Capitalize On Capital
In February, international donors met in London and made an impressive pledge of roughly $11 billion in aid and another $40 billion in loans to deal with the enormous costs of the Syrian civil war, including the migrant flows currently overwhelming the Middle East and Europe. “Never has the international community raised so much money on a single day for a single crisis,” boasted UN Secretary-General Ban Ki-moon. But veterans of humanitarian aid and crisis response watched the conference with a sinking feeling, knowing that a great deal of promised funding fails to materialize and that even the best-intentioned aid frequently falls short of achieving its goals.
Innovative finance can help improve the international community’s response to some of the most costly aspects of such crises. Imagine, for example, how pay-for-success contracts or approaches similar to IFFIm’s could allow governments to raise funds quickly for the health-care, housing, and educational needs of refugees by securitizing future spending. Such proposals might once have seemed far-fetched; not any longer. With continued philanthropic support and sustained commitment from governments, innovative finance can put the power of private capital markets to work for the public good.