This is why Rockefeller Foundation is committed to innovative finance. We believe that our grant capital and other assets—reputation, relationships, and knowledge—can realize significant returns by creating new partnerships that lead to innovative financial products, and these in turn can be implemented and leveraged with significantly more capital than what we could ever invest. This helps us catalyze outsized impact on the problems that we care about most.
For example, we provided seed support for the research and development of the first Social Impact Bond (SIB), a pay-for-success financing tool that harnesses private capital for the delivery of innovative social services in partnership with government. The Rockefeller Foundation was also an investor in the first SIB transaction in the United Kingdom focused on reducing recidivism. Since this first SIB transaction was implemented five years ago, there has been an explosion of growth around SIBs, with 60 deals launched across 15 countries as of June 2016, and a strong pipeline of new projects forthcoming. The Foundation’s investment around SIBs has also spurred the creation of derivative solutions, which we continue to support as part of our Zero Gap portfolio. These solutions include the Forest Resilience Impact Bond, a new pay-for-success mechanisms to fund environmental conversation, and the Social Success Note, a pay-for-success mechanism for crowd-in return-seeking capital to social enterprises.
Investment capital from the private sector will always require a financial return, and the ingenuity of most innovative finance solutions lies in how to generate those financial returns while still realizing social and environmental impact—this is the promise of innovative finance. Philanthropy has a critical role to play in helping innovative finance to quickly drive innovative solutions to our hardest problems. We can’t risk a smaller ambition.