Ilifa Labantwana and Harambee Youth Employment Accelerator collaborated on a project to explore the feasibility of catalytic funds to spur sustainable public and private investment and collaboration in early childhood development services in South Africa. The outcome is a comprehensive resource that provides valuable insights through case studies of nine local and international catalytic funds. This resource is now publicly available on our website, offering a guide for anyone interested in how public-private collaboration can raise investment towards shared goals in ECD and beyond.

Catalytic funds have been found to be a useful funding mechanism within the social development sector designed to act as catalysts for positive change. By attracting additional investment and pooling resources or expertise towards a common cause, these funds enhance the impact of allocated resources. They play a critical role in addressing market failures and de-risking investments, forming partnerships, and improving coordination to scale the impact of social development efforts.

We undertook an extensive research project to understand the principles and practices that underpin successful catalytic funds. This involved a detailed examination of nine local and international catalytic funds, focusing on their governance structures, funding instruments, successes, and challenges.

The research, conducted by Nova Economics on behalf of Ilifa Labantwana, highlights several key areas: 

• Guiding principles: Establishing a set of sound principles to guide governance, institutional arrangements, procurement, and disbursement policies is crucial. Independence and transparency are particularly valuable in contexts with low public-private trust.
• Leadership and champions: Successful catalytic funds often have a single champion or a small group of champions driving their formation. Support from political champions or credible ministries can be crucial for mobilising stakeholders.
• Alignment with broader plans: Catalytic funds typically derive their goals from a common plan, usually a national government plan. Aligning efforts with an existing governmental strategy or participating in the co-development of a new shared plan enhances the fund’s impact.
• Focused mandate: A clear and focused mandate helps in raising funds with a specific ask, achieving early successes, and clearly measuring and communicating achievements.

Case Studies and Key Lessons

 The resource includes detailed case studies of various funds, such as: 

• The Solidarity Fund: Launched in response to the COVID-19 pandemic, it successfully mobilised over R4 billion and demonstrated the importance of guiding principles, transparent governance, and rapid decision-making.
• The Resource Mobilisation Fund (RMF): Focused on South Africa’s energy crisis, the RMF showcases the importance of political will, positioning within the Presidency, and independence in procurement and operations.

 Global Examples: International case studies such as Gavi, The Vaccine Alliance, and The Global Partnership for Education (GPE) illustrate successful strategies for leveraging catalytic financing mechanisms and forming effective public-private partnerships.

 Establishing Your Catalytic Fund

 Based on our research, here are some practical steps and considerations for establishing a catalytic fund:

 Conceptualisation and Design:

• Identify the core challenge or motivation for the fund.
• Develop a shared vision, goals, and strategy with stakeholders.
• Ensure a clear and focused mandate.

 Establishment:

• Secure buy-in from key stakeholders.
• Establish the fund’s legal and governance structure.
• Formulate guiding principles to ensure transparency and independence.

Fundraising and Disbursement:

• Develop a robust fundraising strategy.
• Use catalytic financing mechanisms like fund matching or blending to attract additional investment.
• Establish clear disbursement criteria and decision-making frameworks.

Monitoring and Reporting:

• Implement rigorous monitoring and evaluation processes.
• Ensure transparent and regular reporting to maintain trust among stakeholders.

Partnerships and Capacity Building:

• Facilitate collaboration between public and private sector entities.
• Provide technical assistance and capacity building to funding recipients.

 This comprehensive guide, born from our collaborative research, serves as a valuable resource for anyone looking to establish a catalytic fund. By learning from the successes and challenges of existing funds, new initiatives can be better positioned to achieve their development goals. We invite you to explore the full resource, now available on our website, and leverage these insights to drive impactful change in your sector.

 For more detailed information access the full report.