There we go! Our newest publication on innovative financing instruments is there! Monday the 27th – with the diverse community on innovative finance – we celebrated the official launch of ’Innovative financing instruments for development, popping up like daisies’ at Partos offices.
Three eye-openers from the authors
We kicked off with an interview with the authors of the publication Menno Bosma and Hans van de Veen. For the past year, these journalists have emerged themselves in the field of financing development. They shared their experiences in the writing process and elaborated on their affiliations with the topic. As first eye-opener, they indicated the specificity of the instruments. The new financial strategies are no silver bullets and only work well in the right context. For example, Unconditional Cash Transfers may not easily stimulate democratization processes and Impact Investment often requires reasonably large fund sizes. Second, the process of adopting new instruments requires testing and making a mental shift. With Social Franchising, for example, southern partners need to get familiar with increasing autonomy and entrepreneurship. Thirdly, innovative finance is an emerging topic in sustainable development debates. In the past years not only the governments’ taskforce has been extended but more organizations are involved in the topic. Debates and pilots are transcending hollow buzzwords and real action is taken …
Speaking of action …
Global Technical Advisor on Inclusive Value Chains at SNV John Belt enthusiastically shared his experiences with a Social Impact Bond (SIBs). He points out the lessons learned as the verifier from a piloting project in the Amazonas. SIBs are essentially deals between the public sector/NGO, donors and investors whereby part of the money is returned to investors if the together concluded social outcomes are met. For a SIB to work, donors must really be interested to make an impact and investors must agree on a reasonably low rate of return. In aiming for measurable outcomes, the NGO has much flexibility in reaching its impact. For this, donors need to take their hands of the process, because only the concrete results count. A SIB is a real partnership that requires learning and negotiation to reach consensus on all terms. John Belt encourages organizations to become active and test their projects on the ground.
Between philanthropy and investment
Next in line, Maarten Mulder of Han Valk Fundraising Consultancy took the audience into his reflection on future trends of Innovative Finance models. He elaborated on the scale from philanthropic funding to commercial funding for development. In his view, there is much potential in searching synergies between these two rationales. It is remarkable that people are familiar with both forms of spending money but few models succeed in combining donations with investments. When considering donations as forms of investments, why is then partly claiming your donation back after a certain period of time such an unthinkable option? Or using consumption as a means for doing good. Are future consumers willing to pay more for their goods if a social impact is included? According to Mulder, Blended finance, Social Impact Bonds, Impact Investments and Social Entrepreneurship have the highest potential to combine these different discourses. See his full presentation here.
Mobilising money is not enough
As the final speaker, director of Partos, Bart Romijn, related the publication to other important trends within development. First, he stressed the need for policy coherence in all Dutch foreign affairs. Aside from the 0.7% of the annual budget for official development assistance, the proper use of sustainable development of the remaining 99.3% is crucial. Second, let’s pay attention to what is already there. When we consider the sheer size of global remittances to low and middle-income countries, (innovative) direct cash transfers might only be a single drip in the ocean. Lastly, it is good to remember that mobilizing money is not enough. In light of shifting the power, it is important for Northern-based organizations to spot, mobilize, support and align their agendas with global movements.
Innovative financing instruments for development
Social Franchising, Social Impact Bonds, Blended Finance, Impact Investment, Unconditional Cash and Social Entrepreneurship – you’ll find all of these innovative instruments (and others!) that are “popping up like daisies” in our brand-new publication.
Click here for the official online version (including hyperlinks)
Click here for the printable version
If you prefer a hardcopy version, please let us know by sending an e-mail to firstname.lastname@example.org.