Blended finance[1] 

is defined "as the strategic use of

development finance and philanthropic funds to mobilize private capital
flows to emerging and frontier markets",[2][3] resulting in positive results
for both investors and communities. Blended finance offers the
possibility to scale up commercial financing for developing
countries and to channel such financing toward investments with
development impact. As such, blended finance is designed to support
progress towards the Sustainable Development Goals (SDGs) set forth
by the United Nations. Meeting the SDGs will require an additional $2.5
trillion in private and public financing per year as of 2017 estimates,[4]
[5] and an additional $13.5 trillion[6] to implement the COP21 Paris
climate accord. The concept of blended finance can contribute to raising
the private financing needed. It was first recognized as a solution to the
funding gap in the outcome document of the Third International
Conference on Financing for Development in July 2015.[7]
Building upon evidence from a previous survey[8] done on behalf of
the World Economic Forum, the OECD released recent findings[9] which
identified 180 blended finance funds and facilities, with $60.2 billion in
assets invested across 111 developing countries and impacting over
177 million lives, demonstrating the tremendous potential of blended
finance to close the funding gap required to finance the
ambitious Sustainable Development Goals (SDGs) agenda and deliver
development outcomes.
The concept has been gaining popularity lately within the world of
international development finance. As a result, blended finance
principles[10] have been adopted by the Development Assistance
Committee to guide the design and implementation of the concept,
which aims to use development finance, including philanthropic
resources, to align additional finance towards meeting the SDGs.