As shrinking aid budgets and the dismantling of the U.S. Agency for International Development take a toll on aid flows, attention is turning to funding alternatives, including ways to mobilize more private dollars to tackle development challenges.
One approach is blended finance, which leverages catalytic capital from public or philanthropic sources to increase private sector investment.
Still, it remains a relatively small market. In 2024, there were 123 blended finance deals worth about $18.3 billion, according to a report out this week from Convergence, a global blended finance network. That’s down from a record $23.1 billion in 2023 and doesn’t yet reflect the aid cuts and shuttering of USAID in the past six months.