Innovative Humanitarian Financing Forum charts way forward

Innovative Humanitarian Financing Forum charts way forward

June 25, 2020

Leaders in business and philanthropy explore pathways to catalyse change through public-private financing. How can public and private sectors work together to increase the scale and scope of funding required to proactively address social causes—and potentially avert crises from future global threats?

Leaders in business and philanthropy explore pathways to catalyse change through public-private financing

As COVID-19 continues to spread, the world is witnessing the speed and scale with which a local health challenge can grow into a global crisis. How can public and private sectors work together to increase the scale and scope of funding required to proactively address social causes—and potentially avert crises from future global threats?

This question is at the center of discussions within the Innovative Humanitarian Financing Forum (IHFF), a roundtable of practitioners and stakeholders in innovative finance initiated by Cyrus Ardalan, IFFIm Board Chair, and Simon Meldrum, Innovative Finance Specialist at the British Red Cross.

The Forum is bringing together representatives of public and private institutions in business, banking, charities and humanitarian organisations to explore how novel financial tools and instruments could expand resources for urgent humanitarian needs, from health emergencies and education to sanitation, hygiene and climate change.

The IHFF convened virtually on May 18 with more than 30 participants from 17 organisations. The second gathering followed up on the outpouring of interest at a kickoff exploratory meeting held in London on March 2.

Utilising innovative finance to close gaps in funding

There’s reason for concern about funding resources, according to IHFF Co-Chair Simon Meldrum, Innovative Finance Specialist with the British Red Cross. “Humanitarian financing as we know it today is not adequately equipped to address the frequency and scale of emergencies our world is facing. COVID-19 has further exposed the fragility of the current system.”

Although traditional humanitarian aid has grown significantly, gaps in funding remain. “The humanitarian sector has an opportunity to look beyond traditional funding to find alternative resources and innovative models to mobilise private capital for emergency response,” said IHFF Co-Chair Cyrus Ardalan, Board Chair of IFFIm, the International Finance Facility for Immunisation (IFFIm), the pioneer of Vaccine Bonds, which accelerate funding for Gavi, the Vaccine Alliance.

LBS research: addressing real-world challenges to innovative finance

To gain perspective, IHFF participants invited MBA students at the London Business School to present findings from research focused on how to improve collaboration to promote greater innovation in humanitarian financing. They focused specifically on the role of coalitions and how to make them action oriented. The students conducted interviews and analysis across diverse public, private and international organisations including Gavi, the World Bank, the Overseas Development Institute, European Civil Protection And Humanitarian Aid Operations (ECHO), the UK’s Department for International Development, Centre for Disaster Protection, International Finance Facility for Education (IFFEd), the Water Supply and Sanitation Collaborative Council, Volta CapitalAonCitibank and the law firm of McDermott Will & Emery.

The LBS researchers identified five primary barriers to non-traditional sources of financing and private sector capital. These include a lack of viable investable opportunities; gaps in information and data on investment opportunities; the need for more collaboration between private sector and humanitarian actors; readiness among organisations to participate proactively: and mitigating operational and political challenges that hamper engagement of staff within organisations.

Next steps for IHFF

The roundtable can address these gaps and challenges as IHFF begins to design its structure and focus its purpose.

Mr Ardalan and Mr Meldrum have begun synthesising insights from the participants and research to inform the working group's efforts. “We are now considering next steps in terms of how the roundtable complements other initiatives in the space, and potential partnerships we could initiate."

The IHFF plans to reconvene later this year to go more in-depth into some of the ideas that emerged from the May meeting, with a focus on the outcomes of the LBS study. The Co-Chairs will share a proposal on setting goals and focus, as well as suggestions on formalise a structure and working process going forward.