Building on the fund’s objectives, a country should consider the types of resources that would best
capitalize the fund. Indeed, deciding where the funds will come from is one of the most important choices
that will shape the NCF. Many sources of finance — including international, national, public and private
— can be delivered through an NCF, but they must build on existing frameworks and be supported by
appropriate structures to access and channel funding efficiently.
LINKING OBJECTIVES AND CAPITALIZATION
Fund capitalization must be realistic, grounded in the objectives and functions of the NCF. Funds with
ambitious objectives must have clear expectations of how the fund will be capitalized and the objectives
supported. Designers of NCFs should exercise caution in this regard: expectations of co-financing and
leveraging must be based on national circumstances. Likewise, funds with smaller, targeted objectives
should not aim to access billions when it is not appropriate for the scope of the NCF.
Generally, if a fund has a broad set of objectives, it usually blends together a broader array of sources than
more targeted NCFs. An NCF with wide objectives — for example, supporting all of the activities under a
low-emission, climate-resilient development strategy — may aim to collect funds from international and
national sources so that a wide variety of activities can be covered. A fund with a more targeted mission
will often only focus on a single source, such as those from one bilateral partner.
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