Opinion: Mobilizing capital through philanthropy to address polycrisis

The world is currently facing multiple, interconnected crises, including the climate emergency, increasing protracted conflicts driving displacement, and pervasive, widening inequalities. They have exposed and exacerbated weaknesses in our social, economic, and environmental systems. Each of these challenges is substantial in isolation, but they are also interconnected. Together, they pose an existential threat to life on our planet and all our futures.

For example, the effects of climate change are impacting us on various fronts in the global battle against hunger. A U.N. Food and Agriculture Organization report published this year states that, over the past three decades, disasters related to climate change have resulted in the loss of $3.8 trillion worth of crops and livestock production. This accounts for 5% of the annual global agricultural gross domestic product and is equivalent to the daily dietary needs of millions.

Climate-related shocks including rising temperatures, floods, and prolonged droughts cause adverse impacts on agricultural production, which directly and indirectly impact people’s food security. For example, in countries where temperatures are already extremely high, such as the Sahel belt of Africa, rising temperatures have a more immediate effect on crops such as wheat that are less heat tolerant, making it clear that the fight against hunger goes hand in hand with the fight against climate change. According to the 2023 State of Food Security and Nutrition in the World report, it is estimated that between 690 million and 783 million people in the world faced hunger in 2022.

Addressing each challenge in isolation is no longer a viable or effective strategy. We urgently need a new paradigm recognizing their interconnected nature and supporting coordinated responses through deeper, more effective collaboration.

Philanthropy and the power of patient capital

Philanthropic organizations have a huge role to play in enabling such collaboration, not least because official development assistance budgets are increasingly constrained, further exacerbated by the economic crisis following the COVID-19 pandemic and ongoing geopolitical conflicts.

Organizations looking to tackle some of the root causes of these interconnected problems need to be ready to take greater risks in pursuing innovations and adopting collaborative models to reach the most marginalized communities. Philanthropic foundations can do this by providing “patient” capital, which enables development and implementing partners to pilot, test, and learn — and to take calculated risks and explore innovative approaches without the limiting fear of failure.

Some successful examples of effective collaboration have emerged in recent years, particularly in the areas of transforming food systems and increasing access to energy. These, in turn, are paving the way for partnerships across a range of players, including from the government, the private sector, and the development space. They are also creating space for new locally led approaches and business models that have the potential to achieve scalable impact that enables all people to live in dignity and have equal opportunities to thrive sustainably.

Forming broad alliances to impact people and planet

Alongside partners from the IKEA Foundation, Bezos Earth Fund, and a dozen other organizations, The Rockefeller Foundation launched the Global Energy Alliance for People and Planet to help catalyze a just energy transition by mobilizing public and private capital to reach one billion people with reliable clean power by 2030.

Through this partnership, SNV as a global development partner is supporting the Distributed Renewable Energy-Agriculture Modalities, or DREAM, project in Ethiopia, working closely with the government and partners in the country. DREAM is aiming to facilitate the implementation of private sector operation of nine renewable energy mini-grids and irrigation systems across Ethiopia, providing year-round reliable irrigation that will support an estimated 11,500 people, seven schools, and three health clinics. The partnership will also offer opportunities for scaling and replication by sharing lessons learned that can be applied elsewhere in the region.      

DREAM demonstrates how philanthropic foundations, in their ability to convene, share, and disseminate knowledge, can de-risk investments and prove the viability of innovative collaborations by attracting additional private sector investment. This is particularly important during these times of declined trust and heightened competition and in the context of the current global challenges posed by climate risks, economic downturn, and political unrest.

Taking risks and inspiring others

When philanthropic institutions provide patient capital and demonstrate the potential for social and environmental returns, they can inspire others to join in. By underwriting the initial risk and showcasing successful outcomes, philanthropy provides a pathway to crowd in additional forms of finance such as impact investments, venture capital, or public-private partnerships, which in turn can help scale up and replicate effective interventions.

Given the enormous needs and resource constraints in today’s turbulent world, this crowding-in of different forms of financing is essential if we are to close the investment gap in Sustainable Development Goals (SDGs). What’s critical is that these initiatives do not lose sight of the importance of doubling down on equity and inclusivity, so that the promise of the SDGs to leave no one behind can truly be fulfilled.

To do so, we must also recognize the importance of partnerships in generating wide-reaching outcomes through mechanisms that enable efficiencies by ensuring that different partners’ work isn’t duplicated, but rather complementary. To achieve this, the roles of each group must be clearly defined to avoid duplication and unnecessary competition and to ensure the most effective use of capabilities and comparative advantages.

As we look to the challenges ahead of us — and in particular the climate crisis that is currently being discussed at COP28 in Dubai — we cannot ignore their interconnected nature. By recognizing this and developing more comprehensive partnerships and better ways of working together, we can build a more resilient and sustainable future for all. The time for collective action and unparalleled collaboration is now. Will we seize it?