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Innovative Finance

Shaping the next generation of financing solutions to unlock private capital for social good.

Overview

Global philanthropic funds, even when combined with the development or aid budgets of governments, add up into the mere billions of dollars. Meanwhile, the cost of solving the world’s most critical problems runs into the trillions—including an estimated $2.5 trillion annual funding gap needed to achieve the Sustainable Development Goals (SDGs) in developing countries alone. Private capital is urgently needed in order to fill this gap and address pressing global challenges.

To attract more private capital, The Rockefeller Foundation is pursuing innovative finance solutions—the use of financing mechanisms to mobilize private sector capital in new and more efficient ways for projects to create a more resilient and inclusive world.

Our Approach

The Rockefeller Foundation’s current innovative finance portfolio, called “Zero Gap,” works to develop new financing mechanisms to mobilize large pools of private capital, identifying, and supporting innovations that have the potential to create outsized impact.

Employing a venture philanthropy model, the Foundation’s Zero Gap work supports early-stage design and leans heavily on collaboration and experimentation with both private and public sector partners. Zero Gap is focused on solutions that can ultimately catalyze large-scale capital from institutional investors, as well as households and retail investors. The innovative financing mechanisms currently under exploration range from new debt instruments to raise commercial institutional capital for environmental preservation to micro-levies that raise funds for fighting childhood malnutrition.

Zero Gap Portfolio

The Rockefeller Foundation is supporting a number of innovative financing mechanisms that deliver positive social, economic, and environmental outcomes. Highlights of the portfolio include:

  • Extreme Climate Facility (XCF): The Extreme Climate Facility (XCF) is an African-led effort designed to access private capital, diversifying the sources and increasing the amount of international funding available for climate adaptation in Africa. XCF is a data-driven, multi-year vehicle that will provide financial support to eligible African countries to help them build climate resilience and be financially prepared to undertake greater adaptation measures, should extreme weather event frequency and intensity increase in their region. Our current partner is Africa Risk Capacity.
  • UNITLIFE: UNITLIFE is a proposed micro-levy based financing model designed to create a new, large, and stable funding source for the fight against chronic malnutrition, harnessing previously untapped capital for social good. It presents an innovative alternative model to Sovereign Wealth Funds (SWFs) for developing countries with populations facing complex social and economic challenges. Partners include Innovative Finance Foundation and United Nations Under Secretary-General in charge of Innovative Financing for Development.
  • Social Impact Bonds (SIBs): Social impact bonds are an innovative method of financing social programs in which government partners with service providers and private sector to fund social programs. Investors are repaid if and when improved social outcomes are achieved. Thus, government pays only if the services are successful at meeting the needs of its citizens. The programs funded through social impact bonds typically focus on prevention, with a goal of delivering better social outcomes to poor and vulnerable people. Partners include Social Finance UK, Social Finance US, Harvard University, and the Nonprofit Finance Fund, amongst others.
  • Social Success Note: The social success note is a pay-for-performance financing mechanism for social enterprises to attract mainstream investment capital, while overcoming the trade-off between social impact and financial return. Our current partner is Yunus Social Business.

A Pioneering Legacy: Impact Investing

The Rockefeller Foundation has a long history in supporting innovations that seek to catalyze private sector investment for social and environmental good. In 2007, the term “impact investing” was coined at The Rockefeller Foundation’s Bellagio Center, putting a name to investments made with the intention of generating both financial return and social and/or environmental impact. Since then, the Foundation has worked to build the infrastructure for the impact investing field to take hold. Among our work, we have supported the Global Impact Investing Network (GIIN), B Lab, and GIIRS.

Development Goals Without Money Are Just a Dream http://t.co/TalO2GWdtZ #Finance #SocialGood http://t.co/KzK7Q3pcUy

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