The International Committee of the Red Cross has set up what it says is the world’s first "humanitarian impact bond", which is expected to be worth about £21m.
The new bond, which will help to build and run three physical rehabilitation centres in Nigeria, Mali and the Democratic Republic of the Congo, has the UK government as one of five "outcome funders" that will pay the ICRC if the scheme performs.
Approximately £21m in funding will be used to build and run the centres over the next five years, and the programme will run on a payment-by-results basis.
The bond, which is officially known as the Program for Humanitarian Impact Investment, will use initial funding from a number of social investors in the private sector to help the ICRC run each rehabilitation centre.
After five years, the five outcome funders – which include the governments of the UK, Belgium, Italy and Switzerland and the La Caxia Banking Foundation – will pay the ICRC according to the results achieved, in this case how many people receive mobility devices per rehabilitation professional.
The results will be benchmarked against existing physical rehabilitation centres in the region as part of the payment-by-results programme.
The ICRC will repay the social investors from the private sector using the money from the five outcome funders, dependent on whether the results achieved are above the benchmark.
Peter Maurer, the president of the ICRC, said: "This funding instrument is a radical, innovative but, at the same time, logical step for the ICRC. It is an opportunity not only to modernise the existing model for humanitarian action, but also to test a new economic model, designed to better support people in need.
"We hope that once the pilot project is proven, it will demonstrate that non-traditional financing models can work. There is great potential for investments that are built around improving the social, environmental and economic conditions so that humanitarian action advances in impact, effectiveness and scale in ways never seen before."