This is Part One of a three-part blog series by AVPN and the Catalytic Capital Consortium (C3), exploring how strategic capital can bridge the gap between intent and impact in a changing financing landscape. By examining the evolving role of catalytic capital, this series unpacks how investors can move beyond traditional funding models to build lasting resilience across Asian markets.
Resilience has become one of the most frequently used terms in global development and impact conversations. Derived from the Latin resilire, the word originally referred to the act of springing back or recoiling, a quality first understood at the level of the individual. Yet much of the discourse still treats resilience as an outcome to be achieved rather than a capability that must be deliberately financed and built into systems. Resilience is increasingly less about the capacity to endure alone and more about the ability of communities, institutions, and markets to adapt together.
This move toward collective resilience is unfolding against a changing financing landscape. According to the OECD, official development assistance (ODA) fell by 9% in 2024 and is projected to decline by a further 9-17% in 2025. Longer-term analyses, including from Dalberg, warn of a potential contraction of 40-60% in global aid over the next five years. Resilience can no longer be underwritten primarily by public funding alone.
In Asia, meeting development and climate goals requires an estimated USD 1.5 trillion annually. Despite growing domestic capital, misaligned risk appetites, return expectations, ticket sizes, and time horizons continue to constrain investment in areas such as climate adaptation, micro, small, and medium enterprises (MSME) finance, and inclusive infrastructure.
These constraints point to a critical and often under-articulated role for philanthropy. Beyond grantmaking or pilot funding, philanthropy in Asia must increasingly act as a system builder, alongside governments, with a focus on constructing scalable development solutions that deliberately create a bankable pipeline; especially for enterprises and intermediaries operating at the frontier of impact that often require timelines of seven to ten years, flexible instruments, and early risk absorption to reach sustainability, conditions that conventional finance can’t provide.
Catalytic capital is designed for these conditions. By absorbing risk, extending time horizons, or accepting flexible returns, it unlocks impact that would not otherwise occur and helps bridge critical gaps in the financial system. When deployed strategically, catalytic capital does not substitute private investment; it prepares markets for it.
Its potential, however, depends on how effectively it is deployed, a challenge that AVPN and the Catalytic Capital Consortium (C3) are addressing through a structured and engaged Community of Practice (CoP). Launched at the AVPN Global Conference 2025 in Hong Kong, the CoP equips investors with case-based learning, convenings, and impact tracking, ensuring catalytic capital is deployed strategically to strengthen the markets, enterprises, and ecosystems that communities across Asia rely on.
As Asia confronts widening development and climate challenges amid tightening public finance, reimagining the role of philanthropy and deploying catalytic capital with intention may prove to be one of the most consequential steps in making the transition from fragile pilots to investable systems possible.
Ready to see these principles in action? Read Part Two: What does effective capital look like in practice? or skip ahead to Part Three: The way forward – organising for ecosystem resilience.
This series is produced in partnership with the Catalytic Capital Consortium (C3), an investment, learning, and market development initiative created and led by the John D. and Catherine T. MacArthur Foundation, The Rockefeller Foundation, and the Omidyar Network. Together with AVPN, C3 is building a Community of Practice to equip investors with the knowledge, networks, and tools needed to deploy capital that is patient, flexible, and risk-tolerant.
To effectively diagnose and address specific market failures, investors need a robust methodology. Download Addressing Capital Gaps: A Guide to Strategic Deployment of Catalytic Capital. This guide draws on real-world cases to provide the rigorous framework practitioners need to move from intuition to high-impact, evidence-based deal structuring.
