From April to December 2018, the TUKLAS Innovation Labs supported five youth organizations, two indigenous peoples groups, 17 local non-government organizations, three academe, five startups, and eight new individual unaffiliated groups  with a seed funding of up to PhP 1 million to test and refine their innovative ideas in collaboration with their partner communities. Most of these groups are not familiar with the usual NGO granting modalities with several of them being individual innovators with no formal legal registration or People’s Organisations.

As such, the TUKLAS Innovation Labs then streamlined or reduced the administrative- and other compliance-related burdens to make the grants both fit for purpose but provide accountability. Instead of using a standard sub-granting approach regularly used by NGOs, funds were given to the innovation teams under a Fixed Obligation Grant (FOG). This modality aims to allow for more innovation-centered activities that promote flexibility and encourage innovators to ‘fail fast’ or pivot and adjust their design. In addition, the mechanism was also designed to ensure that it will be possible to rapidly end or change agreements based on explained parameters of non-performance or overall failure of the innovation.

What sets FOG part from the usual sub-granting modality are as follows:

  • In tranches

    The FOGs payment schedules will be based on funding tranches (monthly) tied to the achievement of agreed milestones and movement along the innovation cycle. These milestones are to be clearly agreed with each innovator with support from the community labs.

  • Change in focus

    The tranches will focus on innovation-related outcomes or completion of key processes, like social preparation and testing of assumptions, rather than purely on outputs or activities.

  • Less Paperwork

    The requirements for regular partner liquidations and supporting documentation of expenditure would therefore no longer be required. Financial reporting as per normal grant agreements would be removed. Reporting would be based on the milestone narratives, progress reporting and other MEAL requirements.

  • Determining Disbursal

    A monthly disbursal schedule will promote a mentality of ‘failing fast and failing often’ with quick turnaround on activities and pivoting where appropriate, as well as limiting outstanding liabilities by reducing the amount of funding disbursed to teams at any one time. During the grant negotiations, and prior to the first disbursal, the budgets submitted by the teams will be carefully reviewed by the community labs to advise recommended modifications or validate that they are accurate, reasonable, and demonstrate value for money before agreeing to the final amount. The labs will work with the innovation teams to create a milestone delivery schedule and budget phasing to ensure the monthly disbursals are able to cover the cash flow needs as per the work plans. Disbursals will be made upon approval of milestone deliverables, and absent review or approval of a financial report or other supporting documentation.

  • Budget and Forecast Modifications

    As projects and innovations are expected to evolve, budget modifications are possible and enabled through this mechanism. However, it is recognized that teams will need support and significant changes could impact particular budget categories and monthly forecasted funding needs. Budget and forecast modifications should be discussed with the lab teams, and innovators would only need written approval from the lab’s Project Manager. The Grants Officers of each community labs will be responsible for supporting teams to re-forecast as needed and remind teams to request modifications in time to allow a decision to be made before the next disbursal. All budget modifications will be expected to be within the approved total budget amount unless otherwise requested by the innovation teams and approved by the Consortium Manager with endorsement of the lab’s Project Manager.

  • Continuous Capacity Strengthening

    In order to minimize risks, ensure adequate financial management and internal controls, and support the innovators’ capacity development, the labs will still continue to provide quality financial and operational support based on the results of their PCA and the resulting needs identified, and/or requests of the teams. The regional labs’ Grants Officers will be working closely with the innovation teams every month (face-to-face or remotely) and instead of focusing on the validation of project expenditure, their monitoring support will be focused on providing coaching and mentoring support on financial management and strengthening of internal controls and systems. Similarly, the PCA scores will be used to develop capacity building plans to also help support in this area. Project funds for ‘expert’ support will also be used for providing additional and targeted financial support to innovators with limited experience.

As part of due diligence activities, community labs visited the 40 innovation teams (February – March 2018) and used a Partner Capacity Assessment Tool (PCAT) to assess the financial management and administrative capacities of the innovation teams. The assessment examined five attributes: (a) governance, (b) program and project management, (c) finance and administration, (d) human resource management, and (c) external relations. PCAT assessment and validation involved document reviews, focus group discussions, and key informant interviews. Results of the PCAT assessment were used to determine appropriateness and readiness of the innovation teams to manage TUKLAS funding and areas where they would need support to meet requirements or be able to make the best use of the funds. The assessment results were also used to develop a capacity-building plan or to determine what specific capacity-strengthening support the community labs could further provide for the innovators.

Based on the PCAT scores, the innovation teams would initially be categorized as TUKLAS-managed,  co-managed, and partner-managed to determine how to grant funds. However, because of the  proposed change to the granting modality from a standard subgranting approach to a FOG granting modality, the labs used the following categories instead:

  • Blue Category – The category for the innovation teams which scored below 50% of the highest possible score on the Partner Capacity Assessment (PCA)
  • Orange Category – The category for innovation teams which scored 50% – 74% of the highest possible score on the PCA.
  • Green Category – The category for the innovation teams which scored 75% or higher of the highest possible score on the PCA

The community labs were also given the liberty to modify the said FOG to complement their respective organization policies.

Apart from putting categories on the granting modality, the results also served as reference for the labs to be able to draft capacity strengthening support. For the past eight months, the TUKLAS Innovation Labs then supported 17 teams under the Blue Category, one of which scoring a bit close to Orange Category; 9 teams under the Orange Category, and 14 teams under the Green Category.


Implementation of the FOG has been a learning experience both for the innovation teams and the labs.

Below are the reflections on FOG implementation[1].



  • The FOG was considered an innovation to the usual financial management system as it accommodates different groups of people and institutions. The FOG stays true to the core of TUKLAS, and that is to encourage everyone to innovate.
  • The FOG encourages financial reporting not to focus on compliance (e.g. reporting and liquidation) but on achievement of milestones
  • The FOG allows for the teams to do quick decision making based on their progress, feedback and findings and course correct without time consuming and administrative processes
  • The consortium partners have been very supportive in implementing the FOG, despite of it being new to everyone. The host organizations were able to reflect on their processes, and tried to minimize the requirements so as to accommodate the FOG. There was also support in terms of conducting financial management trainings to the innovation teams.


  • On FOG Implementation

o   Though the FOG was given the green light by the Project Steering Committee, it was challenging for the consortium partners, especially the finance units of the consortium partners, to implement it right away as they already have finance and grants management of their own. On top of that, the FOG seemed to deviate from the usual practice, making it more difficult to adopt.

o   There have been challenges on verification of expenditures since the FOG does not require liquidation and financial reports. To compensate, the verification was done when the labs visit the innovation teams with regular follow up and financial management support.

o   Some innovation teams were late in submitting milestone reports and updated budget (which is a requirement for releasing of tranche) despite several reminders from the lab.

  • On Finance and Grants Management Structure

o   Late approval of the FOG from it being a new modality to adopt, causing late release of first tranches

o The Grants and Finance Management Coordinator was onboard a bit late (July 2018)

As for the challenges according to the innovators, most of them noted that it was their first time doing these activities. Some appreciated the experience and see it as useful for their next endeavors. Others see it as another paperwork. They also attribute some delays in their testing activities due to late release of tranches.

Moving forward, as much as the FOG wants to be an example of how grants management can be agile to accommodate innovation programming, it could have been better if TUKLAS Innovation Labs was able to put its advocated approaches into practice and co-design the next granting modality guidelines with the teams who will be implementing them and the finance units of the consortium partners. With this, it will promote ownership and accountability of the process as well.



[1] Sources: TUKLAS All Staff Meeting Minutes, August 6-10, 2018; CCU Meeting dtd. November 15, 2018; and Partnership Review with VL Innovators, dtd. November 20-21, 2018.