Co-financing is the financing associated with the baseline project and any non-GEF financing associated with the incremental project. In short, GEF wants to see that there is an existing foundation of work (baseline) on which the GEF project will build. Co-financing is the GEF’s method for quantifying this foundation of work. For example:
The ‘aspirational’ co-financing ratio is 1:7, which means for every dollar the GEF contributes, the project should demonstrate $6 in co-financing. In general, Middle Incomes Countries are expected to generate higher co-financing numbers than Least Developed Countries.
Co-financing source and type can be defined by the below:
When estimating co-finance amounts, consider that co-financing can come from WWF, the Executing Agency, government, project partners, NGOs, bilaterals, multilaterals, the private sector, and others. Discussions with potential co-finance sources takes place to both (a) discuss whether the potential source is supporting the project baseline or the project increment during execution, and (b) agree to an amount that will be listed in the PIF. Note that co-financing only refers to the financing associated with the execution period, not for project preparation.
Co-financing listed at PIF stage is indicative. It does not need to be confirmed by a co-financing commitment letter, and the makeup of co-finance can change after the PIF is approved. However, the overall amount of co-financing must remain consistent (or increased) when the full project is re-submitted (see ProDoc stage). This means there is some flexibility when discussing co-financing with partners at PIF stage, as they are not making a written commitment at this time – only giving a realistic estimate of the funding amount.
**Co-financing represented in the PIF should be distributed across all project components, including Project Management Costs. The overall ratio of co-financing to GEF funding should be reflected with the Project Management Costs (i.e., If the overall ratio is 1:7 co-financing to GEF Funds, then the co-financing for project management should also be 1:7).