This discussion paper by Development Initiatives examines whether blended finance—using official development assistance (ODA) to mobilise private investment—truly supports poverty reduction and reaches the poorest people. While blended finance is expanding rapidly, the report finds that its poverty impact is often assumed rather than demonstrated, with weak evidence and major gaps in data on who benefits.
Drawing on theories of change from 12 blended finance actors and evidence from 56 donor agencies, DFIs, and MDBs, the paper highlights that current approaches lack clear pathways to impact and risk diverting scarce ODA away from those most in need. To address this, it proposes two principles for better poverty-focused data: use a small set of fundamental indicators that track progress for the poorest, and build on existing reporting standards to avoid unnecessary burdens. It also introduces guiding questions—Who benefits, How, and When—to ensure that progress for the poorest and most marginalised people remains at the core of ODA allocation decision-making.