What is the specific problem?

In recent years, many European cities have been confronted with significant numbers of new arrivals and a growing diversity of profiles and needs in local populations. This has increased the pressure on local authorities to invest in social infrastructure—e. g. improving the provision of education, or creating spaces and opportunities for community building—to promote migrant and refugee inclusion and prevent long-term (financial and social) costs of marginalisation. However, the long tail of the 2008 financial crisis took a high toll on city budgets over the following decade, curtailing forward-looking investments and innovation. At present, the COVID-19 crisis looks set to further tighten public spending for years to come. Yet without targeted investments, the crisis risks condemning vulnerable groups, including many migrants and refugees, to durable marginalisation, isolation, and destitution—ailments that will put a strain on social cohesion and will be difficult and costly to reverse. 

In this context, the rapidly evolving landscape of financial instruments can provide opportunities to address societal challenges faced by cities and to promote sustainable and inclusive urban development. The aim of using financial instruments with revolving nature is to implement a win-win approach for every entity participating in financial public-private cooperation of different kind. In particular, cities and other administrations could leverage (additional) resources to provide needed services and realise social impact investments, expand and improve the impact of these investments, and develop overall economic growth of local communities and their social cohesion. 

The potential of the use of financial instruments is undermined by some challenges, namely:

1) knowledge gaps regarding target groups and possibilities of intervention; 2) expertise on the financial instruments; and 3) administrative and organisational capacities and cooperation between actors. 

What action was needed?

Through this action, the Partnership aimed to raise awareness and build capacities with regard to the means and opportunities available for cities to pool resources and to complement local, national and EU funds that are allocated to address various integration challenges faced by migrants. In particular, it aimed to provide cities and other administrations with the knowledge and tools to benefit from financing provided by private and public financial institutions and other intermediaries.

In addition, the action provided distinct advantages for other entities involved. Financial institutions and intermediaries could invest in more viable projects and schemes of interventions, de-risking or sharing the risk of financial operations and potentially generating returns commensurate to the risk undertaken, as well as operating under market terms while pursuing social objectives.