Practicing hypothesis-testing grantgiving means funding a portfolio of projects that deliberately addresses a stated hypothesis and gathering project data via structured monitoring and evaluation. A grant program that does hypothesis testing needs a narrowly focused profile, and this can be accomplished by streamlining what problems grantees are seeking to resolve, the approaches they take to address those problems, and the range of eligible grantees themselves. The complete portfolio of grant-supported projects constitutes a hypothesis-testing experiment, yielding analytical results that may be applied systematically to improve the design and implementation of subsequent programs and projects. At the same time each grant given also benefits the individual grantees and implementation sites.
Fully realizing a hypothesis-testing program takes a great deal of ongoing involvement. A learning approach to compiling and administering a grant portfolio requires a significant amount of time, preferably devoted by full-time managers, to develop the framework, refine funding and research criteria, collect and analyze data, periodically revise the approach in accordance with new knowledge, and disseminate results. Capacity building is often another requisite. Awarding the grants, implementing the research, carrying out capacity building, monitoring, and completing the analysis require donors who look beyond the usual two-, three-, or even five-year grantmaking program horizons to focus on long-term learning and other benefits. All the extra time, money, and effort can pay off in learning that extends well beyond the portfolio's own existence.
The Biodiversity Conservation Network (BCN) was established in September 1992 and ended exactly seven years later. In 1999, when the program closed its doors, it was very different from what had been originally envisioned. To understand, therefore, how BCN functioned as a grant maker and how it interacted with its grant recipients, it is useful to do a straightforward "before and after" comparison of the program—because it is from those differences and changes that the most important lessons can be drawn.
In the following paragraphs we will give a brief history of how the BCN was conceived, and we will describe the program's institutional and programmatic structure, its grantmaking process (the core of this analysis), and its interactions with grant recipients at the beginning and end of the program. We will conclude with a section that highlights the changes BCN went through as a grant maker and, the major lessons it learned along the way.
A Very Brief History of How BCN Was Conceived
In the late 1980s and early 1990s there was a good deal of discussion in the development and conservation communities about how small-scale, community-based enterprises could create financial incentives to protect important terrestrial and marine habitats. The successful marketing of the Brazil nut in various Ben and Jerry's products, with the help of Cultural Survival, was one prototype suggested for the idea. The argument was that because local communities were earning income harvesting and selling the Brazil nut, and because the quality of the Brazil nut was directly linked to a healthy forest (Brazil nut trees require an intact canopy), local communities had an inherent and direct incentive to protect their revenue source and the ecosystem it relied on. Similar arguments were being made about "ecotourism," biological prospecting for pharmaceutical compounds, and even timber cutting as potentially lucrative businesses that could create incentives for sustainable use and conservation. This enthusiasm for the idea was matched by a good deal of skepticism about the limits of such an approach, but no one had done a systematic analysis. It sounded good in theory, but did it work in practice?
That is, in short, how the concept behind the BCN—a systematic look at enterprise-based approaches to conservation—got its start. At about this same time, USAID was creating a 10-year, $120 million program called the United States-Asia Environmental Partnership (US-AEP). US-AEP was focused on developing trade in and training for environmental technologies. USAID decided that the enterprise-based approach to conservation was conceptually compatible enough with US-AEP's overall goals to commit substantial funds to it.
In the Beginning (1992)
In September 1992, BSP and USAID signed a cooperative agreement to launch BCN. The agreement was for $20 million over a five-year period. Key features of the institutional and programmatic structure of BCN included the following:
BCN was designed to have a headquarters office in Washington, D.C. (where the majority of staff would be located), and a single regional office. The designers felt that putting staff in a regional office would reduce costs and enable staff to be managed so that they would not interfere with projects.
When the BCN cooperative agreement was signed in September 1992, there was no BCN staff. By mid-1993, BCN was actively reviewing proposals and making grants, even though there was just one permanent BCN staff member and two additional people with temporary status. BCN scaled up fast, but even after one year there were just five permanent staff members.
At the End (1999)
By 1999, BCN was still an integral part of BSP and the Consortium and still had its headquarter-office at WWF, a regional office, and a separate cooperative agreement with USAID. But much else had changed:
BCN had been given two no-cost extensions that extended its life by two years, making it a seven-year, $20 million program.
BCN had a small regional office in Manila, Philippines, but it also established "satellite" offices run by just one or two program officers in India, Indonesia, and Fiji, thus decentralizing the operation far more than anticipated and putting more staff in the four field offices than were located in Washington, D.C.
At its peak BCN had about 15 staff members, including interns and contractors in Washington, D.C., and the field.
In the Beginning (1992)
BCN was designed with two goals in mind: 1) to support terrestrial and marine conservation at specific sites noted for their biological diversity; and 2) to learn whether or not enterprises can, in fact, create financial incentives for conservation. This meant that BCN would have two distinct functions, occurring in more or less sequential phases. In the first phase, BCN was to function as an intermediary donor—receiving and reviewing proposals, making grants, and monitoring finances to achieve conservation goals. In the second phase, BCN was to function as a research organization —compiling and analyzing data coming in from the various grantees through technical reports and site visits to promote learning. That was the overall vision.
To reach these two goals of conservation and learning, BCN's original plan for grantmaking had several key features:
BCN was an open grants competition, meaning that anyone who read the widely distributed and vaguely written English-language Request for Proposals could apply for funding.
BCN staff members were discouraged from actively soliciting proposals and, thus, jeopardizing the program's objectivity.
BCN could make one of two types of grants: a Planning Grant of up to $50,000 for one year, or an Implementation Grant of up to $900,000 for three years. Organizations could apply directly for either one—they did not need to go through a planning phase.
All proposals were expected to incorporate a sound plan for three core elements: 1) a thorough business and marketing plan in support of a "linked" enterprise,1 2) a socioeconomic monitoring plan, and 3) a biological monitoring plan. Implementation Grant proposals that did not have these three core elements were to be denied funding.
Although it was trying to work with enterprises, owing to USAID regulations, BCN could only make grants—no loans of any kind were allowed. Furthermore, BCN could not make grants to for-profit firms.
BCN would review all incoming proposals internally then, for those Implementation Grant proposals that appeared promising, a Peer Review Group would be convened on a periodic basis to review and recommend which Implementation Grant requests should be supported.
All grants were supposed to be made by May 1994 so that data collection and analysis could begin.
At the End (1999)
After receiving and reviewing dozens of proposals that did not meet the BCN criteria, it was clear that the review process would have to go through incremental but fundamental changes. While many of those changes were in place by mid-1994, it was not until 1998 (the year BCN formalized its "Small Grants" review process) that BCN stopped working on the grantmaking process altogether. The following are the most important and substantive changes BCN made relative to the original grants review process:
BCN staff wrote an entirely new version of our Request for Proposals that was clear, straightforward and almost prescriptive, on the assumption that BCN should err more on the side of transparency and clarity than to try to be open and inclusive of all possibilities. BCN also translated the revised Request for Proposals into Indonesian because English was a serious obstacle to local groups in that country. Writing this revised version was difficult, because USAID requirements constrained us to maintain elements of the format and structure of the first version.
BCN staff members were encouraged to solicit proposals to fill gaps in our portfolio of projects and to develop proactive relationships with potential grantees. For example, when BCN realized that it did not have sufficient representation from India, BCN staff did a traveling road show in India to solicit proposals. In like manner, BCN also actively encouraged the development of marine proposals.
Organizations were actively discouraged from applying for an Implementation Grant without first applying for and completing a Planning Grant. BCN also ended up making more Planning Grants than Implementation Grants. Although this selectivity made a stronger portfolio, it also created some false expectations. Groups that received a Planning Grant but did not get an Implementation Grant for their projects were understandably unhappy. This screening process took significant amounts of staff time and also created some ill will.
Although originally BCN wanted to fund only complete projects, it found that most projects were deficient in at least one (and often more) of the key elements. BCN thus had to work closely with project teams during the Planning Grant phase to help them develop these elements of their proposal.
Although BCN could still not make loans or grants to for-profit firms, it tried to work with groups that were closely linked with for-profit businesses.
Instead of asking for full proposals from potential grantees, BCN requested two- to three- page concept papers in which the grantee outlined ideas before submitting a full proposal. These concept papers saved an enormous amount of time and effort for both grantees and BCN staff. If the ideas seemed interesting, staff could work with grantees to develop a proposal. If the ideas did not seem like they would fit, BCN could let people know before they expended a great deal of time and effort.
The selection phase of the grantmaking process took much longer than anticipated—it was not completed until mid-1995.
In the Beginning (1992)
Although it is hard to know exactly what the original designers of the BCN program were thinking, they seemed to have thought that BCN staff would try to avoid becoming involved in or working too closely with projects. They thought that if BCN developed a "research hypothesis," it would be a simple thing to publish it and wait for potential projects to apply for funding. BCN could pick the best ones, write them checks, conduct occasional field visits, and wait for the reports full of data to roll in. BCN could then analyze the data, write reports, and move onto the next topic. These were the major assumptions behind this approach:
Project teams had all the capacity necessary to manage their work and project finances.
Setting up enterprises was a fairly straightforward proposition, given the degree of funding that BCN could provide.
Project teams had the capacity and time to develop and implement monitoring plans that would collect appropriate data needed to test the BCN hypothesis.
At the End (1999)
Very early on in the program, it became clear that BCN staff would have to work with project partners on a regular basis and that BCN would have to provide extensive technical support. Instead of being hands-off donors, BCN had to get involved in projects:
Although all projects had developed extensive work plans, a good deal of modification was required. In particular, for many of our national NGO partners, even meeting USAID financial reporting requirements was difficult. BCN had to send its administrative staff to the field to help partners develop their institutional and financial management capacities. For better or worse, BCN staff also played facilitating roles in a number of disputes within organizations or among project partners.
Establishing workable enterprises is a difficult task. BCN supported numerous consultants and other types of assistance for the projects, but even this was not enough.
BCN staff spent a great deal of time working with projects to develop their analytical frameworks and to collect data to help test the BCN hypothesis.
When BCN started, it was conceived of as a fairly simple and straightforward proposition. But this process turned out to be incredibly difficult and complex. Setting up and running a hypothesis-testing grants program requires time and energy. It also requires that program and administrative staff simultaneously function as grants program officers, technical resource persons, information pollinators, researchers, and communicators. At times, wearing so many different hats was both confusing and tiring. But it also made the job extremely interesting, and BCN learned a great deal.