Blended Finance in the New Macro Reality: Challenges and Opportunities

Blended finance models have become the new buzzword in the humanitarian/development sector. The “blend” refers to the strategic use of various funding tools to achieve social and environmental impact, which includes, for example, public, private, and philanthropic capital. 

Investors engaging in blended finance initiatives typically expect financial and social returns. 2021 was the peak in the global economy, boosted by international pandemic stimulation packages. Two years later, macro trends look different; inflation has sky-rocketed, and in many developed countries, you earn close to 4% in interest return on your bank deposits.

Despite the glory surrounding this concept, one wonders how the change in the global economy has impacted the use of blended finance instruments. Are organizations and investors still equally interested in the idea? 

This article explores the challenges and opportunities of blended finance in the current macro reality and provides advice for organizations considering introducing blended finance models. 

I speak to Patrick Elmer, founder and CEO of iGravity, a Zurich-based impact investment advisory firm that supports investors and development partners in building and executing impact investment strategies, designs and implements innovative finance mechanisms and develops impact management and measurement frameworks.