PROFITS & PURPOSE

About Innovative Finance

In recent years we have seen a proliferation of innovations in finance to address entrenched social and environmental challenges. From global health to climate change, affordable housing to disaster response, those who fight poverty and seek to improve lives and communities across the world are testing new ways to finance investment in public welfare. These new tools and capital configurations have taken a variety of forms across fields and geographies, from blended finance and pay for success structures to advanced market commitments, revamped insurance products and various forms of credit enhancement. What they share is their innovative approach to risk mitigation and outcome measurement, focused on harnessing the power of financial markets for social good. In some cases, these new developments have proven highly successful; others have been less so.

For years, there has been a broad recognition, both internationally and in the United States, that we lack sufficient public and philanthropic resources to address complex issues of poverty and inequality. In response, governments, non-profits, philanthropies and, increasingly, commercial investors, have begun to experiment with new and ‘innovative’ ways to finance solutions to these problems.

Innovative finance is an evolving field, one that draws on decades of work in economic development – domestic and international – and engages in much new experimentation. To date, there has been no comprehensive assessment of what has worked, what has not, and why. There has also been no work that translates this critically important and growing field into language and case studies that are accessible to a broader public. Using innovative finance examples from around the globe, this research explores how new financing instruments have been used to address social, economic and environmental problems worldwide, examining where, and why, these financing tools have been successful, and where they have not. In doing so, these insights will also reveal gaps (by sector and geography) and the most promising areas for further exploration and advancement.

This initiative offers solutions to poverty, inequality, and lack of opportunity through social entrepreneurship, innovation, and public-private partnerships that strengthen investment in human and financial capital globally.

With major support from the Rockefeller Foundation, Georgia Levenson Keohane undertook a year-long investigation into advances in innovative finance. Innovative finance looks for creative and collaborative ways to fund investment in public goods and address global challenges. Much of this work will culminate in her new book, Capital and the Common Good: How Innovative Finance is Tackling the World’s Most Urgent Problems, to be published by Columbia University Press in September 2016.

Georgia Levenson Keohane’s 2013 book Social Entrepreneurship for the 21st Century was translated into Chinese in 2015, which spurred a number of follow-up discussions and new work related to social enterprise and investment in China.