NRC Capital Fund for Sustainable Humanitarian Response

Summary

In 2024, the Norwegian Refugee Council (NRC) committed to creating the Capital Fund for Sustainable Humanitarian Response, an initiative to enhance the sustainability of humanitarian operations and provide durable solutions to protracted crises. From January 2025 to December 2030, the Fund will blend grants and loans from private and institutional investors with NRC’s resources for an initial goal of $8 million to provide loans to country offices for multi-year, capital-intensive initiatives. This commitment represents phase one of the project and will transition NRC country offices to solar power through loans to finance replacing diesel generators with solar technology. The NRC Capital Fund has an initial implementation pipeline including Afghanistan, Bangladesh, Cameroon, Chad, Colombia, Democratic Republic of Congo, Ethiopia, Mali, Mozambique, Niger, Somalia, and Yemen, directly serving over 5500 people and benefitting millions indirectly. This commitment not only aligns humanitarian response with climate change goals by reducing NRC’s carbon footprint but helps secure and maximize life-saving operations.

Approach

Norwegian Refugee Council (NRC) ‘s Capital Fund is an initiative to enhance the sustainability of humanitarian operations and a mechanism for better solutions to protracted crises. Over multi-year phases, the Fund will focus on overcoming challenges in humanitarian implementation through more sustainable financing.

The fund blends grants and loans from private and institutional investors, as well as resources from NRC’s own reserves. Legally held by NRC’s Head Office in Norway, the fund will make loans to NRC country offices for multi-year, capital-intensive initiatives. Country offices will repay their loans through internal financing mechanisms linked to traditional short-term donor funding.

The Fund’s first phase, NRC Capital Fund 1.0, will focus on solarizing NRC’s field operations. For the next five years, Capital Fund 1.0 will provide loans to country offices to finance the replacement of diesel generators with solar technology. This first iteration will loan country offices costs for solar materials, installation, and management. Loans will vary based on the size of the country office, field office presence, and solarization expertise, but are estimated to average $200,000 per country office.

NRC operates in almost 40 countries worldwide, and many of their field offices could benefit from solarized operations. Based on available funding, capacity, and readiness, NRC will determine which country offices will be eligible to apply for Fund loans. Current country offices that have expressed interest include Afghanistan, Bangladesh, Cameroon, Chad, Colombia, DR Congo, Ethiopia, Mali, Mozambique, Niger, Somalia, and Yemen.

The Capital Fund 1.0 capital requirements are $8 million, with more than 10% allocated from NRC. The Fund will broaden its focus in future phases using more innovative instruments for refugee livelihood opportunities, and Information & Communication Technology in displacement settings. Funding for future phases will be available upon repayment of Fund 1.0 loans.

Action Plan

01/01/2025 – NRC selects first round of countries and 50 sites for next solarization phase.

01/04/2025 – With country offices selected and staff experts (electrical engineers) identified, funds are released to country offices with repayment agreements.

01/07/2025 – Solar power installed and staff trained on maintenance. Payments back into fund.

01/01/2026 – Selects second round of countries and sites for next phase of solarization (50 sites) .

01/04/2026 – With country offices selected and staff experts identified, funds are released to country offices with repayment agreements.

01/07/2026 – Solar power is installed and staff are trained on maintenance. Payments back into fund by second cohort.

01/01/2027 – Selects third round of countries and 50 sites for next phase of solarization.

01/04/2027 – Country offices selected and staff experts identified, funds are released to country offices with repayment agreements.

01/07/2027 – Solar power is installed and staff are trained on maintenance. Payments back into fund by third cohort.

01/01/2028 – Selects fourth round of countries and 50 sites for next phase of solarization. Strategic outline of Capital Fund 2.0 begins.

01/04/2028 – With country offices selected and staff experts identified, funds are released to country offices with repayment agreements.

01/07/2028 – Solar power is installed and staff are trained on maintenance. Payments back into fund by fourth cohort.

01/01/2029 – Selects fifth round of countries and 50 sites for next phase of solarization.

01/04/2029 – Country offices selected and staff experts identified, funds are released to country offices with repayment agreements.

01/07/2029 – Solar power is installed and staff are trained on maintenance. Payments back into fund by fifth cohort. Payment schedule by first cohort complete, and funding is made available for Capital Fund 2.0.

Background

Norwegian Refugee Council (NRC) is committed to sustainably financing humanitarian work.

Traditional humanitarian funding is not only limited, but often short-term and earmarked. Aid in fragile contexts still prioritizes outdated models of food and water trucks over durable solutions and self-reliance. The private sector can still be reluctant to resource the humanitarian work needed in longer-lasting displacement crises. These outdated approaches to humanitarian response perpetuate the very conditions of vulnerability that inform them: a vicious cycle.

Without access to financing mechanisms that allow humanitarians to invest in program and material costs upfront, long-term displacement could become the new normal. A solution is needed to bridge the gap between short-term funding and longer-term needs. A case in point is the difficulty of humanitarian organizations in accessing capital to solarize their operations.

Like most humanitarian actors, NRC relies on diesel generators in responding to emergencies. They are expensive, unreliable, environmentally unfriendly, and susceptible to looting and supply chain weaknesses. With humanitarian crises proliferating and protracting, diesel generators are leading to an unnecessarily large carbon footprint of humanitarian operations. The dependency by humanitarian organizations on diesel power is untenable.

Solar power ensures reliability and affordability, while minimizing the environmental impact of humanitarian response. But It requires upfront investment and trust in the humanitarian sector.

Based on a successful pilot project that installed solar power at 11 sites in Sudan in 2022, NRC will scale the model to country offices meeting criteria for similar success. Since April 2023, Sudan’s installations have proven solarization’s benefits to operational security, health, and financial well-being. Staff stressed that, “When the war broke out, we were able to continue our operations and communication with colleagues in all area offices. During hibernation [a temporary pause in programming], if generators are running, armed groups will know where you are.”

Progress Update

Partnership Opportunities

In committing to a new way of approaching humanitarian work and its sustainable financing, Norwegian Refugee Council (NRC) is open to knowledge exchanges on similar mechanisms in other sectors, messaging unique needs and goals to diverse audiences, and securing financial support for the increasingly urgent work., Norwegian Refugee Council (NRC) ‘s experience in humanitarian operations in conflict settings allows them to offer unique expertise in the form of knowledge sharing, convening of diverse stakeholders, and advocating for the forcibly displaced at local, national, regional, and international levels.