Sliced: IFNF Insights Brief No. 4 of 5: From Experimentation to Scale – How IFNF Evolved Across Five Cohorts

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This is the fourth in a five-part Innovative Finance for National Forests (IFNF) Insights Brief Series produced by Gordian Knot Strategies, the U.S. Endowment for Forestry and Communities, and the U.S. Forest Service. Each brief distills a core lesson from the IFNF program, drawing on five cohorts of grantee experience to surface what it actually takes to move conservation finance from idea to execution. A new brief will be released each month via Sliced, so keep an eye out for the next in the series. For additional information on the overall program, please visit https://www.usendowment.org/ifnf/.

About the Innovative Finance for National Forests (IFNF) Program

The Innovative Finance for National Forests (IFNF) program (2020–2025) awarded $9.3 million across 38 projects to mobilize private capital for forest conservation. Grantees have collectively raised more than $108 million in blended finance. Gordian Knot Strategies developed the TRARO readiness framework and provided technical advisory services throughout the program.

The Challenge: Moving Beyond One-Off Experiments

Across five cohorts (2020 to 2025), IFNF needed to balance space for experimentation with pressure to demonstrate scalable, repeatable conservation finance models that could mobilize meaningful private and blended capital at portfolio level. Early rounds surfaced many conceptually strong ideas, but only a subset had the institutional capacity, defined payors, and governance structures required to move from single site pilots to platforms that could replicate across forests and regions. The core challenge was to shift from funding individual innovative projects to building an ecosystem of investment ready structures while maintaining a learning agenda.

Key Insight: IFNF progressively tightened its focus, using readiness and portfolio learning to move from broad R&D toward a smaller set of tested financing models that could scale, while still reserving room for strategic experimentation.

Success Drivers: What Enabled the Shift from Experimentation to Scale?

1. Introduction of a structured readiness lens

The seven-element readiness TRARO framework developed by Gordian Knot Strategies, helped distinguish between concepts that were merely investment worthy and those that were closer to investment ready, guiding which projects should receive feasibility, pilot, or scaling support.

Applying this lens prospectively in later cohorts allowed proponents to strengthen weak elements before awards and helped USFS and the Endowment direct limited funds toward higher readiness opportunities.

2. Deliberate evolution in cohort design

Cohorts 1 and 2 emphasized feasibility and hypothesis testing across wildfire, water, recreation, and timber related models, accepting that many projects would deepen understanding without immediately mobilizing capital.

By Cohorts 3 to 5, the program increasingly backed projects with defined products, documented demand, and explicit replication strategies, such as corporate water stewardship facilities and forest resilience bond platforms.

3. Rising leverage and partnership density

Cohort 2 projects, for example, leveraged approximately $18.37 million on about $2.18 million in grants and expanded from 29 initially identified partners to around 95 by the end of implementation, demonstrating the value of blended capital and broad coalitions.

Later cohorts built on these lessons by prioritizing models that could attract diverse investors and institutional buyers, not just one off philanthropic or grant support.

Common Pitfalls: Where Projects and the Portfolio of Applicants Stumbled

1. Staying in perpetual feasibility mode: Some initiative teams continued to refine concepts without committing to a concrete transaction structure, leaving strong ideas stranded in the valley of development risk.

2. Underestimating execution timelines: Several Cohort 2 and 3 projects experienced six to seven and a half month delays due to federal agreements, stakeholder coordination, and internal capacity limits, revealing persistent optimism bias in schedules even as the program matured.

3. Uneven readiness across critical elements: Projects with compelling ecological logic but unresolved payor pathways, vague operational practices, or unclear policy routes often struggled to advance, despite receiving technical support and feedback.

Case in Point: (Illustrative Example)

A composite example based on higher performing IFNF grantees:

Phase 1: Experimental Pilot: A conservation finance intermediary receives early cohort support to test an avoided cost wildfire resilience concept in a single watershed. Grant funding covers feasibility work, treatment impact modeling, and initial legal design, resulting in one fully structured pilot with a mission aligned investor and a public agency payor.

Phase 2: Structured Replication Model: Encouraged by pilot results, the intermediary returns in a mid-cohort round with a proposal for a standardized forest resilience facility. This facility uses common documentation, a repeatable underwriting approach, and an identified pipeline of utilities and counties that could participate in similar transactions.

Phase 3: Scaling Across Geographies: In later cohorts, additional support focuses on expanding the facility to new regions, refining terms based on observed performance, and strengthening governance so that the platform can handle multiple simultaneous projects rather than one off deals.

Practical Takeaways for Practitioners and Partners

1. Design with the second and third transaction in mind: From the outset, ask what would need to be true for your model to work in a different forest, with a different set of partners and payors, and start standardizing those elements early.

2. Align request type with readiness: Seek feasibility funding when payors, governance, or practices are still uncertain, and reserve pilot or scaling requests for models that have already tested their core logic and institutional capacity.

3. Treat portfolio learning as an asset: Use cross project and cross cohort insights about what has worked and where delays emerged to refine your own design, especially around payors, governance, and realistic timelines.

That’s it for IFNF Insights Brief No. 4 of 5 – From Experimentation to Scale.

IFNF Insights Brief No. 5 – “Overcoming Structural Barriers: How Federal Bridge Capital Works” will be released next month.

This June, Jay Tipton, Senior Director at Gordian Knot Strategies, will be representing GKS at London Climate Action Week (June 22–25). If you’re attending and would like to connect, reach out to Jay directly at jtipton@gordianknotstrategies.com – his calendar is filling up fast!

At Gordian Knot Strategies, our goal is to help mobilize $1 billion per year in climate finance. That is why we’re committed to making climate finance smarter and faster by addressing a broken impact investing screening process.

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