This report represents a first effort to review options for donor engagement in the area of innovative finance, as outlined by the Private Sector Engagement Working Group. In order to facilitate informed discussions, this paper critically reviews four concepts that frequently feature in current discussions: Innovative Finance (often used as an umbrella term for approaches to leverage additional finance as well as other practices), Blended Finance, Impact Investing, and Results-Based Finance. The following aspects are explored:
- A generic description of each concept, based on key elements occurring in different definitions;
- Important differences between existing definitions and terminologies;
- How each concept relates to other concepts around innovative finance; and
- Whether there is evidence that it works.
- The paper concludes with a summary of key issues for donors considering expanding the use of innovative finance.