Introduction

Agenda 2030, the United Nations (UN) plan for sustainable development adopted in 2015, envisioned a more holistic, inclusive, and resilient definition of development. Moving away from a myopic and conventional view of growth, the Sustainable Development Goals (SDGs) acknowledged the common economic, social and environmental challenges faced by countries across the globe. The international community rightly recognised the failures of the conventional model of development to reduce the socio-economic inequalities that have long impeded genuine development.^[1] Indeed, the 17 goals, particularly SDG 10 (reduced inequalities) and SDG 17 (partnership for the goals), and their associated 169 targets were formulated taking into account the “varying types of national realities, capacities and different levels of development, policies and priorities.”^[2]

Development partnerships, also known as Official Development Assistance (ODA),^[3] can play a pivotal role in directing resource flows to the most vulnerable, such as the least developed countries (LDCs), landlocked developing countries (LLDCs), and small island developing states (SIDS). The lack of basic financial wherewithal, coupled with limited market competitiveness and, for many of them, remote geographies, render developing economies incapable of meeting their development needs. Compounding the challenge are the ongoing conflicts across the globe, disrupting the link between energy markets and food supply chains^[4] and triggering a food, fuel, and fertiliser polycrisis.

Clearly, current efforts directed towards realising the SDGs are not sufficient, and the 2030 deadline appears to be unrealistic. For instance, as per the UN Energy Progress Report 2024, in sub-Saharan Africa, about 685 million people live without electricity—that number is 10 million more than in 2021.^[5] This accounts for a staggering 80 percent of the world population lacking access to electricity. Furthermore, as per the current policy structure, by 2030, about 660 million people would still be without electricity then and close to 1.8 billion people would be without access to clean cooking technologies and fuels.^[6]

Another critical challenge linked with the energy crisis is the surge in food prices. The number of people facing food insecurity has tripled between 2017 and 2021 and has further increased by 17 percent in 2023 owing to the negative consequences of the conflict in Ukraine.^[7] These issues have been aggravated by extreme weather events; a growing number of trade barriers and restrictions; the demand for post-pandemic recovery; and mounting input costs of goods, like energy and fertilisers.

Over the last two decades, ODA emerged as a potential source offering both emergency relief and external financing for projects in various development domains such as education and healthcare.^[8] The Organisation for Economic Co-operation and Development (OECD) notes that foreign aid increased from US$73 billion in 2000 to US$223 billion in 2023.^[9] At present, however, the overall state of international development assistance is bleak. Despite the total amount of ODA reaching an all-time high of US$223.7 billion in 2023,^[10] representing an increase of 1.8 percent in real terms from 2022, it still fell short of meeting the yearly requirement of US$2,000 billion for realising the SDGs.^[11] Moreover, most developed countries have failed to spend 0.7 percent of their gross national income (GNI) as part of their ODA expenditure—a target set by the UN in 1970.^[12] As of 2024, only four countries exceeded this benchmark: Denmark (0.71 percent of GNI), Luxembourg (1 percent), Norway (1.02 percent), and Sweden (0.79 percent).^[13]

As the UN Conference on Trade and Development (UNCTAD) has observed, resource disbursement for development^[a]  has remained volatile in recent years.^[14] For example, the total resource flows to LDCs (US$48 billion), LLDCs (US$29 billion), and SIDS (US$4.5 billion) witnessed a slump following the 2008 global financial crisis (Figure 1). The flows picked up pace beginning in 2014 and touched its highest level in 2021, amid the COVID-19 pandemic; that year, the total disbursement was at US$60.4 billion for LDCs, US$37.2 billion for LLDCs, and US$4.2 billion for SIDS.

Figure 1: ODA Trends for LDCs, LLDCs and SIDS (2000-2020)

Source: UNCTAD 2024^[15]

Moreover, according to figures from the UNCTAD, global foreign direct investment (FDI) fell by 2 percent (US$1.3 trillion) between 2022 and 2023, while flows to the developing economies declined by 7 percent (US$867 billion) in the same period.^[16] Under US President Donald Trump’s second term, the ceasing of operations of the US Agency for International Development (USAID) has cast a long shadow on the funding prospects for the social sector, especially for countries of the Global South.^[17] Furthermore, investment related to SDG-specific sectors, such as infrastructure, renewable energy, water and sanitation, food security, healthcare, and education, has decreased by 10 percent.^[18] Magnified by the visible consequences of climate change,^[19] along with increasing conflicts in different parts of the globe and a decelerated economic outlook,^[20] there is a strong need for development providers to rethink their ODA strategies. There is also a lack of alignment of global investment flows with the larger SDG agenda, especially in domains like connectivity, energy, and food security.^[21]

The Role of Philanthropy in Financing Agenda 2030

Developing economies are visibly in need of capital to fund their domestic development agenda and help realise the SDGs. Indeed, financing sustainable development is a roadblock for the international community as a whole, both in the Global North and the Global South. In 2015, international development agreements concerning financing, the primary of which is the Addis Ababa Action Agenda,^[b] the SDGs, and the Paris Agreement on climate action, have all highlighted the need for wider cooperation between actors to further strengthen the reciprocal leverage effects and, in this manner, address the most crucial challenges of the century.^[22]

According to the 2024 World Investment Report released by UNCTAD, the annual investment gap for the developing world was pegged at US$2.5 trillion in a pre-2030 Agenda world.^[23] This figure has now skyrocketed to US$4-4.3 trillion as per the mid-term review conducted by UNCTAD in 2023,^[24] and is expected to rise further to US$6.4 trillion by 2030.^[25]

To be sure, the gap in SDG financing is not new. In 2015, when the SDGs were adopted, the world’s economic prospects looked uncertain owing to various factors, including weak global trade, soaring interest rates, and the risks of economic stagnation, along with inflation.^[26]  The financing challenge has existed even before the outbreak of the COVID-19 pandemic and has amplified since then. The reasons include the slump in growth due to fragility in emerging markets; policy uncertainty and risks; and regional instability and geopolitical concerns. Indeed, national priorities and policies need to be reoriented to drive an investment-friendly environment and steer all potential sources of finances, ranging from tax revenues, FDI, and ODA in the form of both grants and loans (see Figure 2).

Figure 2: Potential Sources of Financing for the SDGs

Source: Doumbia and Lauridsen, 2019^[27]

In this backdrop, this paper argues that philanthropy can play a role. While the annual financing gap of over US$4 trillion is enormous, the big picture shows that, globally, there is no dearth in financial resources.

At the end of 2022, the total net private wealth across the globe was pegged at US$454.4 trillion.^[28]  This figure is expected to further grow by 38 percent by the end of 2027, reaching US$629 trillion. Disbursing and mobilising even less than 1 percent of this private wealth can possibly bridge the annual SDG financing gap till 2030. The imperative is to channel components of this private wealth to fulfil the unmet developmental finance goals.

Philanthropic foundations are one such cog in the financing wheel that can mobilise resources and also operate as development actors in their own right. There are traditional investment plans that aim to maximise the rates of return, which may or may not fulfil the larger global good. Additionally, there are investments driven by the objectives of positive social impact and outcomes. This is where ‘impact investments’ or ‘social impact investing’^[c] becomes relevant.

Philanthropy and Development Partnerships

Philanthropic activities are known to be among the reliable sources of funding in the domains of international development and cooperation. ‘Philanthropy’, from the Greek word, philanthrōpia meaning “love of mankind”, imparts value to “institutions or agencies possessing modest resources to simultaneously and over time, test and support disparate circumstances and interventions.”^[29] Experts posit that philanthropy can possibly supplement and complement, and not necessarily replace, development aid. Considering their informed global and national outlook towards pertinent development goals, philanthropic organisations are better oriented to unpack the external context and utilise opportunities to leverage capital, actors, and tools.^[30]

In India, organisations like Tata Trusts and Reliance Foundation have been involved in implementing interventional programmes at the grassroots by forming collaborative partnerships with governments, international and local NGOs, and private welfare organisations. For instance, the Tata Trusts’ India Health Fund focuses on pooling mechanisms for health financing in the country.^[31] Reliance Foundation, for its part, works with the UN offices in India in activities that support “future readiness” in Disaster Risk Management (DRM) systems.^[32]

In more recent years, philanthropy has emerged as a vital part of the sustainability landscape. This was evident during the COVID-19 pandemic that broke out in 2020, when philanthropic foundations stepped up and supported vaccination programmes and other collaborative responses to the emergency. According to the OECD, though the flow of private philanthropy had already been on the rise even before the pandemic, their contribution remarkably increased at that time, from US$8.2 billion in 2019 to US$10 billion in 2020, and further to US$10.7 billion in 2021.^[33]

Yet, the emergence of philanthropy should not be viewed principally as a “gap filler” for ODA.^[34] Philanthropy brings a complementary set of new actors, approaches, and types of funding to the field of sustainable development. It often supports underfunded sectors like social inclusion, human rights, and gender equality. It has supported grantees and partners at the nexus of different disciplines and approaches, thereby creating new fields that are then taken up by the official donor community—such as community-based natural resource management, land rights for the poor, and urban climate change resilience.

Moreover, grant-making portfolios that help build communities of practice, disciplinary fields, and social movements for positive change are a distinctive added value of philanthropy to the non-profit sector. Given the growing importance and enthusiasm around South-South Cooperation (SSC), as well as the burgeoning alternative modes of financing emerging from the Global South (of which little is studied in current literature), it becomes imperative to assess the role of philanthropy in bridging the development finance gap.

Why Do Financing Gaps Exist?

The current financing gaps in the domain of development can be attributed to the argument for return on investment (RoI). In most cases, projects like climate adaptation result in the creation of public goods marked by non-excludability^[d] and non-rivalry, which makes it difficult to identify direct beneficiaries and thereby levy “user fees.”^[e] The absence of a cost-recovery mechanism, in turn, discourages private sector participation and confines adaptation finance largely to the public domain. However, public finance is inadequate to cover the existing chasm globally, as can be witnessed from the financing gap which stands at a staggering 12-14 times the current flows in the developing world.^[35]

A second challenge lies with projects that are hindered by a limited understanding of, or empathy towards, ground-level adaptation realities.^[36],[37] For instance, community-based measures like the strategic retreat of populations from climate-vulnerable zones are politically unpalatable, as they are seen to erode electoral support.^[f],[38]

Lastly, a fundamental problem lies in the absence of a standardised definition and measurement framework for specific projects (especially those that may have the characteristics of a public good), which impedes progress tracking, prioritisation, and fund allocation. It also results in inconsistent reporting and fragmented accountability mechanisms, thereby relegating such projects to a secondary priority vis-à-vis mitigation, where outcomes are more visible and quantifiable.

The Role of Philanthropy in Development Partnerships

The role of philanthropy in development partnerships has become increasingly central in recent decades, and moreso after the adoption of the SDGs in 2015,^[39] particularly as global development goals have expanded beyond state-to-state aid toward multi-actor collaboration. There are various ways in which they operate, discussed in turn in the following paragraphs.

• Philanthropic finance complements public and multilateral finance, and can flow into domains where traditional public or multilateral funding is limited or risk-averse. They can provide catalytic capital, funding that de-risks projects and attracts larger institutional or private flows into sectors such as healthcare, education, and climate adaptation. For example, the Gates Foundation’s work with Gavi, the Vaccine Alliance, has helped channel billions of dollars from governments and multilaterals for immunisation programmes.^[40]
• Philanthropy helps in promoting innovation and experimentation, given that entities in the space can take higher risks and have longer horizons, unlike government or bilateral donors who are bound by bureaucratic constraints. This allows for the testing of innovative models or technologies before they are scaled up through public or private systems. The Rockefeller Foundation’s early investments in the “Green Revolution”^[41] or its support for “smart power for rural development”^[42] initiatives in India are pertinent examples.
• Philanthropic organisations often play a neutral, convening role in bringing together governments, civil society, private investors, and knowledge institutions. Their credibility and flexibility allow them to broker partnerships, facilitate cross-sector learning, and influence global norms.
• By funding research, pilot projects, and advocacy, philanthropy can shape policy discourses and institutional priorities in development cooperation.
• Philanthropy can support localisation and community-led development by emphasising local ownership and channelling resources towards community foundations and grassroots innovators. This helps shift the development paradigm from aid dependency to agency and empowerment. For example, the Azim Premji Foundation and Tata Trusts in India have supported education and healthcare at scale through partnerships with state governments and NGOs.
• Philanthropy often serves as a bridge between markets and public institutions. It can enable blended finance models or social enterprises that merge impact and profitability, strengthening the sustainability of development partnerships. This can be seen in foundations participating in blended finance platforms like Convergence and the SDG Philanthropy Platform.
• Philanthropy has proven to be increasingly important in tackling global challenges that transcend borders, like climate change, pandemics, digital inclusion, and migration. Through global alliances (e.g., ClimateWorks Foundation, Bezos Earth Fund), philanthropy contributes flexible funding and convening power to sustain the momentum towards SDGs.

The role of philanthropy in development partnerships is therefore not to replace the state or the market, but to catalyse cooperation across them by bridging innovation, resources, and moral purpose.^[43] Its success depends on accountability, alignment with local priorities, and long-term commitment rather than episodic charity.

Philanthropy and Impact Investment for Development

Philanthropy and impact investment may appear similar but they have certain differences. In the context of the international development and cooperation sector, private philanthropy refers to the transactions initiated by the private or non-profit sectors that aim to promote research, education, and economic benefit of developing countries, with the funds dedicated to philanthropic contributions typically originating from foundations. It does not focus on returns and is linked to a deep sense of purpose and service to humanity. As per the 2024 report on private philanthropy released by the OECD, private philanthropic foundations mobilised as much as US$11.7 billion in grants by 2023^[g] (see Figure 3).^[44]

Figure 3: Private Philanthropic Flows for Development (2019-2021) 

Source: OECD, 2024 ^[45]   

Till 2020, countries in Africa and Asia received the largest volumes of funding—i.e., 61 percent and 29 percent, respectively (see Figure 4).

Figure 4: Average Regional Allocation of Private Philanthropy (2018-2020)

Source: OECD, 2023^[46]

Figure 5: Average Allocation of Private Philanthropy, by Sector (2018-2020) 

Source: OECD, 2023^[47]

According to the Global Philanthropy Tracker 2023, the 47 countries covered contributed about US$70 billion as philanthropic outflows and a combined US$841 billion across all four cross-border resource flows: philanthropic outflows, ODA, individual remittances, and private capital investment.^[48] Yet, the funding offered by the philanthropies is mostly earmarked for certain sectors or projects. For instance, if the aforementioned US$70 billion were to be examined sector-wise, it would appear that health (SDG 3) and civil society (SDG 17) received much of the funding, i.e., 56 percent and 10 percent, respectively (Figure 6). Despite health emerging as the core sector following the pandemic, providing untied, unearmarked general support towards the broader sustainability narrative can also be useful.

However, do philanthropic contributions actually represent the selfless act of doing good for the benefit of the larger society? Indeed, there is considerable uproar about the ‘no strings attached’ approach and the need for a shift to a more ‘trust-based philanthropy’. This term,  coined in 2014 by the Whitman Institute, refers to "an approach of giving that addresses the inherent power imbalances between funders, nonprofits, and the communities they serve […] On a practical level, this includes multi-year unrestricted giving, streamlined applications and reporting.”^[49] Experts have pointed out the need for ‘flexible financing’ to fund the requisite interventions. Governments and multilaterals need to include philanthropic organisations in policy discussions for optimising development results. It is in this sense that impact investments are distinct. Although these investments are performance-driven, aimed at triggering positive social and environmental impact, there are aspects of profit, accountability, and measurability of effectiveness.

Philanthropy also carries the potential of eliciting positive financing from private foundations and not-for-profit organisations to address the challenges in meeting the SDGs. Given that they are rooted in the ethics of doing overall societal good, philanthropy can explore the dynamics of grant-funding towards specific goals, targets, and projects.

In recent years, there has been a noticeable shift towards flexible financing as a means to build trust not only among the beneficiaries but also for general support within the sector. Outcome-based financing has emerged as a primary tool in the philanthropic landscape over the last decade or so. By aiming to unlock private capital, it allows the structuring of “a funding and delivery model where a major proportion of the funding is tied to a pre-agreed measurable, verifiable outcomes” to encourage incentives or returns to the investor, accompanied by accountability and a directed end impact.^[50] In this sense, it provides incentives for a return-seeking investor to step in and contribute funds for specific targets, such as climate action.

Though still infrequent, flexible financing is gathering momentum among philanthropic organisations. For example, about 16 percent of the overall donations between 2016 and 2019 were tuned flexibly to tackle the urgent needs in the sectors of education and healthcare.^[51] Further, based on historical data from 20 large international philanthropic donors, the OECD report noted, there is a detectable upward trend in the recent years towards more flexible giving, peaking at 20 percent of yearly giving in 2021 on average.^[52] Figure 6 illustrates the state of flexible financing as per an OECD study conducted in 2021.^[53] Out of 64,948 grants or projects selected, only 10,117—worth US$6.8 billion or 16 percent of the total—were earmarked for general purposes. On the other hand, US$30 billion was allocated for specific projects or programmes. While around 16 percent of the grants or projects are designated as general budget support, these flexible donations account for roughly 19 percent of the total amount.

Figure 6: State of Flexible Financing in Private Philanthropy for Development (2016-2019)

Source: OECD, 2024^[54]

Apart from providing direct financing, philanthropy automatically fosters partnerships that help leverage additional resources and expertise. Many philanthropic organisations work in tandem with governments, businesses, think-tanks, non-profits, and civil society to generate knowledge for public consumption and use the strategic insights for better mobilisation and divestment of their funds. This also impacts capacity building and advocacy. Philanthropic support for advocacy efforts also ensures that critical issues remain on the global agenda, influencing policy and encouraging further investment from both public and private sectors.

Pressure Points for Philanthropy in India

India’s private philanthropy landscape is vibrant, growing by 10 percent in 2023 and reaching US$15 billion in value, primarily driven by family philanthropy^[h] (15 percent) and retail^[i] (12 percent).^[55] There is also an increase in collaboratives, particularly new startups and younger non-profits that are keen to take up newer and as yet underfunded sectors like climate action, disaster resilience, and overall ecosystem strengthening.^[56] Further, partnerships built via philanthropy, involving both the private and public sectors, can facilitate the alignment of targets for projects and effect long-term sectoral change.

Deficits in total social sector expenditure for India continue to be a challenge. According to the India Philanthropy Report 2024, there was a 13-percent growth in social sector funding, reaching approximately INR 23 lakh crore in 2023, i.e., 8.3 percent of GDP.^[57] Yet, India’s social sector funding is considerably behind in comparison to other OECD countries, standing at 24 percent of GDP (Figure 7).^[58]

Figure 7: Social Sector Funding in India (2023-2028)

Source: India Philanthropy Report 2024^[59]

Innovative financing instruments, such as outcome-based financing (OBF), where funding is designed to deliver pre-agreed measurable and verifiable impact, are utilised by philanthropic organisations.^[60] For example, impact bonds, such as the Quality Education India Development Impact Bond (QEI DIB)^[61] and Skill Impact Bond and Development Impact Bond (DIB) introduced by the British Asian Trust (BAT) in India, have attempted to mobilise around US$55 million across multiple sectors like healthcare, education, and livelihoods, benefitting over 5 million people.^[62] Considered an effective tool in addressing urgent SDG financing needs, OBF offers flexibility in financing by linking non-profits with large philanthropic organisations for achieving targeted outcomes.

Trust-based philanthropy, meanwhile, is gradually gaining prominence in India. For the non-profit sector, chronic underfunding is a critical challenge hindering their ability to build programmes that can enhance community resilience.^[63] For example, the Bridgespan Group’s Pay-What-It-Takes (PWIT) initiative addresses the pressure points of the non-profit sector, i.e., core costs, organisational development costs, financial resilience, and programmatic costs that hamper their impact.^[64]

Coordination failures, the lack of a common system, the overemphasis on tangible impacts, and the asymmetry between ambitions and results involving the various partners are key tensions that can erupt in a partnership. Further, the social sector ecosystem is dependent on the community, including its belief systems, practices, and customs. Non-profits, philanthropies, or the public sector must negotiate these social ideas and turn them into vantage points.

In this sense, the alignment of intent, interests, and impact becomes a key ingredient for ensuring a successful partnership between the various actors in the ecosystem. Varying stakeholder motivations, with their own priorities, processes, and protocols, can affect internal effectiveness and external outcomes. In the case of impact bonds, generating return on investments (RoI) for social projects is a crucial aspect.

Policy Recommendations to Bolster Philanthropic Funding for Agenda 2030

The inclusion of philanthropy in the development sector comes with its own set of challenges and opportunities:

Leveraging private capital for funding adaptation projects. 

Financing for climate adaptation projects has been largely ignored by multilateral financing institutions, including those in the private sector.^[65] Domains of adaptation and resilience are viewed as creating ‘public goods’ without any associated or positive economic RoI. However, despite an imperceptible or low economic rate of return in the short run, such projects carry a high social rate of return in the long term. Considering the ability of philanthropy to smartly manoeuvre resources and risks, they can potentially facilitate private investments in the adaptation sector to bridge the massive gap between the escalating demand and the dwindling supply of development funds. Further, they can also connect with communities to establish climate-resilient initiatives and ensure the long-term maintenance of assets to support local livelihoods.

Supporting innovative business models.

By leveraging private capital and blending it with public funds, philanthropy can also help reduce barriers and encourage innovative investment opportunities. Local startups that address socio-economic challenges faced by communities or innovative digital technologies for clean energy may not actually attract positive investment cues from the private sector. It also involves tedious mandates for sanctioning investments, high administrative and transaction costs, and creating long-term financing pipelines for sustaining a particular project. Philanthropic organisations can facilitate these processes.

Providing technical assistance.

While attracting private investments, philanthropy can provide supporting mechanisms like technical assistance to aid development projects. This efficiently bridges knowledge gaps and facilitates the development of new projects. Technical assistance can be used to provide advisory services, incubation, operational assistance, training and other professional services to improve the business viability of projects or enterprises and boost the performance of investments.

Creating an enabling environment for philanthropy to thrive.

Governments need to create enabling conditions for the asset-rich private sector to engage in philanthropy and channel resources towards SDG funding. It is not sufficient to bring about innovations in fiscal domains only through tax exemptions. It is important to create enabling factors for philanthropies to have easier entry and exit norms into an economic system, easier norms to operate and use their finances wisely, rewards for exemplary performances in the SDG domain through acknowledgements of their efforts, and also help with product innovation in the domains of blended finance, where philanthropic money can find an easy channel for mobilisation.

Bringing HNIs and UHNIs into the development space.

Streamlined entry and operational norms, recognition for demonstrable social impact, and regulatory support for innovative blended finance instruments can strengthen the ability of philanthropy to mobilise and channel resources toward the SDGs. Within this, High-Net-Worth Individuals (HNIs) and Ultra-High-Net-Worth Individuals (UHNIs) can play a catalytic role by providing risk-tolerant, patient capital and investing in early-stage social enterprises or local development innovations that conventional finance tends to overlook. Their participation can also help create a culture of strategic, outcome-oriented giving that blends personal wealth with public purpose.

Creating a database of philanthropic funding flows. 

Although it is difficult to define and demarcate funding that originates from philanthropic sources, it is possible to devise a database of funds for ready access to development providers, like Development Finance Institutions (DFIs), Multilateral Development Banks (MDBs), Public Development Banks (PDBs), and other relevant stakeholders. This will also help set up mechanisms to measure, assess, and monitor funding flows, thereby changing the contours of global financial flows.

Aligning interests and trust between philanthropy and beneficiaries. 

The collaboration of philanthropy and government is aimed at creating common public goods. However, there are instances of failing public trust in philanthropy due to stringent government regulations, the lack of transparent mechanisms, and reported accountability issues, making the relationship more complex.^[66]  Therefore, it is imperative to clearly demarcate and align the interests and motivations of the philanthropic organisations and government authorities in consonance with the ultimate beneficiary. This will eliminate any possible overlaps in roles, enhance opportunities for innovative and flexible collaborations, and help build long-term multi-stakeholder partnerships.

Encouraging joint North-South philanthropic funding. 

The (re)emergence of development providers from the Global South, notably India, China, Brazil, South Africa, and Indonesia, has certainly shifted the ODA narrative, both in scope and scale.^[67] However, there remains a discernible gap between the Global North and the Global South in terms of financing for sustainability.

Philanthropy can bridge the gap by highlighting mutual concerns and the funding needs of the two parties. It can also facilitate dialogues, stakeholder consultations, and local requirements of the beneficiaries.  This also aims to enhance the visibility and accessibility of funding options for climate adaptation strategies, addressing the gap in financing for developing countries. Moreover, there is a lack of microdata as well as accessibility to the existing data, which hampers the continuation of projects, especially in the Global South. Philanthropic organisations can pitch in by creating investment options and data hubs, which can be sourced from the Global North.

Creating co-investment platforms. 

While collaborations between philanthropy and governments typically aim to generate public goods, they are often constrained by trust deficits, compliance burdens, and accountability concerns. The clear delineation of roles, harmonisation of objectives, and the creation of structured partnership frameworks can help overcome these bottlenecks. Encouraging co-investment platforms where philanthropic capital complements public expenditure and multilateral assistance could further institutionalise long-term partnerships.

Other interventions. 

Emerging economies such as India, China, and Brazil are increasingly shaping the new development finance architecture. However, persistent North–South funding asymmetries continue to constrain climate and social investments in the Global South. Philanthropy, especially when supported by transnational HNIs and global foundations, can bridge this divide by facilitating stakeholder dialogues, fostering South–South learning networks, and co-creating localised funding mechanisms. Establishing regional data hubs, thematic investment funds, and blended finance facilities with contributions from both Northern and Southern philanthropists can bolster adaptation financing and strengthen resilience across developing economies.

Conclusion

This paper has highlighted the pivotal role played by philanthropy in supporting developmental finance, especially in spaces where funding is limited or conspicuously absent.

First, philanthropic financing can de-risk investments in adaptation projects with high financing gaps, directly engage vulnerable communities, and establish climate-resilient livelihood systems that foster sustainable development at the local level.

Second, philanthropy can serve as an effective bridge between private and public capital, reducing entry barriers for innovative investments and demonstrating viable business cases for SDG financing. Startups and social enterprises working on climate-resilient infrastructure or nature-based solutions often face limited access to finance and high administrative hurdles. Here, philanthropic organisations can facilitate incubation, mentoring, and financing pipelines that enhance financial viability and impact delivery.

Third, philanthropy can play a critical role in knowledge intermediation, providing technical assistance, capacity-building, and advisory support to address knowledge gaps that often constrain certain developmental projects. By strengthening managerial capabilities and operational efficiency, philanthropic actors can improve the business sustainability and performance of projects, thereby enhancing investor confidence.

Fourth, philanthropic capital is uniquely positioned to support long-term, transformative solutions that transcend sectors and geographies. Such funders can afford to assume higher risks, experiment with blended financial instruments, and foster collaborative partnerships among governments, multilateral agencies, and communities.

Fifth, a defining strength of philanthropy lies in its capacity to offer unrestricted, patient funding without expectations of direct financial returns. This allows for ecosystem-wide interventions that sustain impact beyond project cycles.

Philanthropy, however, cannot perform in a vacuum. Indeed, the decline in ODA for vulnerable geographies like LDCs, LLDCs, and SIDS underscores the need to supplement and support development partnerships. Being a development actor in its own right, philanthropy can rightly offer that much-needed leverage to raise funds from the private sector for high-impact sectors, such as climate, infrastructure, and energy, which have historically been viewed as risky. It can also blur the boundaries between the Global North and the Global South by engaging in dialogues, encouraging cross-sectoral interactions, and applying a bottom-up approach to address the larger sustainable financing problem.

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Swati Prabhu is Fellow, CNED, ORF.

Nilanjan Ghosh is Vice President – Kolkata Centre & Development Studies, ORF.

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All views expressed in this publication are solely those of the authors, and do not represent the Observer Research Foundation, either in its entirety or its officials and personnel.

Endnotes

• Economics and Finance
• Sustainable Development
• India
• agenda 2030
• agenda 2030 and philanthropy
• agenda 2030 for sustainable development
• financing 2030 agenda
• global north countries
• global north countries
• global south countries
• philanthropic organisations
• sustainable development goals 2030
• un agenda 2030
• united nations agenda 2030

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