Brenda Herchmer is the owner of Grassroots Enterprises, a community development consulting company.When Innovation Lives in Communities—but Funding Doesn’t
When Innovation Lives in Communities—but Funding Doesn’t: How to Resource Community-Rooted Innovators
Last week, I shared this article called When Funders Mistake Big for Better: Why Community Innovators Stay Underfunded.
It was prompted by feedback from many who questioned why, when we say we care about innovation, communities, and localizing the SDGs, so few of the smaller, hardworking, creative, social, and systems entrepreneurs qualify for public, private, or philanthropic funding.
Part 1 unpacked why it was happening. This week is about suggestions for what could be done to fix it—drawing on what community-rooted social and system innovators keep saying, over and over (often while staring down yet another funding application).
When our existing funding systems are built for scale, compliance, and low risk, we shouldn’t be surprised that they only reach the institutions constructed to navigate them.
The question isn’t whether large organizations should be funded (they should), but whether the system also makes room for the groups closest to the work on the ground.
If we want real progress on the SDGs and other complex challenges and opportunities, we need to redesign not just who we fund, but how we fund them. That means changing the funding design and process, and how we use intermediaries—ideally without adding a new 20-page guideline each time.
What needs to change: funding design
First, funding design needs to catch up with what we say we value.
Many funders talk about innovation, equity, reconciliation, systems change, and SDG alignment—but their main budgets still flow through the same old channels, like a well-worn riverbed that always finds its way to the usual suspects.
Here are two practical shifts:
Make SDG and innovation money more than a token. Instead of tiny “innovation” pots around the edges, set aside a meaningful share of big program budgets—health, employment, poverty reduction, education, capacity building—specifically for community-level innovation and smaller social purpose organizations. Think of it as moving innovation from the snack table to the main course.
Shift some funding from projects to people and organizations. Innovators need stable, flexible support for core roles, learning, and partnership building. Without that, every project starts from scratch and ends in a scramble—it’s like asking people to build a house but funding only the kitchen, one year at a time.
The goal isn’t to stop funding large organizations. It’s to design funding that also supports those closer to the ground, where cross-sector trust-building and collective wisdom inform decision-making, experimentation, and timely implementation—without excessive paperwork.
What needs to change: process
Second, the process needs to align with the size and nature of the funding. Right now, many small grants come wrapped in large-grant paperwork. That’s not “just how government works”; it’s a design decision made by people who probably haven’t tried to fill out the form on a phone.
Some shifts funders and policymakers can make:
Treat community knowledge as an asset, not a liability. Lived experience, local trust, and longstanding relationships should be seen as risk-reducing factors—they help ensure funds reach the people and problems they’re meant to address, not just the people with the nicest PDFs.
Offer core and flexible funding, not just projects. When everything is tightly project-based, organizations can’t build the capacity muscles needed for innovation: long-term relationships, reflection, and adaptation. Too often, we fund sprints and then wonder why no one is ready for a marathon.
Talk to potential grantees, don’t just read their applications. Especially for smaller or newer organizations, conversation reveals context, passion, leadership, and capacity that never shows up in a checkbox. A 30-minute call can save everyone three weeks of emails.
And critically, consider matching paperwork to grant size:
Micro‑grants (for example, under 50,000 dollars): short applications, quick decisions, very simple, straightforward reporting.
Mid-sized grants: streamlined forms and realistic reporting.
Large grants: fuller due diligence and evaluation.
Aligning the process with scale doesn’t weaken accountability. It makes it proportionate—and far more likely to support outcomes rather than creating a new competitive sport in “advanced spreadsheet uploading.”
What needs to change: use intermediaries wisely
Third, governments and large funders don’t need to manage every micro-grant or relationship directly. When they try, it often creates bottlenecks and results in further distance from communities. It’s also like requiring that every local pothole be approved by a national committee.
Instead, they can:
Fund trusted intermediaries and networks to re-grant funds and provide light-touch coaching and support to small or rookie groups.
Prioritize intermediaries who have trusted relationships, are closest to the issues, are under-resourced themselves, and have historically been excluded from government, philanthropic, or corporate funding.
When it’s done well, this approach reduces the administrative burden on funders, expands community reach, and builds local capacity. The key is ensuring intermediaries are not just more of the same with a different logo, but are genuinely rooted in the communities and the systems-change agendas the funding is intended to support.
A call to action for funders and policymakers
If you work in funding or policy, you don’t need a ten-year strategy to start shifting your practice. Why not start with one funding cycle?
Begin with this question:
Who is closest to the problem—but furthest from our money?
Then ask:
What would it take to fund them fairly?
Which processes could we simplify or scale down without requiring a task force to approve the changes?
What percentage of our budget could we reserve for community-level innovators and smaller social purpose organizations?
Small, community-rooted innovators aren’t “nice to have.” They’re essential infrastructure for real change—and for any serious progress on the SDGs. If we stopped treating them as side projects and started funding them as the foundation they already are, our systems might finally reflect the communities they’re meant to serve, instead of getting stuck on a never‑ending grant treadmill.
If this resonates—or if you disagree—I’d love to hear how you are, or are considering similar contexts. Your examples, challenges, and experiments are exactly what we need more of in this conversation (and they’re much more interesting than another login screen).
If you’re interested beyond a thumbs-up or heart emoji, please consider answering the questions below.
If you control or influence a budget, what percentage could you reserve for community-level innovators next cycle?
Which one of these shifts—design, process, or intermediaries—feels most doable where you are? Comment with your thoughts.
Share this with a colleague in government, philanthropy, or corporate social impact, and start a concrete ‘what can we change this year?’ conversation.
What examples have you seen of funding processes that actually work for smaller, community-rooted groups?
If you disagree with this framing, I’d be especially interested in your perspective—add it in the comments.”
Posted on 02-04-26Next entry: Who Speaks for Rural Canada Now?
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