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Blog
16 Jul 25

A behind the scenes look at the design and founding of a multi-party entity to scale innovative finance: SDG Impact Finance Initiative

By Leah Pedersen, Kanwal Rathi, CFA
A behind the scenes look at the design and founding of a multi-party entity to scale innovative finance: SDG Impact Finance Initiative

Between 2020 and 2021, Convergence collaborated with the Swiss State Secretariat for Economic Affairs (SECO) to address the estimated $4 trillion annual SDG financing gap in developing countries. Together, they explored establishing an association aimed at providing catalytic funding to innovative financing solutions that both align with the Sustainable Development Goals (SDGs) and attract greater private impact investment.

Drawing from Convergence's experience in managing its Blended Finance Accelerator to support the development of new blended finance solutions and increase transaction flow for private investors, an initial proposal was co-created by Convergence and SECO comprising two key components: 1) an “Innovation Window” to provide catalytic design grants for scoping and designing impact investment solutions, and 2) a “Product Window” offering patient capital to serve as first-loss funding within impact investment vehicles.

This joint consultation and effort led to the creation of the SDG Impact Finance Initiative (SIFI) in 2021 - an initiative led by Swiss actors including both public and private sector partners: SECO, their intra-governmental partner the Swiss Agency for Development and Cooperation (SDC), UBS Optimus Foundation, and Credit Suisse Foundation. A consensus among association members and Convergence was that this association should reach beyond the Swiss and position itself as a multi-donor platform. The association was formally launched at the Building Bridges event in December 2021, and Convergence was announced as the key partner to manage the first call for proposals for the Innovation Window. This event marked a significant milestone in catalytic impact finance, bringing together various government entities and foundations to pool resources supporting private capital mobilization and closing the SDG funding gap.

In partnership with SIFI, Convergence launched the 1st call for proposals in March 2022 for the Innovation Window. That same year, an independent board was established by SIFI to guide the association’s decisions. As the Implementation Partner for the pilot, Convergence worked closely with SECO and other stakeholders to co-design the inaugural cycle of the Innovation Window. This involved defining the window’s objectives, eligibility criteria, grant types, and evaluation framework and ensuring the thematic focus aligned with SIFI’s vision and donor priorities for an SDG-agnostic entity.

Specifically, Convergence helped develop the use of funds and additionality criteria for each grant type, drawing on its experience with feasibility studies and proof of concept grants. Additionally, a new grant category, called expansion stage grants, was introduced to support scaling up already launched solutions. SIFI’s members and Convergence jointly promoted the first call for proposals, attracting a high-quality pool of applications during the pilot phase. Convergence also played a key role in recruiting Investment Committee members to assess and select proposals.

With the inaugural Innovation Window cycle resulting in seven awards to innovators across multiple SDGs, SIFI members recruited a local team with Guillaume Bonnel appointed the first CEO of the association in 2023. Additionally. Luxembourg's Ministry of Finance later joined the association in early 2024 as a donor, making it a multi-government and multi-foundation funded model.

Given Convergence’s active role in co-creating and designing the window, the association collaborated with Convergence to manage the second and third cycles. From 2022 to 2024, Convergence implemented three cycles that awarded a total of $4.6 million in grants to 19 solutions at various stages of development.

The Innovation Window is unique in that it addresses a wide range of SDGs through its targeted approach, with each call for proposal specifying three to four SDGs as its thematic priorities. In total, nine out of the 17 SDGs were covered as thematic priorities. Notably, the Window prioritized SDGs traditionally receiving less private sector attention, such as SDG 14 (Life Below Water) and SDG 16 (Peace, Justice, and Strong Institutions).

  • Cycle 1 attracted 76 proposals, resulting in 7 grant awards totalling $1.5 Million to solutions focused on SDG 4, 8, 12 and 13
  • Cycle 2 attracted 259 proposals, resulting in 7 grant awards totalling $1.8 Million to solutions focused on SDG 5, 14 and 15
  • Cycle 3 attracted 266 proposals, resulting in 5 grant awards totalling $1.3 Million to solutions focused on SDG 3, 13 and 16

These solutions spanned several impact themes and targeted diverse developing countries and emerging markets:

  • Gender: five (AdOpes Microleasing Fund, Girls First Finance, Aqua Farms Organization, Chancen International, Reall) out of the 19 solutions aim for a direct impact on gender equality through increasing access to finance, education, and housing. Additionally, 12 out of the 19 solutions have women-led teams
  • Emerging market focus: 58% of the solutions target Sub-Saharan Africa, followed by those with a Global and Latin America focus.
  • Diverse impact themes:
    a) 5 focus on agriculture, aquaculture, and fishing
    b) 5 target conservation, restoration, and afforestation
    c) 4 address access to health and education
    d) The remaining solutions are either sector-agnostic or focus on peacebuilding, renewable energy, education, or affordable housing
  • Strong partnerships: Strong and synergistic partnerships are a key enabler of success for grantees. Six out of 19 solutions awarded through the Innovation window are being designed or implemented in the form of partnerships between multiple entity types. This approach worked particularly well for NGOs with practical experience but limited financial structuring expertise. They partnered with specialists to fill these gaps. For example, Global Schools Forum teamed up with Kaizenvest and others to create an education financing initiative (Generation Empowerment Fund) using financial institutions and impact-linked incentives. Similarly, Ground Up partnered with Stanbic Investment Management Services (SIMS) to manage a Fund of Funds for SMEs in Ghana, boosting its appeal to local investors through SIMS’ market presence.

In addition to acting as the implementation partner managing the call for proposals and awarding design grants, Convergence continues to support the active portfolio solutions by monitoring progress against milestones and reviewing deliverables to unlock grant funding, offering capacity building opportunities, providing feedback on solution design, and additional support through access to trainings, knowledge products, and a network of blended finance practitioners.

SIFI’s awardees will, if successful, generate pipeline for investors seeking opportunities to place capital in SDG-aligned businesses. SIFI’s flexible, highly responsive funding mechanism enables it to continually adjust the calls for proposals to direct capital toward solutions that address often undercapitalized SDGs. With additional members joining SIFI recently, including Korea International Cooperation Agency (KOICA) and Ursimone Wietlisbach Foundation, the initiative is on track to take the form of a broad-spectrum partnership. As a founding partner to SIFI, we are excited to follow the initiative’s progress and watch how it meets ever-evolving global challenges.

See all the SDG Impact Finance Initiative Innovation Window solutions here.

About the Authors
Leah Pedersen
Leah Pedersen

Leading Convergence’s Blended Finance Accelerator, Leah brings extensive structured finance and international development experience across public and private sectors. Prior, Leah served in the U.S. Agency for International Development (USAID) as Chief Innovation Officer and Senior Advisor on blended finance, for the White House led Women’s Global Development and Prosperity initiative, mobilizing $100M+ of private capital to advance women’s entrepreneurship and workforce development. Executive roles previously included Vice President of M&A for a healthcare consolidator and Co-founder & Director of Malaria No More’s innovative finance platform (NetGuarantee) structuring guarantees mobilizing investment in healthcare in Africa. From 2003 to 2008, Leah held senior positions with AIG’s Global Product Development structuring new commercial insurance solutions for developing markets including AIG's first micro-insurance portfolio. Leah’s career started in management consulting at Accenture and later Dalberg. She earned a BA in International Economics from University of St. Thomas and dual-MBA from Columbia University and London Business School. Houston Business Journal recognized Leah as a “40 Under 40” award recipient and African Leadership Network (ALN) as an African Business Fellowship (ABF) winner. Leah served on the Council on Foreign Relations and serves as a Board Member of Healing Hands of Joy (African maternal health).

Kanwal Rathi, CFA
Kanwal Rathi, CFA

Kanwal Rathi is a Senior Associate on Convergence’s Blended Finance Accelerator Team. She has over 8 years of experience in investing, including 6 in the field of impact investing. Prior to joining Convergence, Kanwal worked as a Senior Investment Officer at Enabling Qapital, AG and managed a portfolio of clean cooking and carbon finance transactions in Sub-Saharan Africa. She also previously worked at Social Investment Managers and Advisors, LLC. There she specialized in the underwriting and due diligence of structured debt investments in off-grid solar and microfinance sectors in Sub-Saharan Africa and South Asia and designing of new innovative funds and projects. Kanwal began her career in Pakistan in Corporate Finance at a leading logistics player before switching to the impact investing space. She holds a Bachelor in Business Administration from Institute of Business Administration, Karachi and is a CFA Charterholder.

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