The World Resources Institute (WRI) released its second report on partnership financing on September 9 and presented it during a webinar. In this context, the “missing middle” poses a particular challenge.

The background to the report is that approximately 4.2 trillion US dollars are needed to achieve the SDGs. Multi-stakeholder partnerships (MSPs) are critical to the success of these investments and outcomes, but they face challenges in mobilizing capital. This was confirmed by the 66 partnerships and six case studies investigated in the report.

An analysis of the partnerships’ funding structure divided into four phases shows that in the first phase – the innovation phase – there is often sufficient capital available because there are grants and subsidies for innovations. As soon as these innovations are to be scaled up and expanded – in phase two – many funders are hesitant due to increased risk. This contrasts with phases three and four, in which there is more capital available because partnerships appear more stable, so that funders are less hesitant to invest. The authors call the lack of capital in phase two the “missing middle“. It is the biggest challenge for partnerships working to achieve the SDGs, according to the report.

To address this challenge, the report explores, among other things, innovative financing approaches. It provides both funders and partnerships with concrete recommendations on how to secure funding, especially during the “missing middle.” As part of the report launch, there was also room for a more fundamental discussion, for example about mutual expectations around scaling innovation (phase two) and policy processes. In the panel discussion, Carlos Manuel Rodríguez, CEO of the Global Environmental Facility, clarified that currently 124 times more money is allocated to activities that are bad for our forests than to their conservation. As a result, the discussion highlighted the importance of the partnership approach in changing awareness and expectations across all sectors of society. In this way, on the one hand, the “missing middle” can be overcome, and, on the other hand, system change can be initiated.

The executive summary as well as the full report can be found here.