Mobilizing Investment For Development With Catalytic Funding

USAID's INVEST initiative is a global buy- in mechanism, designed to expand support for blended finance by testing new approaches to mobilizing capital for development priorities. In the context of USAID, catalytic funding is the provision of resources to an investment fund or vehicle via a contract or grant. The funding is designed to mitigate risk and improve the fund's overall viability to attract new investment for development goals. A key lesson from this experience is that impact is not simply a function of dedicating more resources, but about the strategic deployment of those resources for activities that will most likely influence the trajectory of investment capital. The learning brief looks at catalytic funding in terms of USAID's activities, their framework for blending and their learnings from the INVEST program.