Three key terms

What catalytic funding pays for

Contribution capital can pay for functions that serious landscape efforts need but conventional instruments rarely cover: cross-sector collaboration and governance; funding and financing strategy, upstream of any particular instrument; and flexibility within and around transactions, so momentum survives when a young market or a fragile deal falters. All three come up in nearly every serious landscape effort, and all three are chronically underfunded.

Why this is hard today

Three kinds of money are supposed to provide catalytic funding, and each is falling short in its own way. 

The current systems are either funder-dominated or methodology-based; none adequately engage the prople and institutions closest to the problem in finding solutions.

Donor funding at its best comes closest to the ideal

Donor funding is flexible, mission-driven, able to take real risk. But the supply is short and unlikely to grow much under current conditions.

Deployment routes are often assembled from scratch, risk tolerance varies and donors struggle to learn from each other in the absence of a standardized system for catalytic funding.

Donor systems are being asked to do things they were not designed to do consistently at landscape scale.

Carbon finance: the dynamics are even more disappointing than the quantity

Carbon finance was designed to be catalytic: define what constitutes a credit, establish demand for future credits, and mitigation action and finance follow to deliver the recognized results.

In practice, the goalposts keep moving; demand for nature-based credits is mainly voluntary, exposed to market downturns and swings in sentiment; and the buyers that remain have grown risk-averse, so revenue arrives after the hardest work is done, or at a steep discount.

Donors now spend scarce catalytic funding propping up the market itself: subsidizing projects that low prices cannot sustain, and funding the ever-expanding integrity systems at its center. The market meant to supply catalytic funding has become one of its main consumers.

Impact investing

Impact investing was intended to create catalytic value from the combination of targeted investment and concessional finance.

Many investors who use the label are unwilling to accept below-market returns, however, which leaves impact capital competing for the deals that already work, or scrambling to add uncertain carbon revenues to an already fragile capital stack — either way, the catalytic role goes unfilled.

Developing Co-investment Mechanisms

There is more capacity in landscapes than a decade ago — more credible initiatives, stronger rights-holder institutions, more capable funds and intermediaries — so catalytic funding can increasingly work through institutions that already exist. But the same growth has made opportunities harder to see from outside; the people who can tell where money would change what happens are the ones already engaged.

COIN’s approach follows from that: bring the actors closest to the challenge into shared responsibility for matching catalytic funding with real opportunities.

A co-investment mechanism is a governed route for matching catalytic funding to landscape priorities, deploying it through existing or emerging institutions, and supporting proportionate claims based on evidence. Four working parts are likely to persist through every version:

• Multiple funding sources, on their own terms. Companies, donors, philanthropies, and public funders each support a different part of the same landscape effort, contributing to one coherent whole.
• Matchmaking, guided by the people close to the problem. The landscape initiative, deploying intermediaries, and standards partners find the catalytic uses, test whether an opportunity is credible, and structure the commitment.
• Deployment through the landscape’s own funding system. Contribution capital works through the mechanisms a landscape already has or is building — a trust fund, a public incentive program, an Indigenous-managed intermediary — leaving that system stronger.
• Pragmatic measurement and contribution claims. Existing methods establish the climate and nature importance of the work; MRV is sized to the decisions and claims it supports. The result is a contribution claim calibrated to the evidence, not a claim to own an outcome.

Built for donors and companies

For donors and foundations, this is an operating package with many benefits — results discipline, transparent rules, comparable records — and transparency related to funding terms, uses, and evidence. It builds on mechanisms donors have spent decades helping to create, from conservation trust funds to Indigenous-led funds to watershed facilities, strengthening them rather than adding a new layer. And it makes long-sought reforms more executable: localization, local resource mobilization, and genuine private-sector partnership. Donors also benefit from contribution claims, even when they do not need public marketing claims: the discipline forces clearer records of what was funded, why it was catalytic, what changed, and how the evidence should be interpreted.

‍For companies, the door-opener is the contribution claim: a claim about the company’s role in a measured result, rather than ownership of an outcome. Corporate climate standards are opening room for contributions made as funding — SBTi's Ongoing Emissions Responsibility program is the clearest signal — so companies can fund, not only buy. Because contribution claims are matched to evidence and can strengthen as evidence accumulates, they are more adaptable to evolving expectations, standards, and measurement over time. They can also work alongside credit strategies, provided credit ownership, retirement, and public claims are governed explicitly.

Two pathways

From the perspective of climate funding, contribution capital usually follows one of two pathways, defined by its relationship to carbon crediting. The pathways differ in how measurement is structured and whether credits are generated, but they share the same claims discipline: contributors make evidence-based contribution claims, not offsetting claims or exclusive claims to own the outcome. A landscape can use both pathways at once for different parts of its work. 

• The Non-Credit Pathway. Contributors fund high-value outcomes that credit markets serve poorly — Indigenous territorial management, coastal resilience, watershed function, governance, restoration, or other enabling conditions — with measurement drawn from crediting methodologies or other approaches suited to the context. The claim is not a credit substitute. It is a contribution claim calibrated to what the analysis supports. 
• The Credit-Integration Pathway. Contributors fund a carbon project in full or in part as contribution capital, lowering its cost of capital and reducing or removing the need for commercial or investor financing. The project may still generate high-integrity credits, but credit ownership, retirement, use of proceeds, and contribution claims have to be governed explicitly. Contributors can claim the funding they provided and the measured outcomes they helped enable, only to the extent supported by the evidence and the agreed claims architecture.

Developing an innovation system

A growing portfolio of co-investment mechanisms, with a consistent form and granular information, could produce comparable evidence about what contribution capital achieves, where, and under what conditions — and, over time, give funders, companies, and landscape initiatives a more trusted way to work together, complementing donor grantmaking and market-based instruments rather than replacing either.

What COIN does

COIN supports the development of these mechanisms, develops the underlying framework in the open — the Contribution Capital Operating Framework, maintained as a public good any institution can use — and provides advisory services to initiatives addressing pieces of these challenges.

The principles are fixed: claims proportionate to evidence, deployment primarily through existing institutions, landscape initiatives and rights-holders at the strategic center. The instruments are working drafts, concrete enough to use and critique.

Want the working documents, or to challenge the thinking?
‍lexhovani@coinvesting.earth