Giving Compass' Take:

• Devex explains the concept of blended finance (strategic use of money in development that mixes public and private resources, engaging a broad range of stakeholders) and explains how developers can make an impact using these instruments to meet the Sustainable Development Goals.

• The main takeaway for funders is to figure out how they fit into the blended finance ecosystem: Would it be better to seek out many different opportunities or focus on a single domain?

• Blended finance is becoming an increasingly popular tool, and it's one way that SDG investments in the millions can turn into trillions.

Achieving the Sustainable Development Goals will cost $5 trillion-$7 trillion every year. Current development spending falls far short of what is needed, with estimates of the annual SDG funding gap pegged at some $2.5 trillion. Blended finance has been hailed as a promising way to unlock new sources of funding to eliminate poverty and protect the planet. The approach has grown rapidly over recent years, with Convergence estimating $81 billion in blended finance mobilized between 2012-2015.

Blended finance is the strategic use of development finance to enable private capital flows to projects that address the SDGs. But blended finance is not just about mixing public and private resources into a structured financial instrument. Rather, it involves a range of actors working together at distinct stages of a project or enterprise’s lifecycle ...

Development funders can maximize the potential of blended finance by becoming increasingly specialized across three archetypes: Builders, which support the development of public infrastructure with strategic investments alongside government, and help improve the enabling environment for business and investment; catalysts, which support the preparation of investment projects and formation of new funds and facilities in “risky” markets, and often provide early-stage risk or growth capital to plug viability gaps; and dealmakers, which help to bring transactions to fruition in close collaboration with private sector project sponsors, and tend to provide greater levels of capital to enable proven business models to scale.

Read the full article about leveraging blended finance to meet the SDGs by Greg Snyders and Braden Currey at Devex International Development.