New DFAT funding to focus on shared value in India

CANBERRA – From Feb. 26, the Department of Foreign Affairs and Trade will open a new round of funding as part of the Business Partnerships Platform, focused solely on ideas supporting economic and social development in India. The BPP is an initiative of Australia’s aid program that aims to promote private sector engagement in development by contributing money to support, advance, and scale projects that are both commercially viable and socially impactful. Previously, there have been two rounds of the BPP supporting a total of 19 initiatives responding to a range of development challenges including agriculture, finance, and health. But so far, projects from India have been excluded from the geographic scope of funding. The new round will see funding for four or five partnerships, with a particular need for projects supporting agribusiness, health as well as energy and resources, in line with DFAT’s program of work to support the economic development of India. The BPP is managed on behalf of DFAT by Palladium, and prior to the new round being open to applicants Devex spoke to Palladium’s BPP team leader Nicholas Wolf on the reasons for an India focused round and his advice to applicants on the pitfalls to avoid. Why India? As India was not included in the previous two rounds of the BPP, there is the hope that this will generate a range of new and fresh ideas which demonstrate diversity in private sector partnerships. “There is chance that some companies may have had ideas that could be applied in India, but I would expect this to be rare,” Wolf said. “I generally expect new ideas.” Internally within DFAT, there are policy reasons for supporting an India-focused BPP round. But beyond the requirement of Australia’s aid program to India, a regionally focused round of the BPP is enabling DFAT to test the capabilities of the program to support development needs. “The BPP is still quite new and DFAT is not only trying to make that work, but figure out how to best use it,” Wolf explained. “There are some initiatives they have that are country focused, while others are focused on specific issues or themes. The BPP is testing and learning about how to work with DFAT’s system. We have run two broad rounds now, going to a wide range of countries and sectors. But this allows us to see how it can be focused on one country or region.” As DFAT are currently discussing what the third round of the BPP will look like — whether it will be broad or focused on key countries and sectors — the India round of the BPP lets them test the waters for new models to see what works for the future. “But it is also a chance for us to tweak the process a little bit, and see if we can roll out a program faster,” Wolf said. “The process will essentially be the same as round two of the BPP with a key difference — as it is only in one country we can review applications and run through the round faster.” The India round will also be condensed into a one-step process rather than two. In previous rounds, a shortlist of applicants was created, who were then asked to submit a detailed business proposal. “Instead of taking a year to finalize, it will take three to four months,” Wolf said. “We’re very pleased with the efficiencies created with this one.” The efficiencies will also extend to ongoing monitoring and evaluation of partnerships funded. “From the Palladium side, we have many offices throughout India supporting existing operations,” Wolf said. “We’ve been talking to them about how we can use their support — both in personnel and facilities. Also a few of the advisers we have on the BPP that we have used in the previous rounds are based in India. Having people already there means we don’t have to fly them in and lets us respond quicker.” Advice for applicants When the new round of the BPP opens for application, Wolf advises to ensure proposals demonstrate clear and strong alignment with all four selection criteria. The first criteria looks at the partnership — who are the partners, what their roles are and how they work together. DFAT is also part of this partnership, and demonstrating how the proposal will engage DFAT and what their role is will be is also important. The second criteria looks at social impact. Proposals should address what the partnership is hoping to achieve for beneficiaries, who these beneficiaries are, and how they aim to quantify and assess impact. The third is on gender equality and women’s empowerment. “All successful applicants are required to have gender equality as either a significant or principle objective,” Wolf explained. “If it is not part of the application, the application is not considered.” The fourth criteria is on commercial viability and value for money of the partnership — and this is the criteria Wolf saw many proposals in round two of the BPP fall over on as they believed social impact alone would get them across the line. “Often, there were good partnership ideas and they had been working well together and they had reasonable idea on how they could benefit people,” Wolf said. “But there was just no commercial sustainability to the idea. They were project-based with no clear pathways to a commercially sustainable business. And that is a key part of the concept of shared value.” Wolf explained that in assessing commercial viability and value for money, they look at a range of factors — what the business is, when it expects to break even, whether the financial numbers stack up, what is the leverage or resources being contributed by partners, and whether the commercial outcome would happen on its own. DFAT funding through the BPP, Wolf said, aims to be “catalytic” and shouldn’t support an idea that will happen anyway. “The important thing is they demonstrate they meet all four criteria,” Wolf advised. “They cannot be really strong on all three and missing one other. We did have a lot of applications in round two that were very strong on three criteria and completely missed the fourth. It’s not an aggregate score — you really do need to demonstrate that you are meeting all four, and the one I noticed was most problematic in round two was the commercial criteria.” Palladium and DFAT staff both in Canberra and at Indian posts and specialist business advisers trained on the BPP will be part of the groups reviewing and assessing applications. And Wolf advises that as there are so many unknowns with this India round, it is important for applications to put forward their best possible partnerships and proposals. “We haven’t had a BPP in India before, but there are a lot of businesses that are thinking about social impact,” he said. “And because of this, we don’t know how many applicants, but we have a plan to support, however many we get — but there may be more than we expect and tough competition for funding.” The options are open for the future of business partnerships with DFAT As DFAT are currently considering a third round of the BPP, there are strong signs the program is being embraced internally for better engaging the private sector and increasing scale and impact in developing countries. Contractually, the loose statement of requirements Palladium has to deliver the BPP allows flexibility in what the program looks like and how it is implemented. “Those statements don’t go into detail on every little thing,” Wolf explained. “It is a framework, and the details are determined day to day, or week to week in programming and planning processes. Our contract broadly says we need to help deliver this and what is required. In the end, we do what is necessary to get it done — even if it isn’t written down.” And this may mean a greater number of smaller challenges specific to regions or themes, opening the initiative to new areas, regions, and partnerships for funding. For all innovative development partnerships, the BPP will be a source to watch for potential funding support.