One of the great challenges facing the impact investing world today is the mismatch between the demand for impact assets that provide market returns and the available supply. Simply put, too many impact dollars are chasing too few impact assets.

Development finance institutions (DFIs) like the U.S. International Development Finance Corporation (DFC) can help address this imbalance. DFC currently has more than $33 billion invested in the developing world, delivering tangible impact on the lives of millions of people living in poverty. One avenue through which DFC supports financing for projects is through U.S. Government-guaranteed instruments known as Certificates of Participation (COPs). On occasion, COPs are issued by DFC in the fixed income debt capital markets to fund a select portion of DFC’s loans.

Like other DFIs that have issued sustainable green bonds and blue bonds, DFC has been a leader in issuing thematic COPs in an effort to appeal to investors seeking a fixed-income asset that provides both tangible development impact and market rate returns. Over the last six years, DFC’s Green COPs, which follow the Green Bond Principles, have mobilized over $1.7 billion in private capital to fund DFC’s loans to renewable energy projects across the globe. More recently, DFC issued two gender lens 2X COPs, which follow the 2X Criteria, to fund $250 million in loans that met DFC’s 2X Women’s Initiative criteria which focuses on supporting women-owned and women-led businesses.

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DFC loan will help scale water & sanitation microloan portfolios  Photo courtesy of

Building on this effort, DFC has approved a $100 million loan commitment to the WaterEquity’s Global Access Fund, a fund with a target size of $150m that plans to provide debt capital to financial institutions in emerging markets to help scale their water and sanitation microloan portfolios.

The microloans then enable emerging consumers to install water and sanitation solutions in their homes — such as a toilet or a piped water connection — in an effort to improve health outcomes, disease prevention, educational opportunity, economic security, gender equality, and increased climate resilience for millions of low-income families.

DFC plans to support its loan commitment with back-to-back COPs financing provided by capital markets investors. These COPs would also be the first to adhere to the Social Bond Principles in addition to meeting DFC’s 2X Women’s Initiative criteria.

Innovative financing tools are critical for mobilizing as much private capital as possible to the developing world. DFC is committed to playing its part in continuing to bring private capital into impact investments and will seek to identify additional market-building opportunities in support of high impact projects.

Anthony Randazzo is the Director, Social Enterprise Finance and Ken Olsen is the Director, Capital Markets at the Development Finance Corporation (“DFC”). For more information on the DFC COPs program, please contact Ken Olsen at

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