How the Radical Flexibility Fund is using new tools to finance aid

As international aid budgets tighten and traditional grantmaking models come under increasing strain, a growing number of funders are asking a harder question than how to localize aid: How do you most effectively and sustainably finance local civil society? For the Radical Flexibility Fund, the answer has not been to create yet another pooled fund or thematic window, but to rethink the financial architecture that underpins civil society itself — experimenting with loans, recoverable grants, and participatory governance structures that shift both capital and decision-making power closer to communities. “We create new pathways and mechanisms to sustainably and equitably fund civil society, and find ways of shifting power to communities,” said Riva Kantowitz, founder and CEO of Radical Flexibility Fund, during a recent Pro Funding Briefing. That emphasis on how funding flows — not just who receives it — places the Radical Flexibility Fund at the center of a broader debate reshaping development finance in the wake of declining bilateral aid, heightened risk aversion across philanthropy, and the growing recognition that traditional grantmaking alone cannot meet the scale or complexity of today’s challenges. From humanitarian response to systems change Kantowitz’s path into innovative financing did not begin in finance at all. Trained as a community psychologist with a background in international human rights, she spent more than a decade working in humanitarian and conflict-affected settings before turning her attention to resourcing itself. “After about 15 years working on humanitarian crises and in conflict-affected countries, I started focusing on resourcing and new financing approaches,” she said. That pivot was driven by a persistent frustration familiar to many practitioners: community-based organizations were doing essential, often high-risk work, yet remained trapped in an endless treadmill of short-term, project-restricted grants. Administrative burden was high, flexibility was low, and sustainability was elusive. Radical Flexibility Fund emerged as a response — not as a donor organization, but as a catalytic force, adviser, and architect of alternative funding mechanisms. Its work spans advocacy within the global development ecosystem, consulting with philanthropic donors and institutions, and its “New Tools Initiative”: the creation of entirely new financial instruments designed around community needs rather than donor preferences. Moving beyond buzzwords Like many leaders in the localization and funding reform space, Kantowitz is wary of buzzwords — including “innovative finance” and “sustainability.” “These ideas become tactics,” she said. “Innovation does not necessarily mean more equitable or empowering. It’s how you wield those tools.” Grants, she noted, became the dominant instrument for financing social change almost by default in the post–Cold War era, despite their limitations. For smaller organizations in particular, access barriers, compliance requirements, and rigid project design often exclude the very players donors say they want to support. Radical Flexibility Fund began by mapping the broader universe of financial tools — more than 20 by its count — and then asking a deceptively simple question: What do community-based organizations actually need in order to thrive? The answer, in many cases, was not more grants but access to flexible capital, the ability to generate revenue, and governance structures that treated local partners as decision-makers rather than implementers. Alborada Ventures: a hybrid model for integration Those insights culminated in Radical Flexibility Fund’s flagship initiative: Alborada Ventures, an impact investment fund co-designed with Venezuelan migrant-led organizations in Colombia. “Colombia has absorbed almost 3 million Venezuelan migrants,” Kantowitz said. “We are well past the acute emergency phase. The question now is integration.” Rather than imposing a predefined thematic focus, the Radical Flexibility Fund allowed local partners to identify the challenge they wanted to address. The result was a fund explicitly designed to bridge humanitarian response and long-term development — supporting both nonprofit organizations and social enterprises working on livelihoods, social inclusion, and access to services. Roughly 60% of Alborada’s capital is allocated to social enterprises through small, flexible loans starting at $30,000, designed to help organizations scale revenue-generating activities. The remaining 40% supports nonprofit organizations through grants and recoverable grants — funding that Kantowitz said functions as a “lifeline” in today’s constrained funding environment. Importantly, Alborada does not draw rigid distinctions between “NGOs” and “businesses.” Many participating organizations operate hybrid models — advocacy groups with catering businesses, service providers with earned-revenue arms — reflecting how local organizations actually sustain themselves in practice. What most distinguishes Alborada, however, is not its blended finance structure but its governance model. “People with lived experience are included in every decision-making part of this fund,” Kantowitz said. “It’s Venezuelan migrants who decide what is a good investment.” Alborada is incorporated in Colombia as an independent legal entity with its own governing body. Neither Radical Flexibility Fund nor its Colombian partner owns the fund — a deliberate decision intended to avoid replicating the top-down control structures that characterize many global financing mechanisms. For Kantowitz, governance is inseparable from capital. “Shifting power can’t just stay at a transactional level,” she said. “It’s not only about moving money.” Lessons from implementation Moving from concept to implementation has been neither fast nor easy. “Funding the design phase has been incredibly challenging,” Kantowitz said. “You can’t just create a new mechanism out of the air. That requires years of investment.” Much of Alborada’s early financing came from a mix of consulting revenue and philanthropic grants, including sustained support from Humanity United. The long-term vision is for the fund to attract impact investors seeking modest returns, while philanthropic capital absorbs early risk and enables experimentation. The model is designed to regenerate capital internally as loans are repaid and recycled, reducing long-term dependence on grant funding alone. Still, Kantowitz is candid about the resistance such approaches face. “There have been pretty big challenges,” she said, “Encountering resistance despite the really widespread acknowledgement that we need to try new things.” Assumptions that nonprofits cannot manage loans, or that advocacy work cannot attract alternative capital, persist — despite decades of counterexamples, from charity shops to social enterprises embedded within civil society organizations. Measuring impact — and unintended consequences Radical Flexibility Fund has built an explicit learning framework to assess both intended and unintended consequences of its approach. “We’re asking: Did access to flexible capital actually help organizations do their work better?” Kantowitz said. “Or were there ways that we don’t understand that it was actually a deterrent?” Evaluation operates at multiple levels: organizational resilience among the 22 participating organizations, ecosystem effects at the municipal level, and shifts in donor and investor behavior. Particular attention is paid to social dynamics, including the risk of exacerbating tensions between migrant and host communities. “We’re interested in supporting the resilience around those dynamics without feeding fault lines,” Kantowitz said. A cautious outlook for 2026 Looking ahead, Kantowitz is realistic about the pace of change across the global funding landscape. “At the global level, I’m not seeing a big embrace of risk,” she said, reflecting on the year since major disruptions to U.S. aid funding. She sees more openness, however, at national and municipal levels, where governments and local actors are grappling directly with service delivery gaps and fiscal constraints. “These changes take decades,” Kantowitz said. “The seeds are there. Our role is to connect them more systematically — without wrecking the grassroots nature of the work.” Radical Flexibility Fund does not aim to replicate Alborada wholesale across geography. Any future expansion would begin with a new design phase shaped by local demand, regulatory environments, and lived experience. In an era of shrinking aid budgets and growing complexity, Radical Flexibility Fund is making a different bet: that sustainable impact depends less on perfect financial instruments than on who designs them, who governs them, and who ultimately holds power. Want more briefings like this? Let us know — and stay tuned for upcoming live conversations here.