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The U.S. International Development Finance Corporation, or DFC, is emerging from a turbulent year marked by slowed investments, staff departures, and a dragged-out reauthorization battle in the U.S. Congress. Now, with new leadership priorities and a revamped investment strategy, the agency is hitting the ground running.
Conor Coleman, DFC’s head of investments, tells my colleague Adva Saldinger that the agency is moving away from the old way of doing business.
“Historically, maybe this agency has looked through the lens of trying to just deploy capital to reach certain volume numbers. We’re going to be much more strategic with our investment standpoint,” he says.
“We’re not deploying dollars just for the sake of deploying capital. We’re really deploying capital to drive the president's foreign policy objectives, promote economic growth in the host countries that we are investing in, all while delivering a return for the U.S. taxpayer.”
A central goal is speed. Coleman and DFC CEO Ben Black want the agency to move faster to better align with private-sector timelines, revamping policies and procedures that have historically slowed deals. Foreign policy is now at the center of DFC’s strategy, with its expanded Office of Foreign Policy serving “as the umbrella that drives our dual mandate investment thesis of development investment and strategic investment,” Coleman says.
DFC will retain its development mandate but will no longer operate solely as a development finance institution. Instead, it will pursue multiple investment strategies: a “transformational,” more development-focused catalytic portfolio alongside a commercially oriented portfolio intended to mobilize private capital.
The aim, Coleman tells Adva, is to deliver both development or strategic impact while generating a return for U.S. taxpayers.
Read: Senior DFC official details agency’s plans, new vision (Pro)
Related: A Q&A with DFC investment chief Conor Coleman (Pro)
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While traditional public development aid wasn’t central at the Munich Security Conference, many conversations touched on issues that underpin development — from debt, trade, and remittances, to energy security and the future of multilateral development banks.
Among those we spotted in the halls of the Hotel Bayerischer Hof were European Bank for Reconstruction and Development President Odile Renaud-Basso, European Investment Bank President Nadia Calviño, and Executive Vice President of the Inter-American Development Bank Jordan Schwartz.
“If you were looking for discussions on aid, they were absent,” Alexia Latortue, former U.S. Treasury assistant secretary for international trade and development, told me at the conference.
“But there were conversations about trade, debt, how countries collaborate, the future of multilateral development banks, remittances, and curbing illicit financial flows.”
She also said that there was a good amount of discussion about how state capacity and governance are linked to broader development outcomes, whether you’re talking about Somalia or Ukraine. They need resilient institutions, energy systems, and infrastructure for long-term progress.
The focus on these structural issues was “actually very liberating,” Latortue said.
At the same time, she stressed the need for more diverse perspectives. Most conversations were dominated by transatlantic voices, leaving gaps in how human security, economic opportunity, and political rights are considered globally.
Latortue argued that connecting these social and economic dimensions to security is essential for effective development finance — not just in low- and middle-income countries, but even in wealthier nations facing rising populism.
Read the special edition newsletter: Development plays defense at Munich Security Conference
ICYMI: At Munich Security Conference, development tries to stay relevant
Almost a year ago, the Cali Fund — a U.N.-backed mechanism meant to raise billions for biodiversity conservation from industries using nature’s genetic data — launched with fanfare in Rome. Its goal: $1 billion annually. Today, it has collected just $1,000.
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It’s an extreme example of a recurring problem: high-profile global funds with ambitious targets that fall drastically short. The U.N. Framework Convention on Climate Change’s Fund for Responding to Loss and Damage, designed to aid countries hit hardest by climate disasters, aims for $100 billion per year by 2030 and has secured around $591.42 million. The Adaptation Fund, targeting $300 million by 2025, received about $135 million. Even the Tropical Forest Forever Facility, Brazil’s banner initiative at last year’s COP30 climate summit in Belém, which hoped for $25 billion, garnered around $6.7 billion.
“Unless there’s a clear sunset date in the creation documents, these funds tend to live on in perpetuity,” Clemence Landers, vice president and senior policy fellow at the Center for Global Development, tells me. “They become zombie funds — not really actively fundraising, not really financing anything.” Shutting them down is legally and bureaucratically complex: “It’s a huge bureaucratic hurdle to reassign the funds to something else.”
In the case of the Cali Fund, companies were asked to pay voluntarily based on their annual turnover, without clear benchmarks for success. “I’m a little angry that this has been left entirely to the goodwill of private companies,” says Siva Thambisetty, an associate professor of law at the London School of Economics and Political Science who helped design its operational framework. “This is not the sign of states that want to take the fundraising seriously, and it’s not a sign that states want to take benefit sharing seriously.”
Experts warn the pattern will continue unless governments rethink their approach. “I am absolutely adamantly opposed to the creation of new entities and institutions, especially in this current context,” Landers says. “The international community has this habit of going out and creating something new, and everything is just perpetually underfunded. It’s a bad habit.”
For investors, the message is clear: Billions on paper don’t always translate into dollars in action.
Read: The problem with ‘zombie funds’ (Pro)
Multilateral development banks as an asset class. [ODI Global]
British International Investment’s problem isn’t ambition, it’s capital — and here’s how to fix it. [Center for Global Development]
Blended finance and the illusion of development: Lessons from the EFSD+ for the next EU budget. [Eurodad]