final operating deal due to be in place with the fund by the end of July.

But would-be recipients of the loss and damage fund’s resources are already jostling for position in a growing queue of nations hoping for help – and its board faces an unenviable task: figuring out how to fairly divide very little money among too many people in desperate need of it, as climate impacts accelerate in a warming world.

Timetable of steps the World Bank plans to undertake to become host of the new UN loss and damage fund (Source: World Bank)

Pakistan, for instance, is still seeking about $16 billion to rebuild roads, bridges, schools and more, after 2022 floods inundated a third of the country. In southern Africa, Zambia – hit by a severe drought that has ruined half of this season’s staple maize crop – wants support to shore up its dwindling water supplies.

Vulnerable countries – from Pacific and Caribbean island nations to Bangladesh – are looking for money to cover growing losses as warmer seas drive stronger hurricanes and cyclones. And in Senegal, where higher oceans are accelerating coastal erosion, families watching their ancestors’ skeletons float out to sea from flooded graveyards are asking for cash to rebuild crumbling coastal communities.

“The need is for trillions (of dollars) – and what we have is millions, not even billions,” said Ritu Bharadwaj, a climate finance and governance researcher at the UK-based International Institute for Environment and Development who has closely followed the new fund’s evolution. So far, it has garnered about $700 million in pledges.

With the residual costs from loss and damage projected to reach a total of $290 billion to $580 billion by 2030, according to a 2018 study, the loss and damage fund aims to ramp up its resources significantly, largely by persuading donor governments it can use their money effectively.

In partnership with a new taskforce on international taxation, it is also exploring how to harness innovative but politically tricky funding sources such as levies on fossil fuels, aviation, shipping and financial transactions.

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To make limited resources stretch further, fund observers like Bharadwaj have urged the board to consider ways to reach vulnerable people directly, such as cash transfers when a pre-set trigger point is passed – for example, a top-strength hurricane hitting an at-risk zone.

That approach would cut out middleman delivery agencies that critics say now claim too much of climate finance flows and reduce the amounts getting to the frontlines.

Bharadwaj and some others also believe the fund should consider supporting so-far inadequate efforts to build resilience to worsening climate shocks, rather than just responding once they happen – in order to curb future demands for assistance.

That could include helping Zambia’s farmers build community irrigation systems to avoid them coming back to the fund repeatedly to cover crop losses from warming-fuelled drought.

“We need to be more responsive to the comprehensive risks the communities are facing,” said Bharadwaj.

Between relief and resilience

However, Avinash Persaud, a loss and damage fund board member from Barbados representing Latin American and Caribbean nations, said the fund should focus on its core mission – helping the worst-hit communities and countries recover and rebuild after climate impacts – rather than responding to well-intentioned pleas to expand its work.

“This fund is not replacing relief agencies. This is not a resilience-building fund,” he told Climate Home. “This is doing the stuff in the middle – what happens the day after the relief agencies pack up and leave your people fed and watered but under blue tarpaulins.”

The fund could support the reconstruction of devastated towns in a safer location, repairs to roads, bridges and schools – or anything else that “reboots the community”, said Persaud, an economist noted for helping design the Bridgetown Initiative, which aims to reshape international finance flows to help debt-strapped countries boost climate protection.

Damage in a Miskito indigenous community called Wawa Bar, after being the epicenter of Hurricane Eta, on the Caribbean side of Nicaragua. The North Caribbean, one of the poorest regions of Nicaragua, was plunged into uncertainty and despair after the double blow of hurricanes Eta and Iota, which sowed death and destruction in Central America, Puerto Cabezas, Nicaragua, November 23, 2020 (Photo: Katlyn Holland/CRS / Latin America News Agency via Reuters)

With the loss and damage fund’s 26-strong board now in place – albeit several weeks late and yet to name one developing-world member with only an alternate from India listed for that seat – it is expected to start work in April to establish its operating rules. 

The board is set to grapple with a range of contentious discussions, including whether a share of support should be given as concessional loans rather than simple grants.

Also up in the air is whether money should move straight to governments and local organisations or also through international partners – including development banks and UN agencies – and how much direct access to the fund vulnerable communities should have.

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With the UN-backed Green Climate Fund, for example, about three-quarters of funding has been channeled to countries via international organisations and only a quarter has been delivered directly to developing countries and regions for projects.

Harjeet Singh, who has tracked efforts to establish the fund for more than a decade and is now global engagement director at the Fossil Fuel Non-Proliferation Treaty Initiative, said he was hopeful “this fund is going to be different from the ones we’ve had so far”.

Fund with ‘a clean slate’

Michai Robertson, a senior advisor for the Alliance of Small Island States and a research fellow at the UK-based global affairs think-tank ODI, said language in the agreement setting up the fund should help ensure it operates in new ways.

In making allocations, for instance, the board – which aims to disburse money far faster than existing climate funds – will have to balance the needs of countries that have sustained large climate losses with setting aside a basic floor of support for poorer or highly vulnerable nations where the overall bill is smaller but some communities are hit very hard.

Currently, small island developing states get just 2% of international climate finance and least-developed countries, largely in Africa, about 8-10%, Robertson noted.

“You don’t want one country to take up all the scarce resources,” he said.

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The fund’s agreement also says that vulnerable countries and communities should have a large say in deciding priorities for using its money – and that Indigenous and other community knowledge of local risks should be considered as a valuable source of information, especially when climate risk modelling is lacking in some countries.

The fund will also address some “non-economic” losses and damage – such as the disappearance of nature a community relies on, or cultural institutions – in the form of finance to help rebuild a ruined museum or replant lost mangroves, Singh said.

Bharadwaj said she hoped the fund can act in a way that is catalytic, helping countries fill the gaps in other funding streams – from climate adaptation and resilience, to development and humanitarian aid.

“When an existing institution or organisation does things in a certain way, it takes a lot of effort to change that. But the loss and damage fund is not carrying any baggage behind it. Here we have a chance for a clean slate,” she said.

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