Executive summary

Contemporary social, environmental, and economic challenges necessitate new capital mobilisation methods, as traditional, short-term funding models are insufficient. This research explores how actors along the continuum of capital can collaborate to achieve systems change. Investing for impact requires a shift from isolated solutions to influencing deeper structural conditions. Catalytic capital is central to this transition, as it absorbs risk, enables experimentation, and mobilises private investment. However, its deployment is often limited by regulatory constraints and risk perceptions. Success in systems change depends on trust, early alignment on risk, patient capital, and the use of strong intermediaries.

Methodology and contributors

The research is based on 28 in-depth practitioner interviews and insights from three webinars held between September and October 2025, alongside three sessions during Impact Week in Malmö in November 2025. Contributors represent a diverse group from across the Impact Europe network, including foundations, corporations, banks, NGOs, and government bodies. Notable organisations involved include Acumen, Bayer Foundation, BNP Paribas, Danone, the Dutch Ministry of Foreign Affairs, and the Rockefeller Philanthropy Advisors. The study also incorporated an extensive literature review to map existing frameworks and definitions of systems change.

Systems change: can it be the way to tackle the challenges we face nowadays?

The growing complexity of interconnected global issues, such as climate change and inequality, demands a fundamental rethinking of capital mobilisation. Data indicates a significant SDG financing gap for developing countries of $4 trillion per year. Global progress assessments from 2025 show only 18 percent of SDG targets are on track, with 35 percent in stagnation or regression. Meanwhile, Official Development Assistance is declining, with an expected reduction of 9 to 17 percent in 2025, bringing net ODA to between $170 billion and $186 billion. Furthermore, more than 80 percent of USAID funding is expected to be cancelled. Traditional project-based models cannot address these gaps; instead, multi-sector partnerships are required to activate policy influence, innovation, and financing.

From silos to synergies: the role of collaboration in achieving systems change

Collaboration is recognized as a fundamental precondition for systems change, yet it is difficult to fulfill in practice. Survey data shows that 88% of practitioners believe systems change cannot occur without collaboration, and 80% agree that current levels of collaboration are insufficient. Despite this, respondents rated their own organisations’ collaborative efforts at an average of 7.7 out of 10. Barriers to effective partnership include misaligned agendas, differing risk appetites, and cultural frictions. Practitioners suggest that collaboration works best when actors do not try to do the same thing, but instead perform complementary roles that unlock scale.

The role of catalytic capital in achieving systems change and collaboration

Catalytic capital is defined as patient, risk-tolerant, and flexible capital that addresses gaps left by mainstream finance. It is pivotal for de-risking investments and ensuring long-term sustainability. Blended finance mechanisms are expanding, with $15 billion committed in 2024. Research shows that every concessional dollar attracts an average of $3.76 in commercial capital, rising to USD 5.46 for transactions exceeding $100 million. Targeted sectors include energy (40%) and infrastructure (25%). Despite its potential, concessional volumes remain modest at $5.1 billion from development agencies and $100 million from philanthropy. Practitioners emphasise that catalytic capital is most powerful when used to correct market failures rather than just plugging financing gaps.

How to ensure impact drives systems change: the role of outcomes and theory of change and collaboration

Achieving long-term impact requires deal structuring that includes explicit systems change objectives, clear roles, and governance mechanisms. Monitoring should move beyond firm-level activities to capture shifts in service delivery, market dynamics, and behaviour change. Practitioners advocate for inquiry-based learning rather than strict compliance and the use of systems-aware theories of change to clarify leverage points and causal pathways. Flexible and unrestricted funding is highly recommended to reduce the reporting burden, which is currently described as too heavy for many investees.

Main learnings and key takeaways from practitioners

When asked what they would do differently in a new collaboration, practitioners highlighted several key areas. Regarding ‘Who’, they suggested being more deliberate in partner selection and involving public actors from the beginning. For ‘How’, they recommended investing more time in understanding root causes and ensuring clearer project ownership. For ‘Why’, they stressed the importance of interrogating the collective purpose early on and learning systematically from past failures. Key takeaways include the need for shared problem understanding, simplified designs to avoid political delays, and the mobilisation of more junior capital from foundations and development finance institutions.

Conclusion and next steps

Systems change and collaboration are inseparable, requiring aligned, cross-sectoral partnerships. To move forward, the report recommends strengthening cross-sector education, fostering long-term co-design, and advocating for enabling regulations. Investing in data infrastructure is essential to map key actors and document track records of success and failure. Ultimately, when actors connect through trust and shared purpose, systems change becomes replicable and scalable across the continuum of capital.