header.search.error
At the 斗牛棋牌在线 Optimus Foundation, we have begun testing a novel approach to disaster philanthropy, applying the principles of outcomes-based funding to the dynamic needs of emergency response.
The war in Ukraine is still raging, with devastating consequences for the civilian population. Despite the huge amounts of funding pledged to Ukraine, many Ukrainian NGOs struggle to access bilateral and multilateral relief funds to help those inside their war-torn country and only a tiny fraction of funds has reached grassroots Ukrainian organizations directly.
This phenomenon is not unique to Ukraine. We see it play out over and over, crisis after crisis.
The United Nations (UN) and partner organizations that 299.4 million people will need humanitarian assistance and protection in 2024, up from 274 million people the year prior. Philanthropy can play a critical role in providing much-needed humanitarian assistance to these nearly 300 million people, but this inefficient mobilization of philanthropic capital is a growing struggle that must be addressed now.
So, how do we shift this paradigm? At the , we have begun testing a novel approach to disaster philanthropy, applying the principles of outcomes-based funding to the dynamic needs of emergency response. So far what we鈥檝e seen from our efforts to use this approach in Ukraine is promising for philanthropists and nonprofit professionals alike.
Prioritizing local organizations
It鈥檚 important to understand and sufficiently value the role that grassroots NGOs play in responding to crises. While the support of large international organizations can be paramount in a crisis response situation, more philanthropic funds should be prioritized for these local organizations. Grassroots NGOs are embedded in their communities, they have been working there for some time and will continue to do so well beyond the crisis. This means several things:
But how do we do this, given that it can be challenging to identify grassroots organizations with a strong track record? And given that providing funding to grassroots organizations鈥攚hich often are small and less well-resourced鈥攃arries a fair amount of risk, especially in an active conflict situation?
Developing efficient funding mechanisms
One approach that our team has been testing in the context of Ukraine is using outcomes-based funding. Such marketplaces bring efficiency and the customer experience of capital markets to the impact sector to drive increased private sector funding for social impact aims, which aligns with our vision of contributing to the formation of an impact economy.
By paying for outcomes, rather than activities or inputs, we transfer some of the risk to the implementing organizations and can have greater confidence that our funding actually is delivering the intended impact on the ground. And by providing some upfront funding, we ensure that the organizations still have the capital they need to carry out their programs.
Working with , a social outcomes marketplace, we recruited 63 Ukrainian NGOs working on two outcomes that our Foundation sought for Ukrainian children: improved learning and improved mental health. Then, Impact Genome Registry rated the quality of the NGOs鈥 uploaded data based on rigor of collection method, relevance to the outcome and validity, ultimately selecting a portfolio of 24 organizations which were positioned to achieve the most impact in learning and mental health outcomes.
Thus far, our Ukraine Relief Fund has contracted USD 2 million worth of outcomes from these 24 grassroots NGOs, and they have started to deliver mental health and education outcomes and benefitted over 7,500 children in Ukraine.
Enhancing measurement and transparency
Another way we can ensure more funding reaches local grassroots organizations is by enhancing transparency, both in terms of funding and impact. Purchasing outcomes through a social outcomes marketplace allows us to accomplish these aims simultaneously.
Social outcomes marketplaces aim to measure impact using the highest quality standards and make information about impact and cost available publicly for the benefit of all. By providing this transparency, these innovative marketplaces allow us to track how much funding is going to local organizations as well as how much and what type of impact the organizations are generating. They also reduce the potential for impact washing.
This allows companies and corporate foundations to get proper credit for the social impact they are supporting and increases consumer and investor confidence in the social impact reported by these companies. This in turn drives increased private sector funding for social aims鈥攁 virtuous cycle.
Additionally, marketplaces reward small, local non-profits鈥 performance instead of fundraising capabilities thus levelling the playing field and helping to 鈥榙emocratize鈥 philanthropy by allowing a broader range of implementing organizations access to funding to deliver specific social outcomes/results.
Looking to the future
Paying for outcomes is not a new concept鈥攚e have been supporting this approach for years through outcomes contracts (referred to as Development Impact Bonds). Since our first Development Impact Bonds in India in education and health, our Foundation has had a positive experience valuing outcomes. Now, we鈥檙e doing what we can to accelerate the ecosystem for outcomes-based financing through partnerships like the one with OutcomesX.
Our longer-term vision is to contribute to the formation of an impact economy that values both social and financial return, and where solving social and environmental challenges is part of how finance works and businesses grow. We see outcomes-based financing as an integral part of the impact economy, and the development of social outcomes marketplaces is a natural progression on that journey and key for a well-functioning impact economy.
Interested in learning more about how we maximize impact through innovative initiatives like outcomes-based funding? Contact our team of philanthropy experts today.