This work aims to ignite inspiration around opportunities to support the growth of flourishing communities through blended finance. By applying a combined methodology of finance as a tool for social change, and engaging dynamics of power in investment processes, we recenter the roles that community agency and governance play in blended finance investment design and implementation.
Notably, we draw from Indigenous ways of knowing and being that embed a community-centric model of success in contrast to mainstream finance, which prioritizes an individualistic approach to business and growth. Our community-centric blended finance approach integrates leading work from the fields of development, impact investing, systems investing, and regenerative and donut economics, and engages with dynamics of power around gender and intersectional identities.
In this work we argue that blended finance is an underutilized tool to building community wealth and wellbeing. While there have been notable positive social impacts from blended finance to date, these initiatives tend to be limited by assumptions of what finance should be and how it historically operates. To raise the bar, we promote three strategies for leveraging blended finance to change the system of finance to place communities at the center.
We do this by:
- shifting how value is assigned and reframing calculations of market risk;
- shifting whose knowledge is valued and whose expertise is trusted in investment decision-making
- and models for shared decision-making and governance in investment; and
- shifting structures and terms in investment processes to address unequal dynamics of power.
Our research was informed by discussions with thought leaders and change makers working toward aligned goals worldwide. Throughout this paper we provide case studies that showcase community-led and governed financial models in action. By embedding this rich tapestry of examples within the overarching framework provided, our hope is to excite and inspire a new wave of blended finance investment models that place communities at the center. We share recommendations around the process of developing localized community-owned and governed structures to manage assets. We also highlight the importance of the role of the community translator or localized intermediary in bridging traditional financial processes toward a transformative community-centric approach.
Much of the wealth inequality in the world today is the direct result of historic trauma due to colonial rule. We see finance broadly, and blended finance in particular, as an avenue to address and repair the trauma of our global past. We encourage a reframing of how finance can operate in a variety of ways including; 1) the effective combination of development and private finance that support redistribution of power, 2) the impact outcomes that finance can support, 3) alternative ways that financial instruments can be structured, 4) innovative approaches to how transactions can be conducted, and 5) new ways that stakeholders in an investment can be in relationship with one another. We believe a better world is possible, a world where communities can thrive through strengthened social and governance foundations, and we invite you to take a step in that direction with us – a crucial first step to lead the dynamic shift ahead.
In this report we examine ways that blended finance is currently being deployed to address unequal dynamics of power and promote flourishing communities, and offer some new perspectives and alternative approaches to using this tool.
