Within the education sector, funds are needed for a range of policies and activities to operate the education system and improve the quality of education. However, in many countries there is a lack of funding. As a result, some children are still left out of school, and in some countries the contribution of parents and households can be significant.
Thus, new forms of revenue and expenditure are needed in order to reach the Sustainable Development Goals.
Innovative financing has the potential to attract additional funds for the education sector while also addressing quality and equity challenges. However, innovative finance is understood in many different ways by development and education stakeholders.
The term “innovation financing” does not have one concrete definition by its nature. Most simply, it means some form of innovation on how financial transactions take place for any purpose. Within the international development sector, the term was initially used after the global commitment to the Millennium Development Goals in the year 2000. Often used interchangeably with “Non-Traditional Financing” or “Alternative Financing”, the international community started exploring innovative financing mechanisms to bring in additional funding to reach the MDGs. Over the years, the innovation has been seen as the creative leveraging “of existing funding and revenue streams, infrastructure, expertise, and networks to generate new and desired impact in the domains of financing, efficiency gains, and reduction of business risk (Filipp & Lerer, 2013).”
Within the international development sector, the term generally used for development funding that has one or more of the following goals:
The NORRAG team conducted a comprehensive literature review of both grey and academic literature on IFE, which included over 150 individual articles. The publication includes an analysis of the types of mechanisms that have been researched, disciplinary approaches, definitions, rationales, along with a discussion on the identified benefits and challenges. A typology and description of the most prevalent innovative financing mechanisms discussed in education will also be published.
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