The missing middle: reflections from the World Bank Annual Meetings
At this year's World Bank and IMF Annual Meetings in Bangkok, funders were more ready than ever to pool money behind shared missions. Siiri Palas, Senior Programme Fundraising Manager for British Asian Trust reflects on why that is good news, and on the gap that could slow it down: who pays to test the ideas that large pooled funds will one day invest in?
A new appetite for working together
This year's World Bank and IMF Annual Meetings in Bangkok had a different feel. With aid budgets shrinking and the development finance architecture being redrawn, I heard less about individual projects and more about doing things together.
The World Bank launched its new Philanthropy Hub to move "from pilot projects to scaled solutions and from isolated efforts to collective action". In panels, roundtables and corridor conversations, funders talked about shared missions, pooled funds and common targets. The question was not whether to collaborate, but how to build funds large enough to matter.
Why shared missions are worth celebrating
This shift deserves real credit. For years, the sector has been criticised for fragmentation. Pooling changes that in three ways.
- It matches the size of the problem.
Challenges such as foundational learning, livelihoods and climate resilience affect millions of people and will not be solved one grant at a time. Pooled vehicles reach a scale no single funder could. They replace dozens of separate projects, each with its own reporting and end date, with one coherent partner that governments can plan around. - It aligns everyone on outcomes.
Shared targets mean funders, governments and implementers work towards the same results, rather than each counting their own. In India, the Skills Impact Bond is laying the groundwork for a larger Skills Outcomes Fund, which is coming together because partners are agreeing on what success looks like and how to pay for it. - It lets each type of capital do what it does best.
Grants can take early risk and fund technical assistance. DFIs and multilaterals bring scale and long-term lending. Commercial capital brings discipline and a route to sustainability without aid. Structured together, risk sits with whoever is best placed to carry it, and each public or philanthropic dollar can mobilise several more.
The gap in the middle
But I left Bangkok with a question: where will the next generation of investable models come from?
As pooled funds get bigger, so do the cheques. Most of the development finance institutions (DFIs) we speak to are looking for tickets of US$60 million or more. That makes sense for their balance sheets, but it moves the entry point to blended finance further from where new ideas start.
At the other end, Convergence, the Outcomes Accelerator and others fund the design and structuring of new blended facilities. What sits between the two is much thinner: money to pilot a model with real borrowers or learners, and produce the evidence that a US$60 million investor needs to see.
The data tells a similar story. AVPN's new ASPIRE report, Capital, Coordination and Commitment, finds that the platforms and networks for blended finance in Asia have multiplied, but the number of deals has not: South and Southeast Asia have closed 31 to 35 a year since 2020. Fewer than one in five blended initiatives include dedicated funding for technical assistance.
So there is energy and money at both ends: to design new funds, and to invest once a model is proven. What is missing is the middle, where models are tested and build a track record. Without it, the pooled funds being set up today may struggle to find enough investment-ready models in three to five years' time.
Who funds the middle?
The good news is that this gap can be closed, and there are two natural candidates.
Philanthropy, as the catalyst. Taking early risk has always been philanthropy's comparative advantage. The Commission on Asian Philanthropy calls it "catalytic, patient risk capital for innovation", and the World Bank's Hub casts philanthropy in the same role. The ASPIRE report adds a useful discipline: catalytic money works best when it is clearly additional, tied to a route to co-investment, and not a permanent subsidy. A pilot designed from day one with its scale-up partner in mind meets that test.
DFIs, investing in their own pipeline. DFIs and multilaterals could also take some ownership of the pipeline they will later depend on. A modest innovation window, or a commitment to co-fund the early phase of models they would want to back at scale, would cost little against the deals it could generate. ASPIRE points the same way, recommending a named lead institution for each transaction and tracking how many prepared projects reach financial close.
The most promising structures combine the two: philanthropy carries the riskiest first phase, a DFI signals early that it will come in once agreed milestones are met, and both share the evidence.
From pilots to systems
I left Bangkok optimistic. The move towards shared missions, pooled capital and common targets is the right one, and it is overdue.
But scale is the end of a process, not the start of one. If the large funds being designed today are to be full of proven ideas tomorrow, someone needs to fund the stage in between. That means philanthropy keeping a share of its capital for well-designed pilots, and DFIs seeing early-stage support as an investment in their own future deal flow.
And scale is not the aim in itself. As I argued in Beyond Sandcastles, what matters is institutionalisation: models that become part of the system and outlast their first funders. That can mean governments owning and running them, or markets sustaining them because lenders, buyers and providers see the commercial case. The pilots feeding today's shared missions should be designed with that end point in mind.
At the British Asian Trust, we work in that middle space every day, designing, testing and evidencing models so they are ready for larger partners to take on. We would welcome conversations with anyone who wants to help fill the missing middle.
Scale is within reach. But the pooled funds of tomorrow will only be as strong as the pipeline we invest in today.
