Within the past decade, foundations have played an important role in blended finance; since 2014, an average of 18% of blended transactions annually recorded in the HDD have included capital from at least one foundation. In the past three years, however, foundations have been proportionately less active, averaging 12% participation annually. One potential reason for this reduced activity is that since the COVID-19 pandemic, foundations may have begun shifting their focus to more local, rather than international, causes. However, given their ability to provide flexible capital, their focus on achieving impact, and their mission to catalyze big solutions to global challenges, foundations have the potential to play a larger role in blended finance.
Overall, Convergence has recorded 236 blended finance transactions that include at least one foundation as an investor, totaling $24.2 billion in aggregate financing. Foundations can participate in blended finance by supporting different aspects of a transaction, whether through non-return seeking grants, concessional return-seeking investments such as debt or equity, or commercial investments.
This brief analyzes how foundations have participated in blended finance transactions to date, presenting insights from an analysis of transactions within the HDD and interviews conducted with industry stakeholders.
