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When to use which instrument?

Author: Initiative for Blended Finance
Published: Feb 2022

Financing can be a key constraint for sustainable development efforts, however effective partnerships have the potential to enable large scale societal and environmental change.

Blended finance is considered a critical tool for public and philanthropic capital to maximize environmental and social impact. With growing interest in blended finance, the sector is seeing diverse and innovative tools - yet, guidance on which instrument to use in which context is still lacking.

Blended finance instruments harness philanthropic or public funding to unlock private investment for development impact. Yet, guidance on which instrument to use in which context is still lacking. We're delighted to join the Center for Sustainable Finance and Private Wealth (University of Zurich) and Roots of Impact in releasing the "Blended Finance: When to use which instrument?" report, in line with the Bertha Centre's long standing commitment to promoting innovation for sustainable development impact.

This tool should facilitate decision making processes and thus promote effectiveness in the allocation resources for development impact. The research project was made possible with support from UBS Optimus Foundation, with the goal to establish the factors that influence the appropriateness of a given financing instrument in each context to construct a guiding tool which can be used by different actors wishing to engage in a blended finance transaction.

This is the first of two white papers, the research for which commenced October 2021 and will conclude in April 2022. This paper focuses on understanding decision-making amongst blended finance practitioners as they determine their choice of financing instruments.

The second white paper, due later this year, will expand on the first by presenting a decision-making framework to support practitioners in developing new blended finance instruments.

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