The Bill & Melinda Gates, Open Society, and Rockefeller foundations have announced that they are collaborating on a new fund aimed at unlocking more financing by multilateral development banks (MDBs) to low- and middle-income countries, with an initial commitment of $5.25 million.

By aligning its assistance around the recommendations made by the G20 Independent Review of MDBs’ Capital Adequacy Frameworks report released in July, the MDB Challenge Fund aims to accelerate financing for the United Nations’ Sustainable Development Goals and the Paris Climate Agreement. When the fund releases its first request for proposals later this year, it will solicit proposals in support of a range of activities, including technical assistance, operational funding, and policy analysis.

In addition, the G20 Capital Adequacy Frameworks report reinforced findings by organizations like the Center for Global Development, which released an analysis showing that MDB capital adequacy policies are significantly more conservative than their charters permit, with statutory headroom on average four times more than prudential limits indicate. Its calculations, which were based largely on equity-to-loan ratios, suggest that just the World Bank, Asian Development Bank, and African Development Bank together could potentially support over $280 billion in additional lending annually.

“The time is now for much more ambitious and creative financing from the World Bank and the entire MDB system to support global economic resilience in the face of compounding health, food, fuel, and climate crises,” said Mike Muldoon, Rockefeller Foundation chief of staff and former member of the independent panel commission by the G20 to conduct the Review of MDBs’ Capital Adequacy Frameworks. “The MDB Challenge Fund is a much-needed solution to helping these institutions take concrete steps to dramatically increase their funding and impact.”

(Photo credit: Flickr/Marc Smith)