The power to scale impact
How blended finance can enable transformative social and environmental outcomes
From climate resilience to healthcare, education to infrastructure, blended finance can raise funds to drive change at scale where it’s needed most. By combining philanthropic or public funding with private capital, it bridges the gap between ambition and action to enable transformative development outcomes.Ìý
From climate resilience to healthcare, education to infrastructure, blended finance can raise funds to drive change at scale where it’s needed most. By combining philanthropic or public funding with private capital, it bridges the gap between ambition and action to enable transformative development outcomes.Ìý
With increasing demand for sustainable solutions, blended finance can reshape the way we address global challenges by helping to:
- Scale development impact across sectors like healthcare, education and climate resilience
- Align the goals of diverse stakeholders to drive sustainable growth
- Provide innovative solutions to close funding gaps and mitigate risks for investors
What is blended finance?
Blended Finance is an approach to mobilizing private, philanthropic and public capital for social and environmental change. It allows diverse parties to invest alongside each other while achieving their own objectives—whether financial returns, social and environmental impact or a blend of both—using common financial market structuring techniques.1
Blended finance has the potential to meet the goals of all stakeholders involved:
- Scaling social and environmental impact for catalytic funders
- Delivering market-rate financial returns for investors
- Driving powerful outcomes for communities
Blended finance uses philanthropic and public funds as catalytic capital, improving risk-adjusted returns to make investments in social and environmental projects commercially viable.
It can help to address market failures and fill financing shortfalls by leveraging the multiplier effect to catalyze investment in emerging markets. By engaging a blended finance structure, every dollar of catalytic capital can mobilize up to $5-10 in private investment for development, increasing the pool of funding available.
Catalytic capital
Blended finance makes use of catalytic capital to address ongoing challenges. For every public or philanthropic dollar spent on development, additional commercial capital can be added in so that social and environmental solutions can be scaled to increase impact.
>50%
of the world’s population are still not covered by essential health services2
600+ million
youth globally lack basic mathematics and literacy skills3
$4 trillion
annual funding shortfall for the UN’s sustainable development goals (SDGs)
Helping more communities
By leveraging private sector capital alongside philanthropic and public resources for development, blended finance initiatives can have a profound impact on marginalized communities and developing regions by offering additionality – that is, funding projects that otherwise would not have happened.
Blended finance initiatives can prioritize inclusive and sustainable development practices, with a goal of benefitting the most vulnerable populations. Communities can benefit from outcomes that enhance the quality of life, including:
- Improved healthcare
- Better education
- Clean energy
The communities benefitting from blended finance can include:
- Sovereign nation states benefitting from investment in climate resilience.
- Individual villages in a particular country benefitting from better education through investment in an early-childhood education social enterprise
Dive deeper
To learn more about how blended finance can mobilize private, philanthropic and public capital for social and environmental change, download a copy of our new primer. Explore real-world examples and gain proven actionable insights to help you navigate the opportunities it offers.
