The fifth step in the operationalizing phase is to match the project ideas resulting from step 4 with potential sources of financing.  There are many sources of funding, including locally-generated revenues, user fees, transfers from higher levels of government, borrowing, national/state-level funds, national development banks, and international sources.  Each source of funding has its place in a broader financing strategy for resilience.  Some parts of the resilience plan are best financed locally, while others require external budgetary or project specific support.  The output of this step will be a list of potential sources of financing for each of the priority action areas and project ideas.

A good starting point in this process is to understand the city’s current expenditures and how they relate to the priorities identified in the adaptation and resilience plan.  In many cases the city may be funding activities that contribute to the goals identified in the plan, but they are not specifically labeled as “resilience” activities.  Moreover, in most cases the activities are implemented by line agencies, and so there is no single coordinating entity or mechanism to track them. Similarly, the city should consider other government funding channels such as city specific programs, national/state level funds, and other government transfers that may be accessed to fund the resilience priorities. The output of this analysis is to identify project ideas that will need external financing.

After identifying which project ideas are appropriate for external financing, the next task is to identify potential financiers.  In general cities should first consider domestic sources of funding before exploring international sources.  Among the most important considerations are the access modality and the access requirements of the financier.  Some financiers have multiple access windows and types of financing available.  For example, your country may have an accredited entity to access an international fund.  In this case, the city will need to identify and work through the national designated authority, which is generally a government official or agency that acts as a point of contact for the fund and exercises a coordination role.  In cases where the country does not have an accredited entity, the city will need to work with a regional or multilateral partner to design the project and apply for financing. 

Another important consideration is the specific goals of the funding agency.  Consider how the project idea relates to these goals.  Related to this are the decision criteria of the financier and the application procedures.  In addition, many financiers prefer to support projects that will leverage grants or concessionary loans so that additional funds can be secured from other development agencies or market rate financial institutions.  This is referred to as blending.  Review the procedures of potential financiers, as well as some approved projects for examples. 

Once potential financers have been identified, the city can begin discussions with the financier, or with the designated authorities at the national level.  This will help the city understand current priorities of the financiers, and the potential feasibility of the projects being supported.  These discussions will also inform the relevant national authorities so that they can coordinate the city’s project development process with those taking place in other cities and regions in the country.  This is the first milestone in an ongoing process of consultation with financiers and the relevant national level authorities, and it should take place before project design begins.