As climate change intensifies and its impacts become more evident, particularly in vulnerable communities, California has emerged as a national and global leader in climate adaptation and resilience. The state has long been at the forefront of ambitious climate policies, but a critical question remains: Is California truly prepared to implement large-scale climate adaptation initiatives effectively? More specifically, do the most affected communities have the necessary partnerships, policies, and project pipelines to contribute meaningfully to the state’s ambitious goals while delivering lasting economic benefits to residents?
With the unprecedented influx of federal funding through the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act (IIJA) under the Biden Administration, California had, and in certain areas still has, a historic opportunity to accelerate its climate adaptation and resilience efforts. However, gaps in readiness, capacity, and coordination have posed challenges to maximizing these resources. A 2024 Union of Concerned Scientists report identified that California was struggling to achieve the distributional equity goals of the Justice40 initiative.
These challenges are not inherent flaws or unavoidable disparities in the system but rather the result of insufficient investment across the public, private, and philanthropic sectors in building the necessary conditions for success. Just as the COVID-19 pandemic exposed disparities in healthcare and community response infrastructure, the availability of significant climate and infrastructure funding has identified fault lines across California in scaling key energy, community development, and climate-related projects.
While it may feel counterproductive to analyze challenges to access and implement progressive funding under a federal administration that is pausing or dismantling these efforts, taking the long-term view is critical. Climate adaptation and resilience strategies enjoy broad public support, and align with national and global economic trends. In a year marked by political division over equity-centered ballot initiatives, Californians overwhelmingly supported a $10 billion climate bond, conferring bipartisan endorsement for climate investment. Moreover, if the projected costs to rebuild after the recent LA fires are any indication, both the business and consumer cases for scaling climate readiness are becoming abundantly clear, even in communities historically not considered frontline areas.
Given strong economic and political support and the nearly $3 trillion price tag on upgrading national infrastructure, we are likely to continue to see significant investment of public and private capital to support long term climate resilience in the future. The operative question is then, are we doing enough to prepare communities to access and implement these dollars and avoid the situation we found ourselves in over the last few years?
Assessing Readiness:
The IRA and IIJA provided California communities with substantial funding opportunities to invest in climate infrastructure, resilience, and sustainability initiatives. However, many communities faced challenges in accessing and effectively implementing these funds due to a few key factors:
Underinvestment in Project Pipelines: The rapid deployment of federal funds came with complex provisions and required communities to have shovel-ready projects, but many lacked a sufficient pipeline. Resources to develop shared priorities, plan, environmentally clear projects, align capital and policies, and develop broad community support are requisite to enable project implementation at scale. Essential to all of this are the cast of characters between nonprofits, local government, business, financial partners, and others working collaboratively to coordinate and cultivate the enabling environment for success. The Center for Community Investment outlines a compelling framework for this called Capital Absorption. Communities that have benefited from past investments in their capacity and have had the time and resources to develop proactive strategies are far more likely to be successful in attracting funding for implementation. Alternatively, much of the federal funding for climate emerged as historically underinvested communities were still emerging from COVID, having struggled to envision and cultivate forward-leaning projects.
Complicated Funding Mechanisms: While direct pay provisions unlocked significant resources for organizations historically expect from income tax, implementation funds flowing as tax credits created working capital issues. This structure favors established projects with access to upfront capital. Additionally, funding tied to established community benefits plans, public-private partnerships, and rapid implementation timelines meant that without projects in the queue, under-invested communities struggled to take full advantage of these opportunities.
Limited infrastructure for Community Benefits: While not necessarily a direct impediment to attracting funding, we know that this influx of available resources put significant pressure on communities to very quickly negotiate community benefits and put forward community benefits plans in the context of Department of Energy funding. More generally, community organizations in particular experienced fatigue trying to engage meaningfully across projects, navigate potential public-private partnerships, and put forward projects of their own. As more and more dollars are likely to flow through private developers and even foreign entities in an increasingly deregulated environment under the Trump Administration, resources to navigate the multi-year engagement and community benefits processes are more critical now than ever.
This analysis does not criticize the funding itself but rather the systems in place to enable successful implementation. Had communities received adequate investment in their readiness and had California established a robust funding and policy framework to accelerate implementation, lower-resourced communities would have been better positioned to seize these opportunities. As the saying goes, hindsight is 20/20, but learning from past challenges is crucial to avoiding future shortcomings.
The Road Ahead: Preparing for Future Climate Investments
As we transition into the next four years under the Trump Administration, the flow of federal climate adaptation dollars has already slowed to a halt. As such, it is likely that the pressure to deploy leverage resources to take advantage of funding will similarly diminish without the prescience of near-term implementation dollars at the scale seen under the previous Administration.
However, as we’ve established, the likelihood of seeing further public and private investment in climate-related projects is high over the long-term. Also, though not at the scale of federal investment, California continues to move progress forward through its own Green House Gas Reduction Fund and the new climate bond. With some of the pressure alleviated around breakneck timelines and navigating a complicated field of implementation dollars, the argument can be made that now is the time to double down on building readiness.
In order to do so, California funders across the government and philanthropic sectors must prioritize four key areas:
- Building the Project Pipeline: Investing in community organizing, planning, pre-development, technical assistance, and feasibility will help ensure a robust portfolio of shovel-ready projects. This will require funders to provide relatively flexible dollars to help catalyze public-private partnerships, cultivate the “bench” of developers, land trusts, and other implementing partners, enact effective policies, and coordinate across sectors to enable the right conditions to attract funding.
- Enhancing Sector Capacity: Local governments and agencies need additional resources, staffing, and technical expertise to effectively apply for and manage grants. Statewide programs aimed at capacity-building will be crucial in overcoming existing administrative barriers that would otherwise lead low-resourced jurisdictions to overlook potential opportunities. Additionally, as projects scale, flexible, multi-year funding is needed to enable communities to collaborate with labor and other sectors to secure meaningful community benefits.
- Address Working Capital and Administrative Needs: Many lower-resourced communities struggle to access flexible, upfront capital, making it difficult to leverage tax credits and other funding mechanisms. Solutions such as low- or no-cost loans and recoverable grants among others can help maximize competitiveness and improve project success rates. The government sector also has a role to play in reducing contracting barriers that may limit public-private partnerships, particularly with nonprofits, and reconsidering restrictive match requirements.
- Strengthening Coordination and Policy Support: Establishing more effective governance structures, state-local partnerships, and streamlined approval processes will ensure a more efficient and coordinated flow of funding. Stronger knitting together of individual state funding programs and across potential future state and federal programs can help to reduce application burden on municipalities and ensure that funding programs are effectively enabling projects to progress through the various steps of development.
Conclusion: A Strategic Moment for California
A recent report, Resourcing Resilience, authored by Philanthropy California and the Nonprofit Finance Fund, outlines key recommendations for both the public and philanthropic sectors to address community needs in advancing climate resilience. Along with Prosper Sustainably’s Better Funding, these insights should serve as a foundation for strategies that enhance capacity, collaboration, and readiness for implementation. By taking proactive steps now, California can ensure that when the next wave of climate funding arrives, our communities are prepared to lead.
