New OECD Analysis: Why Fund Structure Matters in Blended Finance

The key takeaway: It’s not just the volume of concessional funding that matters, it’s how funds are structured.

The OECD highlights that fund design is a critical factor influencing mobilisation outcomes. Elements such as risk allocation, governance arrangements and tranche design can affect whether private investors participate. In particular, junior or first-loss tranches - where development actors absorb higher risk - can play an important role in unlocking investment, especially in higher-risk markets.

For actors working in economic development and education, this analysis reinforces an important point: effective design of structured funds is essential to mobilise private capital at scale. As financing gaps grow, smarter fund structures can help ensure concessional resources catalyse sustainable, long-term investment.

The full OECD blog is available on their website as is the report.