How philanthropy can supercharge climate adaptation finance

Authors: Marilou Uy and Carter Brandon

As deadly and destructive climate impacts are felt around the world, the need for measures to cope with and respond to the effects of climate change—known as adaptation and resilience—is growing. Extreme events such as searing heatwaves and relentless floods fuel a vicious cycle of deepening poverty and escalating vulnerability to climate impacts.

Investing in adaptation and resilience enables nations and communities to prepare, recover, and build infrastructure robust enough to face the future, and is paramount for their progress and well-being. Investment in adaptation yields significant fiscal and economic savings by averting future losses. For vulnerable countries, climate adaptation is no longer an option—it is a necessity. Though funds are required, adapting is cheaper than not adapting.

And yet, a chasm exists between developing countries’ needs and actual investment levels. Annual financing for adaptation and resilience languishes at about 10 percent of estimated needs, which are projected to be $215 billion to $387 billion annually by 2030. In Africa, for instance, enhanced spending on resilience is vital for food security, livelihoods, supply chain protection, and staving off health crises. Furthermore, global financing for loss and damage—the unavoidable social and economic consequences of climate change—remains a footnote.

A unique opportunity for philanthropies

Philanthropies are learning more about climate adaptation and resilience. There are many opportunities for philanthropies to get involved in supporting climate adaptation that many may not have thought about, mostly because these opportunities invite giving at higher levels than in the past. They promote pooling of resources to enable greater leverage and impact of philanthropic resources.

But first, some background. The 2024 report from the Independent High Level Expert Group on Climate Finance (IHLEG) underscored the urgent need to bridge the vast financing gaps hindering both climate mitigation and resilience-building. It stressed mobilizing funds that do not exacerbate national debt, even as Official Development Assistance from the United States and much of Europe in early 2025 is being downsized. In such a climate, developing countries need alternative sources of concessional and grant financing.

In 2023, philanthropic giving for climate change was estimated between $9.9 billion and $16.4 billion annually. Alarmingly, only about $600 million (a mere 4-6 percent of this total) was dedicated to adaptation, according to the ClimateWorks Foundation. Historically, philanthropies have prioritized mitigation, mainly sustainable energy. A new survey indicates foundations are now paying more attention to adaptation, a shift that is long overdue.

At the United Nations climate summit (COP28) in 2023, a coalition of 21 leading philanthropic organizations, including the Rockefeller Foundation, Aga Khan Development Network, Temasek Trust, and the Shockwave Foundation, called for greater action on climate adaptation. The Adaptation and Resilience Funders Collaborative now unites 60 foundations to learn, coordinate, and invest. Separately, the World Economic Forum’s Giving to Amplify Earth Action (GAEA) initiative is fostering public-private partnerships to multiply financial contributions for adaptation and nature.

For foundations looking to give in new and different ways and leverage the strengths of other development partners to increase the impact of their contributions, adaptation and resilience provide promising avenues. These involve collaboration with multilateral development banks (MDBs), offering mutually beneficial outcomes.

Key opportunities for higher-impact giving

Philanthropic organizations can pursue many avenues for contributions to climate adaptation, from local community projects to broader sectoral or global initiatives. Many foundations possess deep-rooted partnerships in developing regions, providing vital channels for direct giving. Specific needs could include better information for project planning and supporting governments to understand and prioritize cost-effective climate interventions.

There are also opportunities for expanding the quantity and improving the quality of MDB adaptation financing by crowding in substantial funds from large foundations. Such action could be extremely impactful at a time when developing countries are facing increasing financial and climate-related stress simultaneously.

However, to truly scale their impact, foundations need innovative investment strategies. Here we dive into five avenues for philanthropy to work proactively and innovatively with partners to scale up concessional climate financing.

1.Co-finance projects with multilateral development banks

Philanthropic organizations and MDBs can jointly finance climate adaptation, nature restoration, and resilience-building projects—particularly in low-income, climate-vulnerable countries. Philanthropists have historically contributed to MDB-managed trust funds for research and capacity-building, but these funds do not typically co-finance large MDB projects. Pooled philanthropic capital could provide longer-term financing, which many adaptation investments demand. This approach, previously promoted by the Center for Global Development, allows philanthropies to expand their impact.

2. Provide grant financing for the loss and damage fund

Philanthropies could support the Fund for Responding to Loss and Damage (FRLD), operationalized at COP28 to help particularly vulnerable countries cope with the adverse effects of climate change. The Fund itself plans to explore non-donor and private financing.

Philanthropy is well-placed to provide some urgently needed early grant financing to augment the very limited funds pledged by countries so far; doing so would allow developing country governments to meet growing government liabilities related to climate loss and damage without incurring greater debt.

It is not realistic for philanthropies to cover a major portion of the total projected needs. In fact, the negotiating bodies (and governments generally) are still determining what those total needs might be. Nevertheless, early philanthropic partnership could inform crucial funding discussions.

Crucially, philanthropies played a notable role in raising early awareness at COP26 in 2021 of the need to devote more financing to loss and damage. They can continue to apply public pressure, catalyze support, and foster innovative non-donor contributions.

3. Create global funding mechanisms to leverage MDB core capital

The G20 Triple Agenda Report proposes an innovative idea: create global funding mechanisms through which non-government investors, including philanthropy, could help expand MDBs’ financing capacity. Such a mechanism could use grant contributions to allow MDBs to leverage their core capital, potentially multiplying philanthropic giving 4-5x. This multiplier effect arises from MDBs sharing portfolio risks, enabling them to lend more with their existing capital. Accordingly, contributions of several billion dollars from philanthropies could stimulate an additional $10 billion to $20 billion in MDB lending.

The International Financing Facility for Education (IFFED) serves as a promising model. Through the IFFED, country guarantees enhance philanthropic cash contributions to create a financial base that can be leveraged up to four times. A similarly designed climate financing facility could see a $2 billion grant from philanthropists increase total MDB concessional lending by as much as $10 billion, and by even more if catalyzing private financing. Since philanthropies would want a voice in the management of such funds, a suitable governance structure will need to be developed.

4. Contribute to disaster risk insurance premiums

Countries increasingly seek disaster risk insurance against the economic shocks of major disasters. While insurance alone cannot eliminate climate risk, even nations with robust adaptation programs face unforeseeable impacts. Sovereign disaster risk finance enhances governments’ capacity and agility to meet post-disaster funding needs without compromising fiscal stability.

Philanthropies could help developing countries pay insurance premiums. The potential benefits for vulnerable countries could be, on average, about 100 times the cost, though premiums vary. This is not a new idea: bilateral donors have previously covered such costs, for example, the European Union subsidizing premiums for the Caribbean Catastrophic Risk Insurance Facility. Philanthropic involvement in risk pooling not only offers substantial financial benefits, but also creates leverage to convince countries to undertake important climate adaptation measures before disaster hits.

5. Develop better climate adaptation metrics

As philanthropies scale up their partnerships with MDBs, the need for better metrics of climate risk reduction, resilience-building and loss and damage financing will grow. WRI, for example, is working with the Gates Foundation and ClimateWorks to develop improved economic analysis and metrics, testing a wide range of approaches — from tracking inputs to outcomes at project and national levels.

Foundations, as informed partners to donors, governments and communities, should continue supporting the research and technical assistance required for parties to converge on commonly accepted metrics. As vested partners, foundations can and should play an important role in debates over how adaptation and loss and damage financing gets measured, monitored, and evaluated in the years to come.

A new era of philanthropic engagement

Poverty is a chief driver of vulnerability and vice versa. In the absence of improved adaptation, climate change will exacerbate both. Building climate resilience is a global collective responsibility. Philanthropies can scale up their vital work by building new financing partnerships with multilateral development institutions, favoring mechanisms that provide greater leverage and long-term scope over more traditional approaches.

The first four ideas outlined above represent significant shifts in philanthropy’s potential role and scale. However, they also present opportunities to significantly scale up the impact foundations can have in an area of growing importance amid escalating climate impacts. By joining together and speaking with a common voice, foundations can amplify their influence and facilitate more efficient progress. The unprecedented challenge of climate change adaptation requires a higher level of engagement to support vulnerable countries and communities, and at this moment, philanthropies can play a decisive role.

Marilou Uy is Non-Resident Senior Fellow at the Global Development Policy Center at Boston University. Carter Brandon is Senior Fellow at the World Resources Institute (WRI).

More info