The cash flow problem holding back forest restoration
If you’ve never worked with federal or state funding, there’s a good chance you haven’t yet had a reason to think about how government grants actually move. For the uninitiated, it might be easy to assume a government commitment means cash in hand, but it rarely works out that way.
Written by: Zach Knight, Blue Forest CEO & Co-Founder, and McKinleigh Lair, Senior Associate of Storytelling and Communications Development
Most forest and watershed restoration work in this country is funded by reimbursable grants from federal and state governments: for example, federal programs like the USDA Forest Service and USDA Natural Resources Conservation Service Joint Chiefs’ Landscape Restoration Partnership, and state programs like the Forest Health Program from CAL FIRE. These programs are foundational to restoration work. But before an organization sees a single dollar from the government, it usually has to compete for it.
Grant proposals can take significant staff time to prepare and can result in project delays, with no guarantee of winning. Many programs also require the project’s environmental review (NEPA, CEQA, or other state equivalents) to be cleared before they’ll award implementation funding. Winning doesn’t mean the money can move right away either: an organization generally can’t spend against the award before its official start date, so any work completed before then (such as pursuing environmental review) has to be paid for in some other way entirely.
Only after all of that clears does this crucial restoration work actually start for the lucky orgs whose proposals are accepted. Then a different clock starts alongside the revving up of chainsaws: the one for getting paid. A grant isn’t an upfront payment, it’s a promise to reimburse. The organization still pays for everything itself first: crew and contractor payroll, fuel and equipment, materials specific to the work, seedlings for reforestation, etc. Most agreements only allow reimbursement requests on a set schedule, often quarterly, so organizations often invoice in monthslong intervals.
Orgs without deep cash reserves or an asset base to offer a bank as collateral often struggle to get affordable credit to cover that wait. Some borrow anyway and absorb a steep, unrecoverable interest cost. Others simply take on less: smaller contracts and shorter timelines — work sized to what they can survive financially rather than what the land actually needs, or what they might have the capacity to do if the system’s rigid timelines matched how restoration actually happens on the ground.
We built the Forest Resilience Bond to change both of those outcomes: shrinking that unrecoverable cost dramatically for organizations that would have borrowed, and opening up work that others couldn’t have taken on in the first place. The list of launched FRBs is now thirteen projects long, ranging from large, national implementers to smaller, locally rooted organizations, like Fire Safe Councils and Tribal organizations.
Right now, across the fire-adapted Western U.S., there’s more acreage needing this work than the current pool of implementers can take on, even with plenty of capable groups ready to do it. We’ve seen what changes when these cash flow barriers diminish: crews stay employed through the season, organizations take on contracts they couldn’t have otherwise, projects move at a pace that matches the need instead of the reimbursement schedule. That’s been true for thirteen projects so far, but there are a lot more organizations out there who haven’t had the chance yet. Lately our team at Blue Forest has been spending a lot of time trying to better understand why that gap exists, and how to build our way toward closing it for more implementers leading this important work.