Capital Fund

The limited number and lack of stability of funding sources require that initiatives should establish strategies to become more self-sufficient. This helps to better negotiate financial support with the donors.

Some initiatives do as much as they can to sustain their programs (as much as possible) with the interests generated by a Capital Fund. A Capital Fund Scheme reduces the initiative’s need to search for additional funds annually and allows it to keep the stewardship of its project without needing to bend to the interests of the financial supporters.

This means two things:

• That the initiative’s overall funding strategy objective changes from searching for yearly funds to finding donations for (or generating resources to be invested in) an investment fund (the capital fund) selected with two criteria:

° that maximizes interest.

°  that minimizes financial risk.

• That money gathered from all sources is used to pay the programs’ expenses, and what is left invested in the capital fund, whose objective is to grow as much as possible so its interests can soon become a matching fund: the matching fund of the capital fund, thus favoring true financial sustainability.

To provide credibility and encourage donations, the use of the capital fund can be subject to control by a banking trust fund mechanism.

Related strategies:

♣ Capital Fund 

See also:

Keeping local stewardship

Parity/Matching Funds

Banking Trust Funds

Creating and capitalizing on local resources