Reflections on the power of funding systems change efforts
‘Impact’ can be loosely defined as progress towards a shared goal, the cost of which can include time, human, financial and operational resources.
Traditionally, many donors have been reluctant to pay for anything other than direct project activities, which they most closely associate with impact. Expenditure on less tangible things – like training, salaries, leadership, organisational systems, and collaboration – is often lumped together as ‘indirect costs’, which many donors aim to keep as low as possible.
But it is past time to reframe what an impact cost really is. For social change to take place — especially change led by frontline organisations — donors must expand their definition of direct costs.
At the Freedom Fund, we understand impact costs to encompass whole organisations and invest accordingly. We are able to do so at scale through our clustered hotspot model, which involves:
- Strengthening capacity
- Providing technical support
- Facilitating communities of practice
- Hiring local Program Advisors to directly coordinate this work
For us, these aren’t overheads or nice-to-haves. They are direct costs essential for transformative and sustainable change.