Environmental funds are private law institutions, legally independent and non-profit. They mobilize, manage, and allocate resources of various origins with the aim of complementing long-term funding for biodiversity conservation. They also provide technical follow-up to ensure that the activities they finance are efficient and effective, through rigorous project management, a solid monitoring and evaluation system, and high levels of transparency and accountability. Environmental funds also ensure compliance with all relevant legal instruments and donor regulations. An environmental fund is usually established with the explicit objective of supporting the implementation of public policies and are complementary to national strategies for biodiversity conservation. Environmental funds also play an important role in public-private articulation, the creation of conservation capacities and the strengthening of civil society. One of its fundamental roles is to provide stability and permanence to the implementation of conservation actions, maintaining its independence in the face of changes in government priorities.

Chile has a historic funding gap for biodiversity conservation. In terms of spending on protected areas, both public and private, Chile is one of the countries that spends the fewest dollars per hectare and has the least diversified sources of funding in Latin America. An environmental funds aim is to attract new donors and develop financial mechanisms to increase total conservation spending. They also play a role in helping the State maintain or increase its financial commitments to conservation and promoting the articulation of the different environmental actors. Although an environmental fund does not solve all problems, it is an essential part of a diverse and resilient financing strategy for conservation.

At this stage, Fondo Naturaleza Chile has funding only for its basic operation. This funding comes mainly from the 2022 budget of Chile’s Ministry of Environment approved by the National Congress in 2021. During its first phase, the fund will be developing its management tools to ensure the best transparency and good use of resources, whilst raising other funds for the implementation of the first conservation projects. To define the way in which it will channel the resources, the fund will be developing a Subproject Manual during its start-up stage.

Environmental funds mainly manage two types of funds: ● Endowment fund: refers to a “sum of money destined to exist in perpetuity or to preserve its capital in the long term; the capital of an endowment is invested with a long-term horizon, and normally only the income resulting from the investment is spent to finance grants and specific activities". Based on the agreements that govern it, the Board of Directors approves at the end of each year the amount available from the yields of the patrimonial funds, in order to consider them in the annual work plans. ● Sinking fund: refers to a type of fund whose capital and returns must be exhausted in a certain period of time (for example, 5, 10, 20 years). At the end of each year, the Board of Directors approves the available budget to be considered in the annual work plans, based on the agreements that give rise to it. Fondo Naturaleza Chile will be seeking this type of funding for its programs and operations. The yields redeemed from the fund will be transferred to a bank account to facilitate disbursements, in accordance with the fund’s Treasury Policy (under development).

Management tools will be developed, including the Treasury Policy, Due Diligence Procedures, and Administrative and Accounting Standards.

Fondo Naturaleza Chile works relentlessly to diversify its sources of income in search of greater institutional stability. For this reason, it may receive funding from the public or private sectors in the form of donations, return on investments, financial resources managed by commission, or the payment of services that it provides to third parties. The origin of the money that enters can only be accepted from reliable sources, after being verified in accordance with a Code of Ethics, a Policy Against Money Laundering and Terrorism and Due Diligence Procedures, which would be developed during the stage of start. According to these guidelines, Fondo Naturaleza Chile can receive donations from various public or private sources such as: ● State of Chile ● Multilateral cooperation ● Bilateral cooperation ● National and international private foundations ● National and international non-governmental organizations ● Private companies ● Natural persons

The asset management of Fondo Naturaleza Chile is carried out under the principle of optimizing the returns of its portfolio with prudent investment management practices, which must be consistent with the mission and values of the fund as well as the Standards of Practice for Environmental Funds (CFA 2020) In this sense, in the event that Fondo Naturaleza Chile invests financial resources in private companies, these must be aligned with its objective and purposes established in its Statutes. The investment portfolios will be managed by an Asset Manager who will be selected by the Board of Directors through a transparent competitive process. The Asset Manager will send Fondo Naturaleza Chile monthly reports on the status of the investment portfolios.

The fund will channel resources according to the goals defined in each of its programs. Once resources are raised to implement its programs, the fund will distribute them primarily through civil society organizations in the territories. This, with the intention to strengthen the communities themselves, so they can implement actions in their own environment. In its startup stage, the fund will be developing a Subprogram Manual that will define the resource distribution mechanism.

Fondo Naturaleza Chile is constituted as a private non-profit organization; whose intention is to have high coordination but also independence from the State. According to its statutes, only one person on the Board of Directors can be from the State, which is in line with the Practice Standards for Environmental Funds. Specifically, the statutes establish that one of the directors may be appointed by the Biodiversity and Protected Areas Service (SBAP), once this service is created. The fund's initial directory does not include state representatives. His council has a representative from the National Forestry Corporation and one from the Central Bank. To promote better collaboration with the State, a collaboration agreement is being developed between Fondo Naturaleza Chile, Chile’s Ministry of the Environment, the National Forestry Corporation and the National Fisheries and Aquaculture Service.

Chile has signed important international agreements on Biodiversity and Climate Change, such as the Convention on Biological Diversity (CBD, 1994), where the implementation of National Biodiversity Strategies (ENB) has been committed, which are prepared multi-yearly. It has also been aligned, under the recommendation of the CBD, with the Aichi Targets proposed in the Strategic Plan for Biological Diversity 2011-2020 (MMA 2017). Additionally, the Organization for Economic Cooperation and Development (OECD) has proposed environmental recommendations for Chile that include the need to strengthen those current public policies that aim to reinforce the fight against the main threats that affect ecosystems and their biodiversity (MMA 2017; OECD 2012 and 2016). Finally, Chile has also ratified the Paris Agreement of the United Nations Framework Convention on Climate Change, and within this framework has committed to carbon neutrality by 2050 and met international deadlines to update its nationally determined contributions (NDC 2020), including commitments related to biodiversity, oceans and forests. At the national level, the main public policy instruments that the fund has as reference for the elaboration of its strategies, objectives and goals, are: ● National Biodiversity Strategy 2017-2030 ● Updated NDC 2020 ● National Strategy for Climate Change and Vegetal Resources ● National Landscape Restoration Plan ● National Plan for Adaptation to Climate Change ● Climate Change Adaptation Plan for Biodiversity and, in general, all sectoral and regional adaptation plans

Anyone can submit their complaints or suggestions regarding the operation of Fondo Naturaleza Chile, its programs or projects Fondo Naturaleza Chile has enabled the email account contacto@fondonaturaleza.org for this purpose. The emails are received directly by the fund’s staff, who guarantee the protection of the identity and the nature of the complainants.