How can public and philanthropic funders lay the groundwork for the large-scale arrival of private capital for the Sustainable Development Goals? We identified four actions that can be taken to mobilize private capital at scale.

Speak their language. Public and philanthropic funders must communicate in the language of institutional investors and focus on the credible, commercial investment opportunities that are presented by the Global Goals. Blended finance solutions should focus on producing assets that are familiar to institutional investors and to which they already have allocations. Framing blended finance as a structuring approach within recognized and well-understood asset classes is key to scale.

Team up. Public and philanthropic funders should collaborate on well-proven blended finance solutions, while also promoting standardization and reducing complexity.

Learn from elders. We need to build off the capabilities and experience of Development Finance Institutions (DFIs) like the IFC and EBRD. To engage private investors effectively, they need to increase the number and scale of transactions they arrange, with the express purpose of transferring participation in aggregated portfolios of those assets through syndication, or other means, to private investors.

Data, data, data. There is a need for greater transparency in the blended finance market to build the evidence base for private investors to justify participation. There is currently a paucity of return data on blended finance transactions, particularly return data for the commercial layers of capital in blended finance transactions, which can be a hindrance for attracting new investors into the field.

Read the full article about ways to get the private sector to start paying more attention to Global Goals by Convergence Finance at ImpactAlpha.