This research paper is the second knowledge building resource produced by Convergence as part of a grant awarded by the C3 Grantmaking Program. In conjunction with the previously published report entitled How DFIs Deploy Catalytic Capital, this brief intends to further strengthen the familiarity among development finance stakeholders regarding the catalytic strategies of Development Finance Institutions (DFIs).
The catalytic capital landscape is changing. Longstanding suppliers of this capital are retreating, leaving a void which impacts deployers and recipients alike. New and underrepresented players in the development finance and blended finance space must adapt their conventional investment and impact mandates to ensure sufficient amounts of capital continue to flow to where they are needed most. Philanthropic organizations like foundations are largely untapped sources of vital catalytic and risk-bearing capital.
This brief assesses the historical engagement of philanthropic investors and DFIs in blended finance, building upon other areas of Convergence’s knowledge building work, and proposes a series of pathways for more systematic collaboration between these groups to sustain the allocation of catalytic resources to developing countries.
