What is Leveraged Funding and Why is it Critical to Advancing the SDGs?

How often do you find a funding opportunity requiring 'leverage'? Leverage is different from match, and yet both can be critical in both advancing your sustainable development goals AND making progress with donors.  Leverage is needed when donors seek to scale a project or program by bringing other resources to advance the viability of the project or program. This is often done by attracting private sector interests in traditional funding calls.

There’s a reason for the uptick in leverage requests, though. With private sector ‘leveraged’ funding, other investors (public, impact investors, even NGOs) can be assured that along with their investment is more opportunity for long term impact. Companies’ investments in sustainability are about building long term returns that allow for future production, more dependable consumption patterns, more predictable supply, even assurance around workforce availability. Government donors and NGOs often operate on a much shorter time frame (think under 10 years). Adding private sector leveraged funding to the mix allows these partners to see a greater, longer-term impact with their dollars.

Here in the United States, public funders like USAID, the Millennium Challenge Corporation (MCC) and Development Finance Corp (DFC) are increasingly designing proposals with leverage requirements. For these agencies, leveraging resources ensures that public investments will yield more systemic change that is nearly impossible in any other scenario (i.e. a company investing in NGO activity without support of infrastructure that government could help build as an example). Companies, alone, simply can’t invest at that scale. Governments simply need private sector investment for the type of development they seek. The impact also assuages tax payers. Finding economic engines to drive local production and consumption helps propel tax revenue, keeps engagement high and provides for a more satisfied population and workforce. Partnership and leveraged funding between government sources and the private sector is what can change the paradigm in impoverished countries. 
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Take for example the issue of gender empowerment in development. How many private sector companies have goals around supporting women entrepreneurs? Think about how beneficial it would be to partner with agencies and funders to both address an overarching goal like gender equity but also to scale and amplify the real impact that’s possible. This amplification of funds and impact is leverage.

Collaboration within funding streams like those coming from government agencies, or even philanthropic organizations like foundations, together with the private, nonprofit, academic sectors, etc. helps advance economic development around the SDGs in a way that is more market focused, economically advantageous to the communities in need of large scale investment and better for competition of prices and supply. 

Looking to examine your own leverage scenario? Book a partnership and fundraising strategy audit!

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