Innovative Finance for Development – A Guide for International NGOs

Through innovative finance instruments, NGOs and their partners have the potential to increase financing for development—attracting not only the funding but also the know-how and perspectives of new private sector actors who want to have a positive impact—and make existing financing more effective. There is mounting evidence of NGOs using financial instruments—beyond traditional grants—to mobilize new forms of capital and to improve the efficiency or effectiveness of existing capital to tackle social and environmental problems. However, the number of NGOs involved is still apparently limited. In a recent InterAction survey, NGOs cited lack of information about different financing instruments and how they work, and lack of information about innovative finance for development (IF4D) opportunities and partners, among the top challenges in their efforts to explore new financing options. This report explains key IF4D instruments and how they have been, or can be, used. It is intended for a broad audience but highlights the role of NGOs in implementing IF4D instruments in order to increase the information available to NGOs and help to inform their decision-making about these new financing approaches.  

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