Panel: The New World Order - The Role of Innovative Finance in Driving Systems Change

The  development finance ecosystem has seen substantial innovation over the past decade. A number of innovative financing mechanisms, especially outcomes oriented mechanisms such as impact bonds, have been launched and targeted at a variety of sectors. This innovation in development finance has so far been supported by catalytic capital from philanthropic organisations and impact-focused investors.

A number of such financial innovations have been quite successful in driving collaboration and expanding the pool of capital available for developmental objectives. For example, innovative and forward-leaning philanthropies and CSR funders have moved from utilising traditional grant based models to participating in innovative financial instruments. While some unresolved challenges, such as high transaction and coordination costs remain, the outlook for innovative financial structures is  a strong one.

As the sector evolves, philanthropic funders are increasingly beginning to expect stronger system-wide outcomes from the utilisation of these instruments. Philanthropic organisations are increasingly pushing for more aspirational outcomes that drive systems change, moving from a ‘learning lab’ model (where innovative models are tested and evidence generated for their broader use) to a ‘mainstreaming’ model (where instruments and associated programs are designed with the explicit objective of influencing or driving change in respective ecosystems). This changed focus has resulted in a renewed definition of success linked to the utilisation of innovative financing.

Given the pivotal nature of philanthropic capital in driving innovative financing, the shift in expectations is driving visible change in program selection and design. In the impact bond ecosystem for example, recent announcements include one in the skilling space with an important central government agency acting as an investor, the ongoing design of a healthcare-focused impact bond including a city government as a key stakeholder.

While there is encouraging progress, the evolution towards systems change via innovative finance catalysed by philanthropies has only just begun. This 60-minute moderated panel discussion will discuss the current trends in the space, specifically focussing on the following:

• The evolving expectations of philanthropic organisations funding innovative financial instruments.
• The pathways to systems change that emerge via innovative finance.
• Evolutions in program and instrument design that are making these systems change objectives possible.
• Examples of recent or upcoming program launches with systems change as a priority and learnings from such programs.
• Next steps and upcoming priorities of philanthropic organisations in driving the systems change agenda.

We believe that the perspectives shared and gained through this session will help shape the discourse around the topic area, and help philanthropic organisations gain greater lever leverage from each dollar they invest via innovative financial structures / instruments.

Key Takeaways:

1. Understand how philanthropies view the next step of evolution in the utilisation of innovative finance
2. Explore innovations in intervention and instrument design helping catalyse systems change
3. Envision  how government might play  a stronger role in  innovative finance
4. Learn from ongoing initiatives utilising innovative finance to crowd in government. support and / or drive systems change