International Assistance Innovation Program (IAIP)

The IAIP is impact driven and focuses on creating sustainable development impact though its investments. Experimentation and learning will inform changes to program parameters as needed. Our Feminist International Assistance Policy (FIAP) recognizes that the promotion of gender equality and the empowerment of women and girls requires the transformation of social norms and power relations. The IAIP will apply a gender lens across all its activities to ensure gender and social analysis contribute to and improve investment decisions and calculations of risk. The IAIP is asking partners to take a whole approach by considering the interaction between finance, social, and gender dynamics. The IAIP can positively shape how capital addresses questions of gender equality and social outcomes.

How and why the International Assistance Innovation Program was established.

Objectives of the International Assistance Innovation Program.

Eligibility criteria of the International Assistance Innovation Program.

Parameters of and priorities for the International Assistance Innovation Program.

Details on how to submit an application for International Assistance Innovation Program funding.

Criteria against which applications will be assessed.

Criteria against which full proposals will be assessed.

Contact information for the International Assistance Innovation Program.

Background

In our 2018 Budget, we allocated over $900 million over 5 years to deliver the IAIP. This pilot program will build markets to benefit the underserved, by creating conditions for better investments in developing countries. This will prove that investing in support of the Sustainable Development Goals (SDGs) can yield both development and financial returns. To do this, the IAIP will use one, or a combination of the following concessional financial instruments:

  • debt (repayable contributions);
  • guarantees;
  • equity; and
  • non-repayable grants and contributions.

Note that options for equity and guarantee instruments will not be operationally available in the first one to two years of the program.

In 2015, we endorsed the United Nations Addis Ababa Action Agenda on Financing for Development (Action Agenda). We have taken a leadership role on policy action and expanded innovative financing for development. The Action Agenda emphasizes the role that private capital and innovation can have for development financing. The agenda gathers higher volumes of development investment through engagement with private sector actors using tools such as blended finance.

Blended finance unlocks additional investments by having the public sector/donors/philanthropists absorb some real and/or perceived risks to improve other investors’ risk-adjusted returns. This incentivizes investments that would otherwise not take place. When used appropriately, and in the right context, these tools will enable the department to more effectively deliver results, build markets, and align public and private capital for sustainable development impact.

We played a key role in developing the Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC) Blended Finance Principles.  We have delivered global policy leadership to support innovative finance through fora such as the G7 Charlevoix commitment on Innovative Financing for Development.

Objectives

The IAIP was created to demonstrate that investing in support of the SDGs can bring both development and financial returns. By addressing market failures that affect the poorest and most vulnerable, our support can create visible effects for others looking to invest for both impact and profit.

The IAIP will use catalytic capital to deliver on 3 principle objectives:

  1. Market building for pro-poor investments: We will seek to make investments that address persistent market failures across sectors to expand the reach of markets to benefit the poor and most vulnerable. Building on our innovation and experimentation directives, we will support innovative business models and financial structures that can make a real difference in the lives of the poor. Learning from and helping to scale pioneering initiatives is a vital part of the programs, and will help to build the evidence base around innovative financing for development. Our market building approach will include where possible investments in Least Developed Countries, fragile and conflict-affected states, and countries in transition from crisis.
  2. Gender Equality: Our feminist approach to international assistance recognizes that the promotion of gender equality and the empowerment of women and girls requires the transformation of social norms and power relations. The IAIP will choose investments that have the greatest potential to reduce gender inequalities, and promote women’s economic empowerment. This includes looking beyond outcomes, to consider how investments are conceived and designed to consider matters of gender equality. To do so, the IAIP will apply a gender lens across all its activities to ensure gender and social analysis contribute to, and improve, investment decisions and calculations of risk. In this way, by asking partners to more holistically consider the interaction between finance, and social and gender dynamics, the IAIP can positively shape how capital addresses questions of gender equality and social outcomes.
  3. Mobilizing public and private finance for the poor: With the above objectives having been met, the program will seek to lever in additional public and private capital into investments that benefit the poor. The IAIP can help mitigate both real and perceived risks for other investors by using its patient, flexible, and risk-tolerant capital. The department seeks to attract additional private finance, and build markets in the long-term, by using its catalytic capital to create profitable investment opportunities with acceptable risk-return profiles for private investors. To do this, the IAIP will fund investees that demonstrate innovative and scalable solutions to current market challenges. This can create investment opportunities that work for both private investors, and the ultimate beneficiaries of the investment’s activities.

The IAIP uses instruments from across the innovative financing spectrum. The IAIP will stand to complement the department’s existing traditional international assistance activities and the Sovereign Loans Program. This will increase the impact of our international assistance by allowing us to explore new, comprehensive, and innovative ways to engage with partners.

Eligibility

All initiatives must generate sustainable development impact and adhere to the International Financial Assistance Act and associated regulations, and Terms and Conditions for the International Development Assistance Program.  Eligible recipients are obligated to adhere to the Contribution Agreement – General Terms and Conditions for the International Development Assistance Program, and make necessary declarations and guarantees on fraud and anti-corruption, anti-terrorism, international sanctions, and sexual misconduct.

Eligible recipients are entities (including individuals) that have a legal personality recognized in domestic and/or international law, other than all levels of any government, such as:

  • For profit/not-for-profit entities (including individuals) that have a legal personality recognized in domestic and/or international law, and that are capable of delivering aid activities;
  • Investment funds/funding vehicles that have a legal personality in domestic and/or international law;
  • International Financial Institutions as listed in the schedule to the International Development (Financial Institutions) Assistance Act; and
  • Development finance institutions (DFIs) (multilateral or national) that have a legal personality recognized in domestic and/or international law.

To be considered eligible, projects must take place in one or more Official Development Assistance (ODA)-eligible countries.

IAIP Screening criteria

Eligible initiatives will be screened against the following criteria:

  • Contributes measurably to the achievement of the Sustainable Development Goals, and be aligned with at least one of the six action areas of Canada’s Feminist International Assistance Policy;
  • Requires IAIP funding for their viability;
  • Uses potentially concessional capital from the IAIP to attract incremental private and/or public sector investment for sustainable impact;
  • Meets the requirements of the Official Development Assistance Accountability Act (ODAAA); and
  • Demonstrates that the deployment of a blended finance structure is sustainably addressing a market failure or market gap.

In developing their proposed initiatives, applicants are expected to have conducted a gender analysis consistent with GBA+ and Gender Equality Toolkit methodologies of their investment thesis or initiative, and demonstrated how the results of this analysis has informed the design of their initiative. Further, applicants must demonstrate how the use of a blended finance structure will be able to maximize sustainable development impact, and define development objectives and expected results as the basis for involving the IAIP.

IAIP seeks to play a crowding-in role in the development and execution of suitable projects. The program aims to achieve this mainly through investing in projects that otherwise would be unlikely to:

  • Raise the necessary capital; and/or,
  • Provide finance on terms that are complementary and/or advantageous to potential co-investors; and, ultimately, to downstream project beneficiaries.

In certain instances, the program could play a concessionary role.

While the objective of the program is not profit, only profitable and sustainable investments will be able to attract additional private finance and transform markets. By attracting these incremental private sources of funding for development purposes, we are seeking to attract investments that would not otherwise occur and leverage its contribution.

There are no restrictions on the proposed timeframes of initiatives.

Project parameters and priorities

The IAIP will consider initiatives that build markets to benefit the underserved, by creating conditions for greater and more sustainable investment in developing countries. The IAIP will also demonstrate that investing in support of the SDGs can yield both development and financial returns.  All IAIP investments are expected to be repaid to Global Affairs Canada, with possible consideration of below market terms.

The IAIP will provide funding principally through debt (repayable contributions) and traditional grants and contributions. In the future, the program will also provide support using guarantees and equity investments. Proposals will be assessed for their ability to repay Global Affairs Canada’s funding while generating meaningful sustainable development impact.

The IAIP will make investments in line with the OECD DAC Blended Finance Principles and will prioritize initiatives that demonstrate the following merit criteria:

  • Sustainable Development Impact: Global Affairs Canada will seek to generate beneficial social, economic or environmental outcomes that would not occur in the absence of IAIP support. All initiatives must contribute measurably to the achievement of the Sustainable Development Goals and be aligned with at least one of the 6 action areas of Canada’s FIAP.
  • Additionality: Additionality is generating results that would not be possible in the absence of IAIP support.
    • Investment additionality is created when IAIP support mobilizes private sector investment that would not otherwise have been invested, either in terms of size or terms offered.
    • Impact additionality is created when IAIP support enables a recipient to generate more sustainable development impact than would otherwise have been possible.
  • Financial sustainability: Investments made under the IAIP seek to temporarily incentivize certain market activities to nudge markets towards more socially and economically efficient outcomes. All investments should have at the very minimum a pathway to project, and, where applicable, market sustainability. While not all projects will be able to show changes in a market within the project lifecycle, applicants must demonstrate how markets will be changed in the medium to long term.
  • Minimum concessionality: Implicit in the underlying reason behind blended finance, donors offer concessional financial terms to the private sector to incentivize action that would have otherwise not been undertaken. In order to ensure the financial sustainability of the program and to minimize the likelihood of displacing other potential sources of finances, Global Affairs Canada will operate on the principle of minimal concessionality. Applicants have to demonstrate that they are seeking IAIP support on the least concessional terms necessary to ensure the success of the initiative.

Note that preference may be given to initiatives that:

  • Propose to reduce gender inequalities by supporting:
    • women’s decision making at all levels;
    • quality employment;
    • women’s access to and control over assets and resources; and
    • business opportunities in all sectors.
  • Demonstrate greater additionality, both in terms of investment and impact additionality;
  • Generate greater financial returns to the Government of Canada, while demonstrating strong sustainable development impact;
  • Propose to work in whole or in part in least-developed countries, fragile and conflict-affected states, and countries in transition from crisis; and
  • Have a strong commitment to rigorously measuring impact, and testing new approaches to and generating new evidence to improve the efficacy of development activities.

How to submit an application

The IAIP will use a two-step process consisting of a concept note and full proposal.

Step 1: Concept note

As a first step, applicants are asked to submit the following mandatory documents by uploading them to the Partners@International portal:

  • Completed IAIP concept note;
  • IAIP concept note annex; and
  • Financial statements for the 2 most recent fiscal years possible. Audited statements are preferred. If this is not possible, statements must be signed by a member of the board of directors or delegate, or owners.

Please note that it may take up to 10 business days to register your organisation for the portal. If you encounter technical difficulties while registering or trying to submit a proposal, send an email to partners-partenaires@international.gc.ca.

Application package documents must be complete and presented in either English or French. They can be submitted at any time through the Partners@International portal.

The program will follow a fixed assessment schedule. We suggest that in order to be sure your application gets assessed in a certain cycle you should submit your documentation prior to your preferred assessment dates. The initial assessment schedule is:

  • September 30, 2019
  • December 31, 2019
  • March 31, 2020.

Note that this is not a comparative call for proposals process. Applications will be assessed on an ongoing basis based on programmatic needs, priorities and available funds.

IAIP Concept Note Annex

In addition to a completed Concept Note Form, applicants must also submit an IAIP Concept Note Annex. The annex must be submitted as a Microsoft Word document and not longer than 10 pages, size 11, and Arial font. The annex should include the following information:

  • Investment summary:
    • Investment vehicle description.
    • Description of proposed Global Affairs Canada participation in the investment.
    • If part of a broader set of interventions, description of the greater intervention and the role of the proposed investment.
  • Sustainable development impact:
    • Existing evidence (and its level of rigour) that underpins the assumptions in the logic model and/or theory of change. Description of any existing evidence gaps and any efforts to generate new evidence to fill them.
    • Summary of the investment’s gender analysis, including any gender-specific impact and gender equality considerations to initiative design and implementation.
    • Description of the initiative’s proposed impact measurement approach (including, if available, logic model, theory of change, key performance indicators, data management strategy, and methodological assumptions).  
    • Summary of which SDG’s and which 6 FIAP action areas the initiative is expected to influence
    • How impact measurement will be fundamentally integrated into project implementation.
  • Additionality:
    • Overview of why our funding is required for the investment to move forward.
    • Summary of incremental capital to be mobilized from the private and/or public sectors, including information on the types of investors/capital targeted and their participation in the investment structure.
    • Description of how the proposed investment would be impacted in terms of timing and scope should Global Affairs Canada not invest.
  • Financial Information:
    • Wiring diagram for the investment that identifies all financial flows and mechanics, as well as funding providers, intermediaries and beneficiaries.
    • Description of the financial structure of the investment and the mechanics and terms of participation.
    • Information on the expected returns to all participants in the proposed instrument.
    • Explanation of how much the investment vehicle is expected to cost to operate.
    • Information on which of the identified stakeholders have expressed interest to participate, and their associated level of interest.
    • High-level budget table for the proposed project. This table must identify all expected cash flows to and from the Government of Canada and when they are expected, including all requested funding from the IAIP and related repayments to the Government of Canada (e.g., interest, principal, etc.).
  • Organisation ability relevant to the initiative:
    • Brief description of the applicant’s mandate and key areas of work, including performance of previously managed investment vehicles.
    • Description of the human resources and staff required to deliver the initiative. As relevant, this includes information on current and planned staffing.

Step 2: Full proposal

Based on the results of the assessment of the application package, applicants will be notified by way of letter if they have been invited to submit a full proposal. Invitations to submit a full proposal will include detailed guidance on required information that is tailored to the proposed initiative.

Invitations will also have a list of other documents to be included in the full application package that will support departmental due diligence processes.  Full proposals must provide sufficient information to assess the proposed initiative. Applicants should familiarize themselves with the full proposal assessment criteria. Program officials will work with the applicant in support of the due diligence process and negotiate terms for an agreement, should the application be successful.

Note that annual funding under the IAIP is limited. Applicants that are not invited to submit a full proposal will not receive feedback on their proposed initiative.

Assessment Criteria

Applications will be reviewed for eligibility under the IAIP. Applications meeting all eligibility criteria will then be assessed on the following criteria:

  • Project rationale
    • The proposed blended finance structure can reasonably be expected to address the market failure/gap identified in the theory of change.
    • There is evidence that the concept meets the ODA criteria set out in the ODAAA.
    • The concept aligns with at least one of the action areas in our FIAP.
    • The concept considers regional, institutional or local country context that is evident through references to supporting priorities, policies or plans.
    • The project summary includes a realistic expected ultimate outcome.
    • The development challenges that the concept will address are described clearly.
  • Managing for results
    • There is a clear and logical relationship between each level of outcomes in the theory of change (i.e., how the activities and/or outputs will lead to the immediate outcomes; how the immediate outcomes will contribute to the intermediate outcomes; and how the intermediate outcomes will lead to the ultimate outcome).
    • The applicant has incorporated best practices or lessons learned into the project concept.
    • Assumptions are explained and supported by evidence.
    • Interactions with or between development actors or institutions have been taken into account.
    • The described sustainability of expected outcomes is realistic.
    • The expected outcomes are consistent with Global Affairs Canada’s results-based management methodology and other policy guidance.
    • If applicable, the concept provides a logical rationale and justification as to why the proposed innovative solution(s) will increase effectiveness or efficiency (to achieve better outcomes) over current practices.
    • The applicant proposes a comprehensive impact measurement approach. The measurement approach clearly articulates how the initiative will contribute measurably to achievement of the SDGs, including the identification of any relevant SDG indicators.
  • Gender equality
    • Regardless of project sector, there is evidence of a preliminary gender equality analysis reflected in the expected outcomes and theory of change.
    • The theory of change addresses gender equality gaps, barriers and inequalities, including risks and response strategies.
    • The concept includes references to engagement or potential for engagement in partnerships with women’s rights organisations or movements that will help to bridge existing gender equality gaps.
    • It is clear that the project concept will promote gender equality.
  • Human rights
    • Regardless of project sector, there is evidence of a preliminary human rights analysis reflected in the expected outcomes and theory of change.
    • The theory of change addresses human rights gaps, barriers and inequalities, including risks and risk mitigations.
  • Environmental sustainability
    • Regardless of project sector, there is evidence of a preliminary environmental analysis reflected in the expected outcomes and theory of change.
    • The theory of change addresses environmental sustainability and climate change considerations, such as positive and negative environmental impacts from the proposed activities.
    • Environmental measures relevant to the project have been identified.
  • Addressing risks
    • There is a clear description of the risks that could have an impact on the achievement of the expected outcomes.
    • There are specific gender equality, human rights and environmental sustainability risks identified.
    • There are proposed response mitigations to address the identified risks.
  • Experience and capacity to deliver the proposed concept
    • The experience example is relevant to the proposed project taking into account the size, budget, sector, location, beneficiaries, and intermediaries involved.
    • The organisation has proven capacity to manage a similar project and deliver results. Where the applicant may not have currently demonstrated capacity or technical resources, it has a well-articulated plan to acquire the needed resources to deliver the proposed initiative.
    • The organisation has achieved sustainable outcomes in the past.
    • The organisation’s capacity to manage environmental, gender equality and human rights issues is demonstrated.
  • Additionality
    • The concept note identifies the amount of additional capital expected to be invested as a result of the proposed IAIP investment, differentiated by the type of funding and proposed funding type.
    • The applicant provides preliminary evidence that IAIP support would enable others to secure financing from local or international private capital markets that they could not otherwise have obtained, in regards to quantity or terms.
    • The concept provides information on the expected investment additionality i.e. the amount of capital that is expected to be invested in addition to the proposed IAIP investment. This amount appears to be realistic and appropriate.
    • The concept provides information on the expected impact additionality, including evidence that the applicant would not be able undertake the proposed activities and achieve development impact of a similar magnitude / scope in the absence of IAIP support.
  • Financial sustainability
    • The expected repayment amount, adjusted for risk and calculated on a net present value basis (using established OECD discount rates) appears appropriate relative to the anticipated sustainable development impact. The proposed initiative appears to fit within predetermined program-level funding portfolios.
    • IAIP support appears to be minimally concessional based on information provided by the applicant, with minimal risk of crowding-out other private or public sector investors.
    • The initiative presents a long-term approach to market building, and how the proposed initiative will help to address existing markets gaps/market failures in the medium to long term.

Full proposal assessment criteria

Full proposals will be assessed as a whole. In evaluating a full proposal, due diligence will be performed to validate assumptions made, argumentation presented and conclusions reached in the preceding concept note. Full proposals will be evaluated using Global Affairs Canada full proposal assessment criteria for unsolicited proposals.

Specific to the IAIP, full proposals will also be assessed against the following additional criteria:

  • Additionality
    • The initiative demonstrates expected mobilization of incremental capital from the public and/or private sector. This expected mobilization ratio is supported by evidence of private and/or public sector interest, and commitments.
    • Description/evidence of investment additionality, the need for public support to secure funding at similar scope and scale, and/or the role of public support in mobilizing investment from the private sector that would not have been otherwise invested.
    • Description/evidence of impact additionality, the sustainable development impact that arises as a result of the requested federal support that otherwise would not have occurred. This includes information on the role of an IAIP investment in facilitating faster, larger or better sustainable development impact than the public or private sector would be able to achieve working alone.
    • The initiative demonstrates a sound financial mobilization strategy for the investment vehicle. This includes the fund size, pledging process (timing, target size’s minimum, maximum, and average of fundraising and investment rounds, the category of funding/investors, and profile of targeted investors.
  • Financial sustainability
    • The structure and governance of the financial vehicle is deemed as appropriate, as evidenced by the type of financial vehicle, duration, minimum/maximum size to be viable, asset management team, partnership agreement (if available).
    • The wiring diagram indicates the initiative’s flow of funds and reflects the roles of all proposed partners, intermediaries, beneficiaries.
    • The detailed financial model includes all required information, including but not limited to disbursements, interest and principal repayments of Global Affairs Canada funding, management fees and expenses, monitoring and evaluation fees, structuring and due diligence fees, technical assistance costs. The financial model also reflects all additional sources of funding.
    • Financial modeling and information demonstrates an expected repayment rate that is sufficient, based on Global Affairs Canada’s assessment, relative to the financial risk and intended sustainable development impact of the initiative.
    • The initiative adopts a long-term approach to market building and outlines in detail how the proposed initiative will help to address existing markets gaps/market failures in the medium to long term. This should include information as to whether donor support will be scaled-down over time, and if so, a detailed management plan in order to reduce donor funding over the course of the project lifecycle, and in the long term.
  • Minimum concessionality
    • Justification is provided for the proposed concessionality of Global Affairs Canada’s contribution relative to the financial risk, additionality and intended sustainable development impact of the initiative.  This should include evidence from similar initiatives that received public/donor support, market rates, etc.
    • Evidence is provided that Global Affairs Canada’s involvement is not likely to displace other potential sources of private and/or public financing.

Contact

If you have specific questions on the requirements for the IAIP, please contact IFP-PFI@international.gc.ca.

We will not provide feedback on specific applications.

Additional guidance may be provided on the Frequently asked questions – International Assistance Innovation Program page. The answers are based on frequency and relevancy of the questions received by Global Affairs Canada.

Date Modified: