JPA Funding Strategies 💵

1.1JPA Funding Strategies¶

Joint Powers Authorities (JPAs) are proposed as a solution in California to facilitate agreements with forest landowners and managers, thereby creating long-term supply contracts and increasing investor support for wood products businesses. Funding JPAs presents challenges, given the difficulties of securing grants and private investments. Creating a diversified funding portfolio is crucial, especially for new entities, and suggestions for achieving this are provided.

1.1.1Takeaways¶

Developing diverse funding sources is always a sound strategy. Additionally, creating steady and dependable income sources can help complement the dynamic world of grant funding. Additional takeaways are the following:

1. Portfolio strategy. Be strategic about what funds you utilize for different projects and programs. Look to foundations and business support grants for organizational startup or administrative costs. Still, there are implementation grants for field projects and private or bank loans for scaling once a JPA is established.
2. Temporal ramping. Revenue sources outside the realm of taxes and grants may be difficult to create and execute with risk-averse agencies and organizations. Try funding with traditional resources, such as grants, first, and then gradually introduce new resources to diversify your funding portfolio and help establish the new organization’s financial stability over time.
3. Grant dependence & giving. In a similar vein, just because grants are available does not mean that will be the case indefinitely. As soon as you secure a grant, leverage it with other funding sources and work tirelessly to create more dependable and steady income sources. It may seem daunting, but remember that the single largest source of charitable giving in the United States comes from individuals, not foundations, corporations, or grant-making agencies. Individual contributions are also the least restricted type of funding, so it is critical for covering operational expenses. Develop a strategy to cultivate local support through individual donations and campaigns.

1.1.2Background¶

The large wildfire seasons of the past five years were catastrophic for forests and communities. However, according to Keeley & Syphard (2021), these events are not unprecedented in recent California history and are typically associated with periods of drought, e.g., the 1920s and 2010s. According to North et al. (2022), tree densities in the Sierra Nevada over the past century increased by up to sevenfold, while average tree size decreased by 50%.

Not only does this overcrowding weaken forest health, but excessively dense forests also cause fires to burn more severely. A meta-analysis led by Hagmann et al. (2021) showed a fire deficit and widespread alteration of ecological structure and function across seasonally dry forests of western North America. A chronic level of stress is created by high competition across tree stands, resulting in reduced resilience to drought, disease, fire, and climate change. North et al. (2009) advocates for an aggressive approach to treating fire-suppressed stands using an ecologically based approach that reduces the total number of trees/acre while maintaining stand heterogeneity.

1.1.3Concerns¶

A significant cause for concern regarding the protection of old-growth forests in the United States is their decline from historical levels due to logging and development. DellaSala et al. (2022) highlight the fact that a large proportion of the remaining mature and old-growth forests on federal lands are still vulnerable to logging. The loss of these forests will not only diminish biodiversity but also release substantial amounts of carbon into the atmosphere.

Further compounding these concerns is the lack of a coordinated and effective national policy for old-growth conservation. Carroll et al. (2025) point to a history of policy debates, such as the National Old-Growth Amendment, which failed to provide lasting protection. The authors advocate for a more comprehensive approach that extends beyond simple harvest restrictions to encompass landscape-level planning, the establishment of reserves, the protection of climate refugia, and the setting of specific goals for the recovery of species that depend on these unique habitats. Impacts on these forests are a concern for communities that rely on them for their water supplies.

However, let’s be very clear: thinning dense stands of fire-prone forests is entirely different from logging old-growth forests, and ecologically based thinning is not an excuse to log when maintaining stand heterogeneity and reducing fire risk are the primary treatment goals. Yet, misinformation about wildfire and forest treatments, similar to climate misinformation, persists (Jones et al. (2022)).

Managers implementing forest health treatments should adopt a tailored approach to increase forest resilience, mitigate fire risk, bring stands within a natural range of variation, and create forests that can thrive over the long term.^[1] Treating mixed conifer stands on the western slope of the Sierra Nevada requires different treatments than mesic forests in the Pacific Northwest. Managers should take steps to reduce fire risk while still considering the negative impacts on biodiversity when planning any fire mitigation project.

1.1.4Feedstock Aggregation¶

Thinned forests create a lot of biomass, and much of that biomass from forest health projects ends up in burn piles or log decks and may stay in these locations indefinitely. Not only does this negate fire mitigation efforts, as burn piles and decks can promote or worsen fires, but the carbon from wood is also at risk of not being sequestered.

Processing biomass from thinning is challenging; Swezy et al. (2021) found that the cost of forest restoration far exceeds current market prices for biomass. Becker et al. (2011) point out that supply guarantees, industry presence, transportation, and the value of the biomass are limiting factors to utilization, whereas agency staffing, budgets, compliance, and partnership aggravated utilization problems rather than impeding progress. A burn pile inventory across California showed massive wood tonnages scattered through national forests and other lands Darlington et al., 2023. Yet burning those piles is likely more expensive than transporting them to a facility for processing (Barker et al 2024).

Transportation subsidies to move this feedstock to central locations or nearby facilities could be a crucial missing component in addressing the wildfire problem across the western United States.^[2] Transporting the feedstock to a central location, accessible and central to processors, biomass facilities, and wood product businesses, would help move the biomass out of the woods, mitigating fire risk while also facilitating the centralization of long-term feedstock contracts with landowners and managing agencies.

For instance, Regenerative Forest Solutions identified approximately half (242,365 acres) of Sonoma County’s forested acres as feasible for treatments (Figure 1.1). Berry Sawmill was identified as an ideal location for a wood products campus and aggregation yard Costa, 2025. Creating similar management entities across the West could make it easier for investors to conduct due diligence. Joint Powers Authorities may be an organizational template that can meet these needs. Swezy & Oldson (2025) cautioned against starting new sort yards in northeast California, instead focusing on supporting existing biomass facilities, offering insurance to existing wood yards, and securing funding for a consistent pipeline of environmentally compliant (CEQA/NEPA) projects on which operators can bid.

1.1.5Joint Powers Authority¶

Perhaps the most critical challenge to biomass utilization is establishing long-term feedstock supply contracts. For example, the USDA Forest Service, which manages 60% of California’s forests, typically allows a maximum of five years for a feedstock supply contract CSG, 2020. The lack of long-term contracts makes investment in wood utilization businesses risky. Creating JPAs in some regions may be a solution to address this issue. JPAs could act as brokers to facilitate long-term contracts between suppliers and processors, thereby driving investment in processing facilities. Most lenders and investors view wood product businesses as too risky without a minimum term contract of 10 years, preferably longer Darlington & Stevenson, 2023.

In addition to potentially resolving this problem, JPAs also have the following benefits that may help drive economic development Darlington, 2025:

• Shared risk mitigation
• Improved service delivery, including contract development/management for third parties
• Cost-sharing, grant pursuit, and shared staffing
• Enhanced coordination among participating agencies, cities, and counties
• Jointly established bonds, debt, and insurance tools, and public infrastructure finance

Developing JPAs as a management entity for feedstock aggregation is a key component of the California Forest Residual Aggregation for Market Enhancement (CALFRAME) pilot, funded by the Governor’s Office of Land Use and Climate Innovation. This funding strategy for a JPA is adapted from this broader effort, with more detail available from Darlington & Stevenson (2023).

JPA establishment is at different levels across the state. During the establishment or modification of existing JPAs, participants have been clear about the entity’s role: to act as a critical entity for long-term feedstock supply contracts without competing for funds with other organizations, such as Resource Conservation Districts (RCDs), sawmills, or licensed timber operators (LTOs). This approach requires a realistic revenue assessment and a plan for the initial five years of operation, acknowledging that creating a stably funded JPA will be challenging given the wide fluctuations in private and public funding. But how can such an entity be funded in rural counties with low tax bases that cannot support a sales tax to develop sustainable revenue for a new entity?^[3]

1.2Funding Options¶

The abundance of state and federal funding over the past five years has led many agencies and organizations to rely heavily on grant funding for implementing restoration and infrastructure projects. The Trump administration’s cuts in 2025, or the periodic surplus/deficit of California state funding, demonstrate the vulnerability of grant funding dependence. Many organizations are familiar with the cyclical nature of funding sources and seek to create more dependable, even-keeled funding streams, although grants can often complement stable revenue streams.

1.2.1Traditional¶

Many of the Office of Land Use and Climate Innovation’s feedstock aggregation pilots recognized the need for long-term funding sources and that grants are not a dependable resource to maintain an organization over time. Traditional funding sources are many, and a blended portfolio should help weather changes in grant cycles and tap into funding sources that can provide steady revenue. These options are described below, with the pluses and minuses of each summarized in (Table 1.1). Other revenue sources, such as climate bond funding, agency funding, and legislative action, are also available, but their outcomes tend to be grant-based and temporary.

1. Endowment. In the case of the feedstock aggregation pilots, the Office of Land Use and Climate Change Innovation provided a funding tranche to kickstart JPA creation. This funding could be used to create an endowment or, at the very least, seed an endowment that could provide a steady source of unrestricted revenue if invested wisely. Other JPAs could do the same with an initial foundation grant or a campaign to raise sufficient funds to start an endowment.
2. Contributions. A capital campaign to raise awareness about a JPA and generate individual, corporate, and foundation grants would complement any secured funds. Match from non-public sources often makes grant applications more competitive. A well-defined JPA strategy that clearly outlines the mission, programs, and projects is crucial for focusing funding requests. Similarly, for any grant application, it prioritizes which funding to pursue (Forest Business Alliance 2024). Capital or general campaigns can be an excellent vehicle to drive individual donations and raise awareness about the importance of the issue at hand.
3. Federal and State Grants. It is unlikely that a JPA will receive significant operational funding from state and federal grants, but any proposals it leads or participates in could charge overhead (~10%) plus directly bill salaries to cover some operating costs related to the grant. A negotiated indirect cost rate agreement, or NICRA, to increase this value through public grants could be another approach to boost operating cost revenues.
4. Member Contributions. JPA members or beneficiaries, such as RCDs, pay an annual cost to participate in the feedstock aggregation program. Membership would provide consistent revenue and encourage the member organizations to be involved in the development and success of the JPA.
5. Fee-for-service. Charging fees for forest management, timber harvest plans, feedstock contracts, or grant administration, depending on the skills of the JPA staff, could be another way to generate a steady income source. Western Shasta RCD, for example, works with non-industrial forest owners to develop forest management plans. The State can fund the development of forest management plans for private landowners. A JPA could offer similar services as long as it does not compete with RCDs in the region.
6. Sort yards. Managing a sort yard for aggregated feedstock could be a strategic revenue source. Note that feedstock aggregation and sort yards should not be conflated, nor should the creation of JPAs be thought of as sort yard managers. A sort yard may be one strategy for income generation, but it not necessarily connected to the goal of a feedstock aggregation JPA, which is to broker long-term supply contracts.

1.2.2Endowment Analysis¶

Endowment-based funding represents a promising and underutilized strategy for ensuring the long-term financial sustainability of Joint Powers Authorities (JPAs) engaged in forest health and feedstock aggregation. Unlike grant-dependent models, which are vulnerable to the cyclical nature of public budgets and shifting political priorities, endowments can provide a stable and predictable revenue stream.

How it Works¶

By investing a substantial principal—such as an initial gift of $10 million—and supplementing it with modest annual contributions, a JPA can generate consistent income to support core operations, staffing, and potentially even programmatic expansion (Figure 1.2). The administrative burden and ongoing costs associated with managing an endowment are typically lower than those required for continuous grant writing and reporting, making this approach attractive for organizations seeking to minimize overhead.

Financial calculations demonstrate the power of the initial investment over time compared to annual grants or allocations. With a conservative annual return of 6%, a spending rate of 4%, and an administrative fee of 0.2%, an endowment of $10 mn could yield approximately $400,000 in its first year, with annual income rising to nearly $448,000 by year 5 (Table 1.2). This steady growth not only insulates a JPA from the volatility of state surpluses and deficits but also frames endowment funding as a long-term cost-avoidance strategy for public agencies and private donors alike. By establishing a robust endowment, JPAs can ensure operational continuity, attract and retain skilled staff, and maintain the flexibility needed to respond to emerging challenges in forest management and wildfire mitigation.

Avoided Cost Estimate¶

Let’s assume that it would cost $115,000/yr for a state agency to manage a grants program. This includes staff, administrative, and operating costs. We’ve assumed an annual rate of inflation of 4% to give a total five year cost of $622,877. The 5-year returns are very close to the estimated operating costs of each JPA, so we’ll assume that that $8.7 mn is the total amounted granted giving a total cost of 9,322,877. Although granting agencies ROI is really the public benefit from making the grants for project implementation, this would give a quantified ROI of -6.7% (Table 1.3) for five years. That ROI would continue to decrease over time, whereas the ROI of 27% for the endowment investment would continue to grow.

Community Benefits¶

An innovative approach to multiplying the impact of a JPA’s funding endowment is to allocate a portion of the principal for low-interest loans to forest health operations and wood products businesses.^[4] By acting as a mission-driven lender, the JPA can support critical projects that might otherwise struggle to access affordable capital, accelerating restoration and market development. The interest payments received from these loans can then be reinvested into the endowment, steadily growing the principal over time. This strategy not only amplifies the reach of the original endowment but also creates a self-reinforcing cycle of investment and impact, enhancing both financial sustainability and landscape resilience.

1.2.3Temporal Adoption¶

Any funding strategies, whether they are traditional or new conservation finance approaches, may be new or untested for certain audiences. Raising funds from traditional resources, then piloting new options over time, may be the best approach to introduce novel income sources. For example:

1. New finance options, such as environmental impact bonds, could be introduced over a longer period and trialed at a small scale, then scaled up when successful. These could also include other financial mechanisms, such as revolving loan funds (offering low-interest loans), public-private partnerships, or bonds.
2. Other revenue-generating options could be tested in the same manner to ensure their effectiveness and introduce them to skeptical participants, financial managers, or government entities that are not used to working with alternative finance options.

1.2.4Collaborative Finance¶

Collaborative finance is a conservation finance strategy that involves cooperative interaction between individual project developers, stakeholders, and finance providers Russell & Odefey, 2024. This process may or may not include traditional financial institutions.^[5] The term can be broadened to include finance developed through the fair and equitable participation of stakeholders in a region, landscape, or watershed, addressing natural resource and infrastructure management needs, and utilizing multiple forms of funding, from public grants to private investment. Finance approaches may include outcomes-based finance models such as environmental impact bonds.

The challenge of new finance options vs. more traditional approaches is, simply put, they’re new. As a result, more conservative controllers, accountants, and similar financial managers within any organization will be resistant to implementing new, unproven methods for generating income. Consequently, it may be best to start strong with traditional approaches and gradually test new strategies. Feasibility studies may also help introduce collaborative finance and new approaches. However, there are examples of established and successful impact finance bonds on the North Yuba River to draw upon when creating novel funding streams.

1.3Budget¶

Rough estimates for JPA creation in California for 2025 range from a bare bones budget of approximately $400,000/year to a more “inflation-proof” budget of $2-3 million/year for startup and sustainable implementation over time.^[3]

1.3.1Revenue¶

Revenue may come from a variety of sources such as grants, donations, and fee-for-service consulting. Contributions and gifts may come from local to regional foundations and corporations interested in forest health. Individual contributions always have the potential to add up to more than foundation and corporate gifts, as they are the largest charitable giving category in the United States. However, they require more time to manage. Creating a time-bound campaign with a specific fundraising goal replete with a thermometer to track progress could be a great way to involve communities in a region through giving and engaging them in the need for a JPA to ultimately mitigate wildfire threats.

In the case of pilot projects supported by the Governor’s Office of Land Use and Climate Innovation, a tranche of endowment-like funding is being provided for startup funding of aggregation entities. In some cases, this amount is as much as $1 million, which, along with a capital campaign to bolster individual giving and create awareness around a JPA, could create a base endowment and provide stable operational revenue to a new organization from the principal if the endowment funds are wisely invested.

Although not competing for grants with RCDs, a JPA may help administer a large grant across multiple RCDs to leverage more funds across a region. With the devolution of some state funding sources, this could be a great option for managing regional funds and reducing competition for funding resources, as the grants are allocated to local organizations.

Contingency funding should be written into the budget expenses. Adding 10-15% contingency line items to any secured grant would supplement that funding; however, most grant funding contingencies are typically applied to budget shortfalls. Other contingency funding sources could include unrestricted funding (such as contributions or gifts) and a higher indirect rate.

1.3.2Expenses¶

An annual expense budget of ~$ $400,000-2 million is estimated for a JPA startup. The total expenses/year could slowly ramp up each year of the budget, with the idea that additional secured revenue would enable a JPA to bring on more staff capacity, increase offerings, reach, or fee-for-service activities, or undertake additional revenue generation activities. The bulk of the expenses is for labor and staff, although some JPAs operate completely through contracted staff.

Other expenses may include operations and maintenance, audit and legal fees, LAFCO filing, bylaw creation, insurance, equipment, software, travel, bank fees, communications, website development, outreach, and other related expenses.

1.4Recommendations¶

Funding JPAs is not a simple task, as most public funding sources are focused on project implementation, e.g., funding restoration projects in the field, rather than providing administrative support or organizational startup. Some foundations fund this type of work, but accessing those funds can be challenging. Another challenge is competing with existing entities for scarce local, regional, and federal resources. The following are recommendations to consider when examining the feasibility of building and maintaining a JPA for long-term feedstock agreements:

1. Utilize public funds for startup and traditional projects. Public funding is readily available and generally suitable for trials or the initial development of feasible but new ideas.
2. Pilot non-traditional, higher risk, or new revenue sources. Then, ramp them up with success, and participating entities and partners see their value and understand how they work.
3. Co-house staff and resources. Utilize existing offices and share staff and other resources as capacity and funding allow. This is particularly important during the startup and early phases of developing a JPA.
4. Leverage public funds with private investment. When public funds are secured, immediately work to leverage them with other public and private funding resources. Don’t wait until near the end of the grant cycle to look for additional funds.
5. Use the right revenue source. Property and sales tax increases are more effective in populated areas with higher incomes; however, they are usually not appropriate for rural areas, where the tax base and population tend to be too low to provide sufficient funding.