Diabetes funder turns to impact investing to fill care gap

Diabetes was long seen as a “rich man’s disease … Not even remotely related to low- and middle-income countries,” said Kirza Buch Kristensen, business development and strategy director at the World Diabetes Foundation, or WDF.

Yet around 80% of the estimated 589 million adults with diabetes live in low- and middle income countries, with a huge portion of these — 4 in 5 in the case of Africa — undiagnosed.

Denmark-based WDF is among those leading the battle to change this. Created by pharma giant Novo Nordisk in 2002 as an independent foundation, it was one of the first diabetes funders to focus on LMICs and is now one of the leading global funders of diabetes prevention and care projects in those countries.

Despite the increased attention, diabetes financing remains “urgently needed,” said Buch Kristensen. Just 1%-2% of development aid is allocated to financing for noncommunicable diseases, or NCDs, stagnating over the past three decades, according to the NCD Alliance.

In a significant step for a longtime grantmaker, WDF now hopes to plug some of that gap by venturing into new forms of financing, starting with impact investments in three social enterprises. Details of these deals are not yet public, although WDF said it was collaborating with the Philips Foundation, which focuses on health care in underserved communities, and We Share Forward Foundation, a nonprofit that supports early-stage social entrepreneurs. The latter, registered in the Netherlands and Switzerland, is distinctive for its focus on “revolving” grants, whereby grantees are encouraged to repay the money at a later date so that it can support another social entrepreneur. It also provides equity, debt, and blended finance.

Eleni Theodorou, managing director at We Share Forward, sees WDF’s foray into impact investing as indicative of a wider trend over the past five years or so.

“Finally, more and more foundations [are starting] to engage with impact investing and system-change investing … not only deploying grants through impact investing, but actually investing their endowment with mission-driven investments. The sector is changing,” Theodorou said.

Bridging two worlds

Attracting funds for diabetes can be a tough sell: Many people underestimate the seriousness of the disease.

“Diabetes is not a scary word for people. It should be, because it’s connected to many [other] NCDs,” said Jackie Kassouf Maalouf, founder of Lebanese nonprofit DiaLeb, which promotes diabetes prevention and care, and vice president of the International Diabetes Federation, or IDF. Untreated diabetes is associated with serious complications, including vision loss, kidney disease, and tuberculosis.

The prevalence of diabetes worldwide is set to shoot up, affecting an estimated 853 million adults by 2050. Annual global expenditure on diabetes-related health has already exceeded $1 trillion. Yet Maalouf sees the financial sustainability of many organizations working to address this as “definitely not there.” The work that she and several family members do for DiaLeb is unpaid, and while they can make small donations go far, fundraising is more difficult than for better-known causes. “You say ‘cancer’ and [people] immediately reach [for] their pockets, their chequebooks, their credit cards,” she said.

A few years ago, WDF began looking into innovative financing mechanisms. Initially, Buch Kristensen — a self-described “one-woman army” — borrowed colleagues from other departments and learned from consultants and other funders. Now, under the umbrella of WDF’s Diabetes Investment Accelerator, she works alongside her colleagues: Senior Project Manager Anders Bager, focused on outcomes-based finance, and Cansu Ünalan, recruited from McKinsey & Company to lead on impact investing.

Not a startup accelerator in the conventional sense, the Diabetes Investment Accelerator is rather an initiative to “explore, implement, and scale innovative financing mechanisms” for diabetes and related NCDs. It will focus on partnerships, investment cases, and enhancing knowledge.

The team also hopes to bridge the philanthropic and commercial worlds. WDF is well-positioned for this, bringing its experience and network in 120 countries, plus the backing of both Novo Nordisk and the Novo Nordisk Foundation, which provided funding of 132 million Danish krone (about $20.7 million) and DKK 62 million ($9.7 million), respectively, last year, according to WDF.

Still, its move toward innovative financing and commitment to sharing lessons learned is a “bold” one, according to Mette Halborg Thorngaard, associate partner at Dalberg Media, which supported WDF in initially exploring social impact bonds.

“Everyone is talking about the need for a new, sustainable financing model, but few are actually taking concrete action to build it,” she said. Following USAID cuts, foundations had a crucial role in shaping a new global health infrastructure, including “using their grant muscles” to unlock new funding and ensuring grants were catalytic, she added. “The World Diabetes Foundation is doing exactly that.”

Measurable impact

While moving full steam ahead with the accelerator, WDF’s overall mandate — to improve access to diabetes care and prevention in LMICs — has not changed, and its “classic, grant-based work” will continue, stressed Buch Kristensen. A specific budget for the investment accelerator has not been allocated, nor is there a target number of deals: “We’re starting small,” she said. The ambition is to scale up through partnerships over time.

One focus area is outcomes-based financing, or OBF (WDF was among the signatories of this year’s Cali Declaration on Outcomes-Based Financing, which calls for greater use of this model). This “powerful approach” directly links financial disbursements to verified, measurable results; strengthens accountability; and boosts local innovation by allowing partners to develop the best solutions for their communities, explained Bager. “By leveraging private sector partners, OBF also brings in new ideas and technologies for better health impact,” he said. WDF could take on various roles in such partnerships — as outcomes funder, investor, guarantor, facilitator, or technical assistance provider.

In Armenia, where WDF is currently structuring an outcomes-based mechanism, it could potentially act as guarantor and outcome payer, with local stakeholders in Armenia matching WDF’s financial contribution, said Bager. According to WDF, an independent economic analysis has established that investing between $1.5 million and $2 million in screening and treating diabetic retinopathy — an eye condition caused by diabetes — in just two regions of Armenia, a middle-income country, could save at least $18 million over 20 years. 

Alongside the economic case, diabetes prevention and care is appealing for funders as progress is relatively easy to measure. Achieve a reduction in blood glucose levels and you reduce the likelihood of serious complications. This can be measured either at the individual or groupwide level, as was the approach in a diabetes impact bond in the Danish city of Aarhus, which began in 2021.

Yet OBF remains underexplored in this field. Of the five projects listed in the International Network for Data on Impact and Government Outcomes database that focused on diabetes, all are in high-income countries.

Best of both worlds

For WDF, working with social enterprises makes sense because they combine “the best of the public sector and the private sector,” Ünalan said — a focus on equity, accessibility, and long-term commitment to communities, alongside innovation and financial sustainability.

But she also acknowledged that paid-for products or services — whether by individuals or their employers — could not replace a strong public health care system. “For us, it’s really the bridge … until universal health care coverage is achieved.”

Visit Accelerating Action — a series highlighting pathways for funding NCD prevention and control, spotlighting innovative financing models and cross-sector collaborations.

This is an editorially independent piece produced as part of our Accelerating Action series. To learn more about this series, click here.