Global Citizen, an international non-profit aiming to help end poverty, said on Monday it plans to launch six funds of up to $1 billion each focused on generating environmental and social impact in the developing world.
The Global Citizen Impact Funds aim to help plug a large gap in funding for poorer countries struggling to meet the United Nations 2030 Sustainable Development Goals, which include providing access to clean water and fighting climate change.
The world's poorest countries need close to $400 billion annually in external finance to meet those goals, but currently get only a fraction of that, Global Citizen's Chief Policy Officer Mick Sheldrick told Reuters.
To help drive faster change, Global Citizen said its funds, created with partner NPX, would bring together philanthropists and investors using a financing model that it believes would prove scaleable quickly.
It hopes to start raising donor money over the next six to nine months and is targeting at least $25 million for each fund, although most of the NGOs chosen to receive funding could scale quickly and absorb up to $1 billion in donor money.
Under the model, investors, primarily funds with impact mandates, would give money to the NGO to help it expand its services, with the aim of hitting certain targets. If successful, and after the results have been independently verified by a third-party, the Global Citizen fund in question would release donor money to the NGO, to repay the investors.
Through the process, the investors would receive a return on their capital of around 5-6%, the NGO would get an incentivisation payment, while the donors would have the assurance that they would fund only initiatives that worked.
"We really think it has the potential to be a groundbreaking outcomes-fund vehicle that could transform philanthropy," Sheldrick said. "Our hope would be that it could, over time, lead to an upsurge in the amount of philanthropic capital that is available for SDG-related programmes."
The NGOs selected include One Acre Fund, which supports smallholder farmers in Africa around climate action, including through planting and protecting more trees.
Its target would be to support the survival of 44 million trees planted over four years, leading to 7.4 million tonnes of carbon being sequestered. If successful, the plan could scale to more than 1 billion trees over the next decade.
The other funds will focus on detecting and treating malaria; improving literacy and numeracy for children in crisis settings; providing access to clean water; lifting marginalised women out of poverty; and improving food security.