Humanitarian Finance and Asset Management in 2020

Tayfun Özkan
Turkish Red Crescent Deputy Director General

The basic duties of the Turkish Red Crescent Finance and Asset Management Office are to protect assets, increase the amount and sources of income, track income and expenses within a budgetary framework, manage basic financial risks (e.g., currency, interest, and liquidity) and market (receivables) risk, and create and report financial records for all transactions. The focus in all these efforts is financial sustainability.

Due to the disasters, humanitarian tragedies, and COVID-19 pandemic both globally and in Turkey, 2020 has forced many sectors in both the public and private sectors to question their financial sustainability economically. The civil society and humanitarian aid sector, called the “third sector” of which the Turkish Red Crescent is also a part, is probably the most adversely affected segment as a result of both the increasing expenses due to more spending on aid activities as well as the decrease in donations and ordinary income. International publications have expressed the concern that the COVID-19 pandemic and the unexpected economic shocks it caused could turn back decades of efforts spent on reducing poverty as if they’d never happened and underlined the impossibility of governments and the humanitarian sector providing this struggle again on their own.

According to a calculation made by the World Bank before 2020, 2.5 trillion USD would be needed by 2030 to achieve the Sustainable Development Goals (SDGs) approved at the United Nations Summit in September 2015; due to the disasters experienced in 2020, in particular the COVID-19 pandemic, and their ongoing negative economic effects such as increased global debt, unemployment, loss of income, and income inequality, this figure has easily increased greatly. Therefore, private sector resources must also be mobilized for this purpose. When talking about resources, material resources are not the only thing being referred to. For example, human resources must also support the third sector by way of volunteerism. People working hard for commercial gain in the private sector after all also need manpower of this quality just as civil society organizations do, because no personal development activities can give the peace of mind that giving help to those in need does.

Meanwhile, the private sector has to consider making a positive contribution in all its business doings as well as socially and environmentally. This can be started with the financial sector in particular as we’ve witnessed the serious progress that has been made globally with the concept of “green finance,” which focuses on eliminating environmentally negative effects. Financing for renewable energy sources has increased, both environmental cleanliness and agricultural efficiency have been improved thanks to projects on transforming waste into energy and fertilizers. This time, a financial concept can similarly be developed to eliminate social problems and increase and put humanitarian aid into action. The Turkish Red Crescent proposes calling this red finance based on the color of the Red Cross and Red Crescent organized movements. Red finance can be a broad concept for innovative financial models aimed at collaborating with NGOs in financing international projects positioned for developing and applying solutions to problems such as poverty, migration, and natural disasters. Financial instruments such as kizil bonds, kizil chartering certificates, and kizil mutual funds can be launched for financing these types of development projects.

The Turkish Red Crescent has established Kızılay Investment Holding Inc in order to increase collaborative opportunities with the private sector and to provide higher efficiency in income-generating activities. In this context, economic enterprises within the Turkish Red Crescent Society have been disassociated and transformed into joint stock companies under the Kızılay Investment Holding Inc. The mineral water, tent business, and hospitals have been respectively organized as Kızılay Beverage, Kızılay Tent and Textile, and Kızılay Health. Similar paths have additionally been taken in areas where the Turkish Red Crescent is a major buyer. Kızılay Care was established for elderly, and the nursing homes being operated were transferred to this company. A service has been structured at international standards for caring for our elderly, which became an important social issue in Turkey due to the aging population and changing culture. Efforts are still ongoing for establishing a financial/insurance system to support this. Turkish Red Crescent Logistics has also been established in the field of logistics services, and in this context, a business with international standards has been established for both modernizing and operating disaster and blood stores throughout the country, as well as efficiently distributing these materials. As seen and experienced from disasters and the experiences in Syria, prefabricated buildings in addition to tent cities are obviously needed for migration movements during war periods. Kızılay System Building was established for producing these. Collaborations and facility installation works continue to produce blood bags and by-products needed for blood collection, nearly 100% of which are imported. Kızılay Real Estate and Venture Capital Portfolio Management was established to be able to set up various funds in order to be able to support the potential of the private sector through capital contributions. Likewise, a research center has been opened to provide service in all these areas. These entities, which make social impact investments on behalf of the Turkish Red Crescent, and exhibit permanent and sustainable activities in their sectors in accordance with the Red Crescent’s mission; they earn income and transfer all their earnings to the Red Crescent.

Meanwhile, one important source of real estate for the Turkish Red Crescent is the properties that mostly come by way of donation and inheritance. Due to the very high interest our nation has had in the Turkish Red Crescent, nearly 10,000 properties of various features such as fields, land, old buildings, historical artifacts, shops, inns, and residences have been donated to the Red Crescent for more than 150 years. Real estate needs to be increased through their effective management within various classifications. Kızılay Real Estate and Private Equity Asset Management Inc. has been established for this purpose. In other words, developing Turkish Red Crescent’s real estate assets and properties is attempted by sharing Red Crescent properties and rental income with our people and investors by establishing real estate investment funds using various strategies.

The public as well as private sectors will be able to contribute to the financing of humanitarian aid projects with these initiatives -not as a donation, but as a part of the business- in order to increase social resilience. Thus, financial sustainability will be achieved not by asking for donations over and over but by adding the humanitarian dimension to people’s normal business practices. Believing in the principle of “The short but consistent worship is better than the long but one-time worship,” known and adopted as the concept of Sadaqah Jariyah (Ceaseless Charity) our nation will clearly embrace this approach.

Yes, 2020 may have been a very difficult year whose negative effects we might experience for years. But we are not alone. Humanity is one body that struggles on every front with the experienced disasters and pandemic as well as their effects. The Turkish Red Crescent strives to be at the side of those in need both in our country as well as in every corner of the earth in need and to be the benevolent hand of our nation. The Red Crescent tries to enhance its financial sustainability through global, innovative solutions but also believes that the parameters of its benefactors’ prayers and the blessings of charity are also part of the equation.

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