International Non-Governmental Organizations (INGOs) have traditionally played a crucial role in addressing global challenges, providing humanitarian aid and fostering sustainable development. By leveraging their extensive networks, local knowledge and deep-rooted trust within communities, they have delivered critical services and implemented development projects in the world’s most underserved areas. Some of the largest INGOs exemplify this reach: in 2022 alone, Oxfam impacted 15.6 million people, the Red Cross and Red Crescent Movement supported 160.7 million globally and CARE International reached 170 million, illustrating the scale at which they mobilize resources and deliver transformative outcomes. Their mandates and effective use of resources have allowed them to achieve investor additionality — generating outcomes that would not have occurred without their intervention. They have pursued this additional impact through both financial additionality, such as providing grants or running programs with a catalytic mindset, and non-financial additionality, including offering technical assistance.

We seek to explore the motivations behind INGOs' interest in impact investing, showcasing different pathways available to do so, and shedding light on key challenges they might encounter, as well as opportunities to amplify their impact. The insights presented in this report are primarily based on in-depth interviews, conducted by Impact Europe, with ten INGOs, nine of which have their headquarters in Europe; additional desk research complemented these interviews.

As readers engage with this report, it is important to consider three contextual factors: 1) The sample size may not adequately capture the wide range of viewpoints of all INGOs involved in impact investing, even though it serves as a representative sample of those operating in Europe; 2) The available literature on INGOs engaging in impact investing is currently limited, which may restrict the depth of our analysis; 3) The core constituency of INGOs we consulted understands additionality in a way that aligns closely with our definition11 and considers themselves as pursuers of additionality through their activities, both in financial and non-financial ways. While we acknowledge that this concept may be relatively unfamiliar to some INGOs that are newly exploring the impact investing space, we will consistently employ this definition throughout the paper to maintain clarity and coherence in our analysis.

The key role of guarantees is to crowd in investors and open new markets. This is achieved by:

solving collateral deficiency challenges;
closing the gap between perceived and actual risk; and
absorbing portions of risk so that lenders can enter new markets with lower risk

However, guarantees are not a silver bullet to bypass credit processes e.g., business documentation (registration, business plans, financials, etc), nor do they serve as an exemption to finance unbankable deals. Measuring the effectiveness of guarantees is not standardized and the context of the guarantee (e.g., sector, region, lender) must be considered when comparing metrics such as utilization, catalyzed capital, or additionality. While the ultimate aim of guarantees is to be made redundant, this goal is unlikely to be met in the short term for agriculture as a sector and in SSA given the sector’s profile i.e., mainly fueled by smallholder farmers who are deemed risky because of informality, largely non-commercial farm models and the sector’s vulnerabilities resulting from climate risk. There are several opportunities for donors to support lending to agriculture across the value chain to build the market using an ecosystem approach to increase agri-lending.