Paper details
| Paper authors | Laila Zulkaphil |
| In panel on | Redrawing the Map: Rethinking Humanitarian Financing in Times of Structural Instability |
| Paper presenter(s) will be presenting |
In-Person / |
Abstract
The global humanitarian system faces an unprecedented funding crisis, exacerbated by intensifying crises and aid cuts by donor governments. Amid this crisis, humanitarian actors are increasingly exploring innovative financing solutions, particularly those engaging the private sector.
This paper draws on my PhD research, which critically examines the use of (social) impact bonds in humanitarian settings. Through two case studies – the Humanitarian Impact Bond (ICRC) and Refugee Impact Bond (Near East Foundation) – I demonstrate that impact bonds do not generate new resources. Instead, they reallocate existing funds: private investors advance capital that traditional humanitarian donors reimburse contingent on project success, with added investor premiums. The promised cost savings from only paying for successful outcomes are undermined by substantial guarantees that protect investors’ principal.
While impact bonds may not solve funding gaps, they offer outcome-focused flexibility – an advantage over more rigid conventional financing mechanisms. Combined with risk transfer to investors, this flexibility can potentially empower implementing organizations to innovate and enhance outcomes for affected populations. Yet, this potential was underutilized in practice, with impact bonds, at times, applied to interventions misaligned with their design. Overall, my research underscores the need for a rigorous assessment of financing mechanisms before adoption, ensuring tools are fit-for-purpose rather than pursued for their novelty and appeal.
