The decline in public aid continues to shift attention to other forms of capital. One of those is impact investing, which is meant to have some beneficial social return in addition to financial profits. Over the last two years of declining aid and a shifting development landscape, the world of impact investing has been working behind the scenes to innovate how it finds, blends, and measures capital.

Unsurprisingly, impact investing also cannot replace aid, experts said. Instead, those leading in the space are looking at how scarce public and philanthropic money is deployed — and trying to find ways to help unlock more.

“We all know that impact investing can't replace aid,” said Elizabeth Boggs Davidsen, CEO of GSG Impact. “Declining aid does make it much more urgent that we use public and philanthropic resources that remain more strategically.”

Boggs Davidsen pointed to three priorities for impact investors: protect grant funding for needs that only grants can meet, use catalytic public and philanthropic capital to draw in private investors where sustainable markets are possible, and help countries build financial systems capable of mobilizing larger pools of their own domestic capital.

Read the full article at Devex: Impact investing can’t replace aid. Can it make scarce capital go further?