1. Introduction to Innovative Finance
British Red Cross
Int’l Directorate Briefing
6 Dec

2. Contents What is Innovative Finance? Why is it important ?
How is it relevant ?

3. Innovative financing refers to a range of non-traditional mechanisms to raise additional funds for development aid through "innovative" projects such as micro-contributions, taxes, public-private partnerships and market-based financial transactions.
Not just about finance and funding- its strategic response to external environment

4. Economic Resource Flows
Total flows to low and middle income countries
1990
ODA = Traditional Flows
Overseas Development Assistance (ODA)
Includes International Humanitarian Assistance (IHA)
Remittances
Foreign Direct Investment (FDI)
Portfolio Flows
Why is it important? External Environment
ODA was the single major North-South resource flow.
Private Capital was c. 48% of flows
2016 Private Capital c 87% of economic flows
IHA 3% (1.6% total)
IHA 13.8% (1.4% total)
Source: World Bank, OECD

5. Traditional Flows have change Overseas Development Aid has boomed, but has become less important compared to other resource flows and international humanitarian assistance is <10% of the total resource flows.
World Bank . ICRC
In 1990 ODA was the single major North-South resource flow. Of that, international humanitarian assistance accounted for less than 3% of official assistance to developing countries.
ODA increased by 88% between 2003 and 2016—from $100bn to $188bn.[2] Over the same period, official humanitarian assistance (OHA) grew much faster. OECD data reveals a 400% increase in OHA, from $5.2bn to $26bn. As a result, the share of humanitarian assistance in ODA increased from 5.2% to 13.8%.
even if we only look at the 20 countries that received the largest amount of humanitarian assistance over the past few years. FDI and remittances consistently dwarf humanitarian aid.[4]
It is important to note that North-South resource transfers in Figure 1 fail to capture increasing South-South cooperation involving trade, investment and aid flows between emerging and less developed economies. As significantly, Figure 1 says nothing about the amount of resources that flow in the other direction—i.e., from developing to industrialized countries. By some accounts, South to North transfers in the form of loans,[5] interest repayments, profit or income repatriation and illicit financial flows could be twice as large as North to South transfers,[6] which has become a major issue in global development debates.

6. ODA in Context Resource mix in the 20 countries receiving the most international humanitarian assistance, 2016
What’s happening in traditional Sources of Funding
Humanitarian aid is dwarfed by other flows
Source: World Bank, OECD

7. DFID Strategy (Jan 2017)
“Aid is changing. The significance of aid alone is decreasing….”
“Our focus is on economic empowerment to ensure that the poorest and most marginalised benefit from new opportunities.”
Five Topics -
New approaches, finance and partnerships
We will work with the insurance and risk finance industry to expand access to climate and catastrophic risk insurance…. This can reduce the need for expensive humanitarian relief, reassure private investors and help people rebuild their lives.
Harnessing financial technology and new financing models
DFID is partnering with firms to test new business models, scale up existing successes and encourage replication by others
Key messages of the Strategy 4
1. Rising to the challenge 6
2. New approaches, finance and partnerships 10
3. Our sector priorities and commitment to inclusion 15
4. Stability, governance and sustainability 23
5. Assessing and reporting progress 29

8. Strategy 2030
Consultation with over 100 Red Cross and Red Crescent National Societies and external experts.
Conflict & Poverty
New Communities & Cities
Power & Governance
Climate & Disaster
Health of the Future
Emerging Tech
Participation & engagement
Future of Work
Future of Finance
The gap between humanitarian and development needs and financing is growing, yet largely we still rely on just a few traditional sources of funding. How do we mobilize alternate sources of capital to support communities?
BRC Strategy / London Business School – Kim has submitted a project that should inform BRC, ICRC, IFRC movement Strategy.
I have provided a definition of the subject – we could argue about the definition or add qualifications
And where Inv Fin fits into the movement its part of future and strategy (not finance or resources mobilisation although connected to both)
Now I’ll explain why it is part of the strategy and the impetus for the creation of team and its role

9. Global Innovative Finance Team (GIFT)
Aim is to build innovative finance capacity, alternative financing mechanisms, and access to private capital within the movement’s 191 National Societies.
Innovation
Programmes
Resource Mobilisation
FBF
Cash
One WASH
GIFT Activity
s2030
Futures & Foresight
CPs
Philanthropy
Govts
Donors
Currently a partnership with British, Danish, and Kenyan National Societies convened and coordinated by the IFRC.
Shaun Hazeldine (Geneva), Ramya Gopalan (Beruit),
Adam Bornstein (Addis Ababa),
Simon Meldrum (London),
What is Innovative Finance ?
Team & Activities

10. Innovative Finance
Innovative financing refers to a range of non-traditional mechanisms to raise additional funds for development aid through "innovative" projects such as micro-contributions, taxes, public-private partnerships and market-based financial transactions.
Not just about doing things differently but also about being able to do different things
Lot of examples and case studies to present and bring alive but no time
Working with Ben / Displacement
FBF / Disaster Response – Caroline
Overseas Branches in Carribean
WASH – Islamic Bond with the Islamic Development Bank (public announcement next April) / MOU
Zakayt Financing in Kenya
Aviva
Comic Relief
UHNI

11. How GIFT can support International Directorate Promotes Sustainability
Flexibility
Supports new approaches
Risk Transfer
Leverage (Scale)
Professional Development
Develop Organisational Capacity
Additional Skills
How you can help
Develop Awareness & Dialogue
Build & Expand Capacity
Find [Qualified] Opportunities
How is it relevant? Application of Innovative Finance
It is not just about funding & financing

12. Next Steps Are you developing a programme?
Let’s talk - We could consider adding or including new/different financing mechanisms
Restricted Fundraising colleagues
Format of further sessions / training
Examples & Case Studies
How to develop the dialogue ?
Relevant & Important?
Interaction
What is useful / not useful
Awareness