(Photo by iStock/Diy13)
Since the Trump administration’s dismantling of USAID—alongside big reductions in overseas development aid by the UK, Germany, France and other nations—it is been clear that the development landscape is being fundamentally reshaped. The numbers are sobering: Development assistance for health alone fell 21 percent between 2024 and 2025 (driven by a 67 percent drop in US financing), which researchers at The Lancet estimate could contribute to up to 14 million additional preventable deaths by 2030.
This is not a temporary funding trough. This is a structural rupture in how the world has funded global development.
And yet, even before, the traditional model was never adequate to the challenge. Overseas development aid (ODA) and philanthropy together provide only one dollar for every twenty needed to achieve the Sustainable Development Goals, and no realistic expansion of donor generosity could ever close that gap.
International NGOs have, for too long, been focused on approaches that depend entirely on aid budgets, while underemphasizing market-based solutions, whose concepts of “return on investment” sit uncomfortably in a sector shaped by charitable instincts.
Moreover, the dominant funding instrument in international development—the project grant, for an average of 18 months—is poorly suited to solving complex, entrenched social problems. To meaningfully shift education outcomes, break cycles of poverty, or build a resilient health system, you need to be active in a community for a decade or more.
The Right Diagnosis, The Wrong Prescription
In the face of new developments, the inadequacy of the old model for global development has been the subject of much debate. For example, in a recent Renaissance Philanthropy column, “Philanthropy 2.0: What the Evolution of For-Profit Investment Tells Us About the Future of Giving,” a group of authors drew on the evolution of venture capital, to argue that philanthropic capital should be structured around a limited partner/general partner model, in which donors act as LPs, but defer to expert fund managers on grantmaking and portfolio construction. This division of labour, so productive in commercial investing, is genuinely rare in philanthropy, and the analogy is persuasive precisely because it addresses a real dysfunction.
As Mark Kramer and Marc Pfitzer recently argued, philanthropists have long assumed that financial success reflects a wisdom transferable to social change. But where is the evidence that is true?
Expertise does not often transfer across different domains: Einstein was no good at painting, and Picasso couldn’t do math. Carnegie would never have turned for business advice to his contemporary Mahatma Gandhi, a legendary leader of social change — so why do we assume Carnegie understood how to create a better society, or that today’s billionaires do?
An LP/GP model corrects for this problem, putting domain experts rather than donors in the driver’s seat. But even this approach misses a fuller opportunity, by treating philanthropy as the primary pool of capital to be restructured. That is, unfortunately, like redesigning a bucket when what is needed is a pipeline. The most pressing social and environmental challenges of our time require capital at a scale that philanthropy simply cannot reach. We need structures capable of mobilizing a far wider range of capital simultaneously: ODA, DFI financing, impact investment, corporate capital, philanthropic funding (both grants and investment capital), and technical assistance, each playing a distinct role in a coherent architecture.
Moreover, expert fund managers with deep domain knowledge are necessary but not sufficient. Effective development finance also requires long-term, trusted relationships with communities, the ability to work with—rather than around—government systems, and expertise in navigating the political economy of change. These capabilities take decades to build. They live inside organizations like Save the Children, not inside newly formed fund vehicles. As Ann Mei Chang and Laura Lanzerotti explain, organizations seeking to drive innovation must build a second engine alongside their core operations, leveraging the scale and trust of the existing platform rather than discarding it.
A New Engine, Not a New Organization
Save the Children Global Ventures (SCGV) was designed to solve this problem, and respond to this moment, by combining our brand, trust, technical depth, and community relationships with a stand-alone team capable of designing and managing blended finance vehicles.
For example, our Generation Empowerment Fund, focused on sub-Saharan Africa, illustrates the model in practice: The Fund deploys capital through a layered structure, in which first-loss and concessionary investors act as anchors and DFI guarantees provide protection for highly risk averse but much larger, institutional investors. Because SCGV is also a foundation, it can attract technical assistance grants alongside the investment capital, further enhancing impact without diluting financial returns. Critically, capital can be allocated to the most appropriate implementing entity, from local entrepreneurs and financial institutions to domestic and international NGOs, which—because of Save the Children’s government relationships—can be integrated into and support national education systems, building sustainability that no short-cycle grant can achieve.
We are now developing a second vehicle: the Asia Health Fund, focused on Indonesia, the Philippines, Vietnam, and the Pacific, markets where Save the Children has operated for over 75 years and programs more than USD $100 million in annual health work. The Asia Health Fund will target telehealth, nutrition, frontline health worker training, and underserved health needs of women and children. Its architecture employs a two-class waterfall structure: a concessional Class A tranche, funded by Save the Children, partner health NGOs, and global health philanthropists, who agree to defer returns above a 7 percent hurdle until Class B investors reach a 15 percent target. This return enhancement mechanism is designed to give commercial LPs the confidence to commit patient capital to emerging market health investing over a 10-year horizon. The social returns should also be significant: Evidence suggests every $1 invested in digital health has the potential to generate $5 in health system savings; every $1 spent on addressing undernutrition returns an estimated $23 in economic value.
The Asia health investment market is already demonstrating that financial returns and social impact are mutually reinforcing, not in tension. Eighty-nine percent of Asia-focused impact investors report financial returns in line with or exceeding expectations, a clear signal that scalable health solutions in the region can generate attractive risk-adjusted returns. New technologies are accelerating this further. Advances in artificial intelligence are making high-quality clinical intelligence abundant and cheap, increasingly outperforming humans in specific diagnostic tasks and dramatically lowering the cost of care in low-resource settings. This is precisely why SCGV invested in ThinkMD three years ago, equipping frontline health workers and family caregivers with AI tools that improve the quality, consistency, and reach of care where trained clinicians are scarce or absent.
Both funds embody the LP/GP principle but extend it to encompass a broader range of capital and anchor it in the operational depth that only an INGO platform can provide.
SCGV’s commercial funds are complemented by a third vehicle designed to do things that market capital cannot: take the earliest, highest-risk bets. The Children’s Impact Multiplier Fund, launched in October 2023, is an evergreen venture philanthropy fund, backed by tax-deductible donations rather than investment capital. This makes it SCGV’s most flexible and catalytic tool, able to invest earlier in a company’s lifecycle, absorb risks that would be unacceptable to a DFI or many impact investors, and test an investment thesis before deploying it at scale through a commercial fund.
In practice, this pipeline function is already proving its value. The Multiplier Fund made an early investment in Jackfruit Finance, a Nairobi-based EdTech lender that uses AI-powered credit scoring to provide affordable financing to low-cost private schools in Kenya. That investment built the evidence base and our confidence to allow the Generation Empowerment Fund to make a larger follow-on investment. Similarly, the Multiplier Fund invested in Goshen, a microfinance institution, on the specific condition that it on-lend to low-cost early childhood education providers in Rwanda, an early proof point for the blended finance model at the heart of the Generation Empowerment Fund’s design. Philanthropic capital, deployed with investment discipline, seeded the thesis that commercial capital is now scaling.
This pipeline structure—from venture philanthropy to blended finance to commercial fund—is one of the most important features of SCGV’s architecture. It is also what distinguishes SCGV from a conventional fund manager: the ability to use the full spectrum of capital, from fully concessional to fully commercial, as an integrated toolkit.
Not everyone is convinced that the middle ground between philanthropy and commercial investing is as fertile as we suggest. Kevin Starr argued recently that “there is no such thing as impact investing” and the $1.57 trillion claiming the label is mostly commercial capital with good intentions and that real change in poor communities requires genuinely concessionary finance. He is right that there is often a trade-off between return and impact.
But a binary framework obscures what a well-designed capital stack can achieve. SCGV's funds are deliberately structured so that concessionary capital—from the Multiplier Fund, from Class A investors in the Asia Health Fund, from concessionary investors and DFI guarantees in the GenEm Fund—does the work that commercial capital cannot: absorbing first-loss risk, funding technical assistance and reaching the communities that market logic alone would bypass. The commercial tranches are not pretending to do development work. They are riding on the foundation that concessionary capital has laid—and in doing so, they bring a volume of resources to bear that philanthropy alone never could. As Kusi Hornberger argued in response to Starr, the question is not whether this middle space exists, but whether it actually delivers outcomes. That is precisely the standard to which SCGV holds itself.
Unlocking the Endowment
There is a final dimension most discussions of innovative finance overlook: The vast majority of philanthropic foundations are deploying only a fraction of their available capital for impact. Globally, foundations and donor-advised funds collectively hold enormous assets—DAFs in the US alone exceeded $250 billion by the end of 2023—yet most of this capital sits in conventional investment portfolios generating no social return whatsoever. The “5 percent rule” dictating that a minimum share of assets be distributed annually while the rest is invested conventionally represents a massive, ongoing missed opportunity.
The Paul Ramsay Foundation in Australia has recently modelled a more ambitious path. In early 2026, PRF updated its Investment Policy Statement to formally embed a Total Impact Approach across its entire endowment—not merely a ring-fenced allocation—increasing its Endowment Impact Fund target to 20 percent of its portfolio, now standing at $150 million in commitments. This is the direction of travel for sophisticated foundations serious about maximising their social return.
For global development, the implications are significant. Foundations prepared to act as catalytic, limited partners by deploying endowment capital into vehicles like the Generation Empowerment Fund or the Asia Health Fund, alongside DFI and commercial capital, can generate both financial returns and outsized impact, without spending down their corpus.
That is the total impact approach: not choosing between investment return and social return but insisting on both.
Philanthropy Is Still Critical (and Perhaps More Important Than Ever)
None of this means traditional philanthropy is obsolete. There are contexts—acute humanitarian crises, high-conflict fragile states, child protection emergencies—where fast, flexible grant funding is the only appropriate response. When children are at immediate risk in a disaster zone, the right answer is not a blended finance vehicle. The work Save the Children does in these contexts is vital, and demand for it will only grow as conflicts multiply and climate change accelerates.
But for the more sophisticated funder of international development, the question should always be: Is there a way to make this capital go further? To be more catalytic? To attract development finance or private sector capital alongside my contribution? That question, asked honestly and answered with the right structures, is what will close the funding gaps that philanthropy alone never can.
The world we face in 2026 demands a wholesale reimagining of how development capital is structured, deployed, and sustained. The tools exist. The trusted platforms exist. What is needed now is the ambition to use them.
Read more stories by Paul Ronalds.