For the past two years, Thrive Impact Fund has partnered with Spring and the Ontario Trillium Foundation to host the Blended and Catalytic Capital Summit, convening capital deployers from across Canada to explore innovative financing structures and processes that respond to the need for more flexible, patient capital to support social and environmental outcomes. Both events sold out, underscoring strong demand for practical, applied, and action-oriented learning on how to blend different forms of capital—from philanthropy to venture equity—to finance projects and enterprises advancing these outcomes.
The Summits were designed not as abstract conferences but as working sessions where capital deployers, fund managers, and funders came together to test ideas, share lessons, and build tools. They addressed the urgent need for financing that can reach enterprises and communities often excluded from traditional markets. By blending different forms of money, participants explored ways to achieve impact goals while reducing investor risk.
In advance of the 2025 Summit, Realize Capital Partners supported baseline research to assess the current state of blended finance and catalytic capital in Canada. This included an advance survey of all registrants, combined with in-Summit polls, activities, and post-Summit evaluations.
The resulting report, The Current State of Blended Finance and Catalytic Capital in Canada, provides valuable insights into the tools being used, the priorities shaping investments, the communities being served, and the barriers and opportunities that define this emerging field.
A field in motion
The report begins with definitions. Blended finance is described as a structuring approach that allows organizations with different objectives—financial return, social impact, or a mix of both—to invest alongside one another. Its purpose is to leverage public and philanthropic funds to attract private investors who would otherwise hesitate to get involved. Catalytic capital is defined as a subset of impact investing that is patient, flexible, and risk-tolerant. It fills capital gaps that mainstream finance leaves untouched, often absorbing potential losses or offering lower returns to enable other investors to participate.
These definitions matter because they frame the tools available. The report organizes them into five categories: philanthropic, debt, equity, leverage, and innovative finance. Grants, forgivable loans, venture philanthropy, and revenue-based financing are all in play, as are guarantees, first-loss provisions, and emerging models like community ownership or impact-linked finance. Taken together, these tools expand the possibilities for how finance can be structured to deliver both impact and financial sustainability.
Survey insights
The Blended Finance Landscape Survey 2025, which received 38 responses, reveals a sector that is beginning to gain traction but has not yet reached broad adoption. Nearly four in ten respondents said they had participated in blended finance—either allocating capital or seeking it—while six in ten had not. This split points to both real momentum and significant untapped potential.
Nearly half of respondents identified as capital allocators, with a third identifying as capital seekers. Social finance intermediaries were the most common allocators, while philanthropic endowments and asset owners were also represented. A notable portion of participants left this question blank, suggesting that shared language and clarity about roles is still developing.
Among intermediaries, emerging funds and first-time funds were most common, while established funds were least represented. This reinforces that much of the sector is still in its early stages.
The survey also explored investment priorities. Financial inclusion emerged as the most common focus, cited by over half of respondents. Quality jobs, food security, and racial equity were each priorities for more than 40 percent. Affordable housing was a focus for more than a third, and nearly a third of respondents prioritized climate change adaptation and mitigation. Other areas mentioned included healthcare, clean energy, biodiversity, education, sustainable forestry, and mental health. The diversity of focus areas demonstrates that blended and catalytic approaches are being applied to a wide range of pressing issues.
Equity-deserving communities are a strong priority. Over 84 percent of respondents said their work serves women, while more than 70 percent reported serving other racialized peoples, Indigenous peoples, and low-income communities. More than 60 percent also serve first-generation immigrants, refugees and newcomers, and Black communities. These figures highlight both the breadth of the sector’s orientation toward equity and the need to ensure that capital actually reaches and is governed by these communities.
When it comes to tools, grants remain dominant. They are used nearly three times more often than concessional loans, which were the second most common. About a quarter of respondents had used revenue-based financing. Community bonds and guarantee-backed loans appeared, but far less frequently. Investment tax credits and risk insurance were almost entirely absent. This illustrates a paradox: the sector is hungry for innovation, but practice is still concentrated around familiar tools.
What’s working
The report documents several bright spots. Catalytic capital seeding has helped some funds grow dramatically, in some cases tripling their size in short periods of time. Risk-mitigation mechanisms like first-loss capital and guarantees are making it easier for funders and investors to participate by reducing downside risk.
The flexibility of blended finance models is another strength. By allowing grants, repayable investments, and outcome-based payments to be combined, these models can be tailored to the needs of specific projects and communities. Place-based approaches stand out as especially effective, directing capital to locally identified priorities such as affordable housing, nonprofit infrastructure, and food sovereignty.
Standardized templates and pre-packaged tools are beginning to make blended finance more accessible, lowering barriers for new participants. These developments suggest that, when designed intentionally, blended and catalytic capital can unlock significant resources for social and environmental priorities.
Barriers to scale
The same research is candid about what isn’t working. Complexity remains a central challenge. Multi-party deal structures, regulatory uncertainty, and long design periods make blended finance deals slow and expensive.
Capacity gaps are another barrier. Many organizations are not sure how to enter the ecosystem, who to work with, or how to structure deals. Misalignment across governments, investors, and philanthropic actors adds to the difficulty, as each group brings different expectations, timelines, and risk appetites.
Risk aversion remains entrenched. Without more first-loss capital or guarantees, many mainstream funders are unwilling to take part. A shortage of genuinely risk-tolerant capital prevents the field from unlocking broader participation.
Finally, the ecosystem itself is still maturing. There are relatively few active investors, limited fundable models at scale, and challenges around measuring impact consistently. Transaction costs are high, and some funders worry about disproportionate concessionary risk falling on public capital. Together, these barriers explain why, despite growing interest, blended finance is not yet widespread in Canada.
Recommendations
The report concludes with clear recommendations that chart a way forward.
- Policy and system change is needed, especially around CRA guidance and the enabling of program-related and mission-related investments. Updated definitions of fiduciary duty and preferential tax treatment could unlock more capital.
- Practice and infrastructure must be strengthened. Shared templates, pooled guarantee facilities, and fund platforms would simplify deal-making and build confidence.
- Mindset and culture shifts are essential. Investors need to reframe risk and return, placing greater value on outcomes and flexibility rather than only market-rate expectations.
- Equity and access must be at the center. Reducing jargon, ensuring accessibility, and investing in communities based on lived experience are critical to ensuring blended finance delivers inclusive impact.
- More catalytic capital is needed for underrepresented groups, early-stage ventures, and place-based community infrastructure. Supporting Indigenous, Black, racialized, immigrant, women-led, and low-income initiatives is vital, as is backing affordable housing, food systems, and local businesses.
- Risk-mitigation tools like guarantees and first-loss pools must be expanded to attract more risk-averse private capital.
- Finally, scaling intermediaries is key. Emerging fund managers and community loan funds need support to grow, because they are the engines of this ecosystem.
Looking ahead
Taken together, the findings point to a field in motion. Blended finance and catalytic capital are no longer abstract concepts in Canada. They are being tested, adapted, and scaled by practitioners across the country. Yet momentum alone is not enough. Without structural support and bold policy shifts, the potential of these tools will remain under-realized.
The Summits have shown the power of convening the sector, building connections, and surfacing practical solutions. The research has established a baseline from which to measure progress. Planning is already underway for the Blended and Catalytic Capital Summit 2026. Those interested in shaping the future of this field can sign up for the Blended Finance Newsletter or follow Thrive Impact Fund and Spring on LinkedIn to be notified when registration opens.
For those who want to dive deeper, the full report—The Current State of Blended Finance and Catalytic Capital in Canada—offers detailed data, analysis, and recommendations. It is both a snapshot of where we are and a call to action: to remove friction, scale innovation, and ensure that blended finance and catalytic capital in Canada are not just possible, but powerful and inclusive.