Employing innovative new funding mechanisms can mobilize additional capital, money which is badly needed if we are to end modern slavery for good.

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Moving the Needle: How Anti-Slavery Efforts Can Use Innovative Finance to Mobilize Funding and Make Change

Innovative finance has been put to work for several years across international development. However, anti-slavery efforts still tend to rely on traditional grant finance from donors, whether governments, multilateral institutions, or philanthropic ventures. New funding approaches could help bring much-needed additional finance into preventing trafficking. 

Among other ideas, GFEMS is interested in outcomes-based approaches like Development Impact Bonds, which aim to use donor finance as efficiently as possible. Instead of tying traditional grant finance to inputs or activities, which may not always link to long-term change, money is tied to the achievement of tangible, long-term outcomes for beneficiaries. And instead of spending time on donor reporting, NGOs can concentrate on solving problems.

Why innovative finance?

Across the global social sector, innovative finance approaches have become relatively mainstream over the past few years. The international development community has recognized that the gap between the donor finance available and the funding needed to achieve the UN’s SDGs is enormous: between $1.4T and $3T per year. This suggests that private finance, including the global capital markets, needs to be harnessed in order to close this gulf, and that existing donor funds must be used more efficiently. For instance, impact investing, which focuses on achieving social or environmental impact as well as financial return, has become a common method of boosting revenue-generating and socially impactful sectors like financial inclusion, health, and energy; green bonds have raised investment for environmental projects; and conditional cash transfers have been used widely to support children’s education and keep them out of work.

However, we still see few of these initiatives in anti-slavery work. Funding in our space remains oriented towards traditional grant finance.While donors have worked hard to achieve impact, anti-slavery and anti-trafficking work is a relatively young part of the global agenda on social issues and human rights, and remains deeply underfunded. Today, even the most generous estimates put the total amount of funding for combatting modern slavery at approximately $700M annually, versus an annual operating budget of almost $10B for the United Nations High Commissioner for Refugees, a sector serving a very similar number of beneficiaries. 

Employing innovative new funding mechanisms can mobilize additional capital, money which is badly needed if we are to move the needle towards ending modern slavery for good.

How can innovative finance mobilize resources to propel anti-slavery efforts?  There are two primary ways that innovative finance can make a difference: 

  • Innovative finance can be used to bring new forms of private capital into the anti-slavery space. For instance, blending grant finance with private investment, or providing guarantees, can reduce risk for private investors and allow capital to flow into frontier markets or otherwise risky industries. Equally, supporting private firms with grants for research and development (R&D) can help them to become investment-ready. An example might involve the offer of a guarantee or an R&D fund to incentivize private investment in a financially risky new social enterprise which works to end modern slavery, like a responsible recruiter or a worker voice technology tool. 
  • Innovative finance can also be used to make more efficient use of existing grant funding. Proving value for money and enhancing impact is a crucial way of incentivizing donors to invest in a particular project or sector. Approaches which seek to maximize efficiency include conditional cash transfers, challenge funds, and outcomes-based finance, among others. Over the past year, GFEMS has been exploring the relevance of outcomes-based finance for modern slavery.

Case Study: Outcomes Based Finance

Traditional grant finance, which is common in anti-slavery work, may not always be the most effective or efficient way to achieve long-term, systemic change for our beneficiaries: survivors of modern slavery. Traditional grant finance has historically tended to focus on defining program inputs; measuring success in outputs that are easy to count; and closely managing grants. However, this approach fails to align funding with long-term outcomes for beneficiaries. For instance:

  • In the water and sanitation sector, donors may find it preferable to focus on developing infrastructure, such as water pumps and latrines, rather than measuring whether or not beneficiaries have the safe, sustainable water sources that they need. To have sustainable water sources, beneficiaries need regular operations and maintenance of their water points. This, however, may be harder to plan for and measure than how many latrines or water pumps are installed. 
  • In education, it is common to measure success through assessing rates of school attendance or elements of the classroom environment. However, this may not reflect whether students are learning or the quality of education. To provide the best educational environment, students need good teachers, the right learning materials, and attention paid to unique needs- a complex and difficult-to-measure set of factors.In modern slavery, it is often simplest to measure the number of participants or people engaged in a particular program, such as a reintegration program providing skills training, or a behavior change communication program to educate people about risky migration. However, program participation does not guarantee results. What we need to measure is whether skills-training participants can support themselves in reintegration, or whether behavior change communication results in reduced risk of modern slavery.
  • In modern slavery, it is often simplest to measure the number of participants or people engaged in a particular program, such as a reintegration program providing skills training, or a behavior change communication program to educate people about risky migration. However, program participation does not guarantee results. What we need to measure is whether skills-training participants can support themselves in reintegration, or whether behavior change communication results in reduced risk of modern slavery.

Much of the traditional grant finance approach has been driven by an understandable aversion to risk when spending public money. However, traditional grant finance isn’t risk-free: prioritizing inputs over outcomes is unlikely to ensure value for money in public spending. It can create heavy administrative burdens for grantees and typically doesn’t incentivize innovation in service delivery. Traditional grant finance tends to reward NGOs which are best able to meet reporting requirements, rather than those with the strongest track record or best potential to achieve outcomes. 

Outcomes-based finance, on the other hand, involves donors paying for long-term outcomes, rather than inputs or outputs. When donors can find a way to prioritize long term outcomes, they can make sure their money is being spent on exactly what’s intended: the achievement of long-term impact in the lives of beneficiaries.

When donors can find a way to prioritize long term outcomes, they can make sure their money is being spent on exactly what’s intended: the achievement of long-term impact in the lives of beneficiaries.

Importantly, funding in this way allows service providers to focus solely on achieving outcomes, rather than sticking to the inputs and activities which are specified in a donor’s logframe. They can be flexible, adaptive, and data-informed in their implementation. Instead of spending time on donor reporting, they can concentrate on solving problems.

Two questions naturally arise from this idea: first, how does the donor know if outcomes have been achieved or not? Donors typically employ independent third-party evaluators, who are used to running Randomized Control Trials and similar evaluation exercises which rely on objectivity and accuracy. In the examples above, this might involve measuring the educational attainments of a group of children, perhaps through testing readiness for the next grade; or running surveys to analyse whether families have been able to access the amount of safe water that they need. Donors then only pay out if the evaluator assures them that the program has been successful. 

Second, who funds the program up front? Is the service provider expected to fund it themselves, and take the risk that they won’t be successful? This may be possible, depending on the size and financial security of the service provider. But in most cases, a social investor – an organization with a joint social and financial mandate- gets involved to provide working capital to the program. If the program is successful, the investor is repaid by the donor, plus a below-market return. One of the first and most successful examples of this approach in international development was used to fund the Educate Girls Development Impact Bond in India, which sought to keep girls in school and improve their learning. The investor in this case, UBS Optimus Foundation, received an internal rate of return of 15%, to compensate them for the risk they took in funding the project up-front.

Among other innovative finance approaches, GFEMS is interested in piloting outcomes-based finance in the modern slavery space for the first time. We believe it may be particularly effective to explore skilling models for survivors, since long-term outcomes in skilling are relatively straightforward to measure: these could include job starts, sustainment, progression, or satisfaction, and could be paired with measurement of mental health outcomes to ensure a holistic consideration of reintegration. We are also interested in trialing outcomes-based finance to prevent child labor or child marriage, given the success of outcomes-based finance programs in education, as seen in India’s Educate Girls.

We are looking to test and understand whether this innovative new funding model really can help grant finance work harder: can it better serve program beneficiaries and move us closer to ending modern slavery? We think it can. 

If you are interested in learning more or contributing to our thinking, please contact olivia@gfems.org.

Driving Financial Sector Innovation in the Global Strategy to End Modern Slavery

Driving Financial Sector Innovation in the Global Strategy to End Modern Slavery

The Global Fund to End Modern Slavery (GFEMS) is pleased to share the expansion of our Global Finance portfolio to include an initiative focused on use of new payment technologies and virtual currencies by traffickers.

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This initiative will evaluate new payment technologies and virtual currencies tied to online sexual exploitation of children (OSEC), determine how to identify these transactions, and develop forensic techniques for investigating the illicit financial flows to traffickers. Building on the Fund’s recent work with partners in the Philippines and the UK to identify and disrupt financial flows tied to online sexual exploitation of children (OSEC), these initiatives are designed to drive development of solutions with potential to be replicated globally. 

Mobilizing the financial sector is a critical component in the Fund’s comprehensive strategy. The financial sector has tremendous potential to drive systemic change and play a key role in making modern slavery economically unprofitable.

Beginning in 2018, when GFEMS CEO Dr. Jean Baderschneider served as a commissioner on the Liechtenstein Financial Sector Commission on Modern Slavery and Human Trafficking and building off the efforts of the ensuing FAST Initiative, GFEMS has accelerated its investment in financial sector innovation and partnerships. To-date, GFEMS has committed over 1 million USD in funding to its Global Finance initiatives. 

This Global Finance portfolio is strategically designed to leverage and integrate diverse funding streams, driving innovation and more effectively mobilizing the financial sector. 

One component of the Fund’s financial sector strategy is leveraging the power of responsible investors to drive meaningful, sustainable actions by companies to address forced labor risks in supply chains. For companies to take meaningful action, they first need actionable insights on forced labor risks in their supply chains. However, existing forced labor risk assessment tools have largely been too qualitative or inexact to inform targeted and effective risk mitigation efforts. 

To address this, GFEMS has developed an award winning forced labor screening tool that predicts the risk of forced labor at the firm level using operational features like the number of known trade partners, financial information, and geography. The Fund intends to release the prototype open source for investors, supply chain management platforms, and NGO watchdogs to further develop and integrate into their own platforms, elevating the issue of forced labor in due diligence and procurement. This effort is key to ultimately mobilizing trillions in private sector procurement and ESG investment to sustainably address forced labor.

The Fund also leverages the expertise and analytics capabilities of the financial sector to improve efforts to identify and disrupt illicit financial flows to traffickers. As part of this workstream, GFEMS kicked off the Cross Industry Data Initiative (CIDI) in early 2020. Working with The Knoble and SAS, the Initiative convenes financial crime professionals, financial institutions, law enforcement experts, and NGOs in a series of working groups to address data-sharing challenges and build partnerships necessary to implement solutions.

We look forward to sharing future updates about our growing Global Finance portfolio and partnerships. Together we can create and implement actionable solutions for ending modern slavery.

To stay updated on this project, and projects like it, subscribe to the GFEMS newsletter and follow us on Twitter and LinkedIn

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Cross Industry Collaboration Against Trafficking: CIDI Initiative gains steam

Cross Industry Collaboration Against Trafficking: CIDI Initiative gains steam

Before the onset of COVID-19, GFEMS and its partners at The Knoble and SAS Institute were scheduled to host a Cross Industry Data View workshop, building on the work of the Liechtenstein Finance Against Slavery and Trafficking (FAST) Initiative. The workshop, acting as a platform to explore opportunities accelerating progress in financial sector mobilization, was intended to be the starting point for building a roadmap to a cross-industry data view of financial transactions. Such a data view could enable financial institutions to better identify and track illicit financial flows. 

As the COVID-19 pandemic hit, the workshop was taken online in the form of a webinar, and interest in the project has gained momentum. Since the Initiative launched in May, more than 130 participants from over 60 organizations across government, financial institutions, fintech, and NGOs are working together virtually to identify actionable steps to facilitate better data gathering and sharing and paths for collaboration between public, private, and nonprofit sectors. Contributing their expertise to the Initiative across five working groups, Data, Law Enforcement and Regulations, Role of the NGOs, Scams and Abuse, and Ideation, CIDI participants have dedicated over 1200 hours to the project. 

Shawn Holtzclaw, Acting Executive Director of The Knoble and leader of the Ideation working group, said, “We are facing a challenge that requires collaboration, ingenuity and determination. Through CIDI I am confident we’ll begin to create systemic impact.” 

The CIDI initiative was created to address the need for improved partnership in data sharing by financial institutions to improve visibility into illicit financial flows. Financial institutions have different views of transactional and account activity, resulting in only partial or fragmented understandings of potentially illicit financial flows. There is an opportunity to create a more holistic picture of account activity through improved collaboration and communication between financial institutions and by developing a cross-industry data view that utilizes pre-existing infrastructures and capabilities within the financial sector. Ultimately, this improved data view has the potential to accelerate efforts to identify and disrupt illicit financial flows to traffickers.

The CIDI working groups will continue to meet throughout this quarter, each working on specific proposals and identifying needs and opportunities to advance the goals of the Initiative. GFEMS looks forward to continuing this work and sharing our results and findings into the future. 


To learn more about the CIDI initiative or the Fund’s partnership with The Knoble, please visit our website, follow us on Twitter and subscribe to our newsletter.

GFEMS and The Knoble Partner to Mobilize the Financial Sector to Eliminate Human Trafficking

GFEMS and The Knoble Partner to Mobilize the Financial Sector to Eliminate Human Trafficking

The Global Fund to End Modern Slavery (GFEMS) and The Knoble have announced a formal partnership to advance efforts to end modern slavery by identifying and disrupting the financial flows that enable human trafficking operations.

This is a tremendous challenge. An estimated 80% of fraud is facilitated by organized crime resulting in over $150 billion dollars in profit, and more than 40 million people live in modern slavery—that translates to 1 person every 4 seconds becoming a victim.

Through this partnership, existingnetworks of fraud, cyber, fintech, and financial crime professionals will develop strategies, provide tools and facilitate partnerships to identify and disrupt financial flows to traffickers and more effectively mobilize the financial sector in the fight against human trafficking. Relevant resources will be scaled globally and made available for other organizations to adopt directly or replicate.

“The only way to protect vulnerable populations from human trafficking and modern slavery is through coordinated efforts that educate and equip financial professionals with tools to detect and prevent these threats,” said Shawn Holtzclaw, Executive Director of The Knoble. “It’s an honor to partner with GFEMS. The combination of its continued commitment to mobilizing the financial sector and our unparalleled industry expertise will allow us to implement practical safeguards that affect positive change around the world.” 

“Our team is proud to work alongside and learn from this incredible network of financial crime experts. We are committed to engaging the private sector to co-develop solutions and leverage technology, data, and expertise to more effectively disrupt illicit financial flows to traffickers and protect the vulnerable. The response to the Cross-Industry Data Initiative to-date has been overwhelming and points to the passion and commitment of our partners at The Knoble to drive action,” said GFEMS Director of Strategic Partnerships, Natalya Wallin. 

The Fund’s ongoing efforts to mobilize the financial sector build on its partnership with Liechtenstein and other key partners committed to ending modern slavery by making it economically unprofitable.  ”

About GFEMS

The Global Fund to End Modern Slavery (GFEMS) is a bold international fund catalyzing a coherent global strategy to end human trafficking by making it economically unprofitable. With leadership from government and the private sector around the world, the Fund is escalating resources, designing public-private partnerships, funding new tools and methods for sustainable solutions, and assessing impact to better equip our partners to scale and replicate solutions in new geographies.

About The Knoble

Founded in 2019, The Knoble is dedicated to protecting vulnerable populations around the world, including victims of modern slavery, human trafficking, elder abuse and child exploitation. Led by volunteers (Knights) that are experts in fraud, financial crime, financial services, data, and technology, The Knoble’s cross-industry initiatives in the public, private and charitable sectors create an ongoing, system-wide effort to detect and prevent criminal abuse. For more information, visit www.theknoble.com.

To learn more about our work or our partnerships, follow us on Twitter and Medium and subscribe to our newsletter.

Fostering Financial Sector Collaboration to End Modern Slavery

Fostering Financial Sector Collaboration to End Modern Slavery

This month the Global Fund to End Modern Slavery (GFEMS) is co-hosting a Cross-Industry Data View webinar in partnership with The Knoble and SAS Institute. The webinar will cover the work to-date of the Liechtenstein Finance Against Slavery and Trafficking (FAST) Initiative and explore specific opportunities to accelerate progress. This will be followed by an in-person workshop later this year where participants will build a roadmap for creating a cross-industry data view of financial transactions.

These expert convenings are part of the Fund’s ongoing commitment to mobilizing the financial sector against trafficking and slavery, following the launch of the Liechtenstein Initiative’s Blueprint for Mobilizing Finance Against Trafficking and Slavery at the United Nations General Assembly in September 2019. In alignment with the Fund’s approach, the workshop will foster collaboration across sectors by bringing together representatives from financial institutions, government, anti-trafficking organizations, and the FAST Initiative.

Financial institutions have different views of transactional and account activity, resulting in only partial or fragmented understandings of potentially illicit financial flows. There is an opportunity to create a more holistic picture of account activity through improved collaboration and communication between financial institutions. It may be possible to develop a cross-industry data view by utilizing pre-existing infrastructures and capabilities within the financial sector. Ultimately, this could accelerate efforts to identify and disrupt illicit financial flows to traffickers.

In the upcoming workshop, GFEMS and its partners will work side by side to identify actionable steps for creating this data view to enable institutions to proactively share relevant information. Participants will focus on identifying opportunities to improve information sharing across institutions, clarify what information needs to be shared, and pinpoint outstanding challenges to be addressed. Following the workshop, participants will develop a project roadmap that includes clear steps and milestones to creating a cross-industry data view.

GFEMS thanks The Knoble and SAS Institute for their partnership and looks forward to continued collaboration with the financial sector as part of its overarching strategy to end modern slavery by making it economically unprofitable.

Read more from GFEMS on mobilizing the financial sector to end modern slavery and human trafficking.

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The Global Fund to End Modern Slavery (GFEMS) is a bold international fund catalyzing a coherent global strategy to end human trafficking by making it economically unprofitable. With leadership from government and the private sector around the world, the Fund is escalating resources, designing public-private partnerships, funding new tools and methods for sustainable solutions, and assessing impact to better equip our partners to scale and replicate solutions in new geographies.

Liechtenstein joins GFEMS in the Fight to End Modern Slavery

Liechtenstein joins GFEMS in the Fight to End Modern Slavery

The Government of Liechtenstein has announced a contribution to the Global Fund to End Modern Slavery (GFEMS) to support the bold vision of an international fund and accelerate efforts to end modern slavery by making it economically unprofitable.

GFEMS is proud to welcome Liechtenstein to the Fund and looks forward to working together closely. Liechtenstein has demonstrated global leadership and a commitment to innovation in addressing modern slavery.

In 2017 Liechtenstein signed the call to action to end modern slavery issued by the United Kingdom at the UN General Assembly. Following the call to action, Liechtenstein launched the Financial Sector Commission on Modern Slavery and Human Trafficking. GFEMS served on the Commission throughout 2019 and contributed to the Blueprint which was released at UNGA in September of 2019. GFEMS remains committed to mobilizing the financial sector as a critical component of the coherent global strategy to end modern slavery.

This newly announced contribution to GFEMS further demonstrates the Liechtenstein government’s public commitment to ending modern slavery. The Liechtenstein Government’s contribution will support innovative efforts to mobilize the financial sector.

“GFEMS welcomes Liechtenstein’s leadership and partnership as we build global momentum towards ending modern slavery alongside governments, civil society, and companies around the world,” said GFEMS Board Chair Jean Baderschneider. “Their commitment to mobilizing the financial sector by both tracking illicit financial flows to deny traffickers profits and by promoting responsible investment in companies acting in good faith to address forced labor risks in supply chains is a key component of sustainably ending modern slavery.”

Questions about this announcement may be sent to media@gfems.org.