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Case Study

The ICRC: The Humanitarian Impact Bond (Abridged)

By Vanina Farber and Shih-Han Huang

31 pages

November 2023

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Reference: IMD-7-2464

In July 2017, the International Committee of the Red Cross (ICRC) launched the world’s first Humanitarian Impact Bond. This innovative finance pilot was an experiment by the ICRC to engage the private sector differently and diversify funding – critical given the widening humanitarian aid gap. It was a massive undertaking. The HIB, which had a maximum potential deal size of CHF 26 million, took over four years to plan and multiple stakeholders, including governments, foundations, investors and lawyers, to put together. How did the ICRC pull this off and what possibilities does innovative finance offer the humanitarian and private sectors? Drawing on a series of proprietary interviews with key characters, various internal documents shared by the ICRC, and secondary sources such as news reports, press releases and reports by third-party organizations, this abridged case delves into the ICRC’s motivations for entering innovative finance, why it chose the HIB instrument, what it was, the hurdles and challenges of designing and setting up this complex instrument, and what the ICRC did to get the project off the ground. Participants interested in innovative finance, the humanitarian and/or development sectors, cross-sectoral/industry collaboration, and social innovation will find the case particularly interesting.

Learning Objective

Recognize the benefits – and also the complexity – that innovative finance brings.
Articulate and refine the value proposition of innovative finance.
Explain how an innovative finance instrument – the social impact bond in particular – works.
Identify and map key stakeholders.
Identify the soft and technical success factors critical in innovative finance initiatives.

Keywords

Finance, Social Innovation, Social Impact, Humanitarian Organization, Impact, Innovation, Innovative Thinking, Payment by Results, Lombard Odier, Goal Partnerships, Sustainability

Settings

Switzerland
International Committee of the Red Cross, Philanthropy, Non-profit Organizations Management
2013-2022

Type

Field Research

Available Languages

English

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Teaching note

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This case study is part of a series

The ICRC (B): The Humanitarian Impact Bond
The ICRC (C): The Humanitarian Impact bond, from concept to reality
The ICRC: The Humanitarian Impact Bond (Abridged)

This case study is part of a series

The ICRC (B): The Humanitarian Impact Bond
The ICRC (C): The Humanitarian Impact bond, from concept to reality
The ICRC: The Humanitarian Impact Bond (Abridged)

The ICRC (B): The Humanitarian Impact Bond

By Vanina Farber and Shih-Han Huang
Case reference: IMD-7-2380 ©2022

Summary

The ICRC’s Humanitarian Impact bond is based on the social impact bond model, which brings together outcome funders (donors such as governments, foundations and corporations), service providers (NGOs, social enterprises, etc.) and social investors to pay for the delivery of social outcomes through “pay-for-success” agreements. Case B explores the mechanics of the social impact bond model, how it is applied in the HIB case, and the purpose and role of the term sheet in aligning the needs of the different stakeholders and driving a transaction forward.

Reference IMD-7-2380

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