Signals of Emerging Futures

Philanthropy as a Risk-taker

Philanthropy is playing an increasingly important role in the development financing landscape. In 2022, the top 20 US foundations poured nearly US$8.3 billion into global development, with the top five foundations alone contributing approximately US$6.6 billion – more than 60 percent of the total private development funding flow tracked by the Organisation for Economic Co-operation and Development. Now, there is widespread agreement within and beyond the philanthropic community that foundations must step-up to support the development sector. In the context of declining foreign aid, some foundations are also seeing this an opportunity for risk-taking. 

In May 2025, the Gates Foundation announced it will double its philanthropy over the next 20 years, spending 99 percent (US$200 billion) of its endowment by the time it permanently closes its doors in 2045 – making it the largest philanthropic contribution in modern history. The MacArthur Foundation has said it would increase giving from five percent of its endowment to at least six percent — likely around US$75 million a year of additional spending — and the Skoll Foundation is set for an additional US$25 million in giving. Meanwhile, ‘Asian philanthropy’ is burgeoning as a philanthropic market catalysed by economic boom in the region. Billionaires in Asia are expected to collectively hold around US$4.7 trillion by 2026, and as younger generations start to play more active roles in philanthropic giving in the region, challenges such as climate change are becoming increasingly important. While many philanthropists may have previously been risk-adverse when it comes to grantmaking, this is starting to shift – particularly in Asia, whereby new wealth creation and generational transfers are making space for fresh approaches in impact investing. Many wealthy philanthropists across the globe are also signing the ‘Giving Pledge’ whereby the majority of their wealth is given to charity.

The philanthropic sector, despite its increasingly vital contributions, cannot make up for the shortfall in declining ODA. There are also uncertainties around the future of tax status for US foundations with a current US bill proposing that taxes on foundations with assets above US$5 billion increase from 1.39 percent to 10 percent, with new tiers for those with assets between US$50 million and US$5 billion.  

The Expansion of Blended Finance

Meanwhile, development actors are joining forces to multiply grant impact through blended finance. Gavi, the vaccine alliance, is blending grant resourcing of up to US$1 billion in Asian Infrastructure Investment Bank loans, expanding country access to health financing including in the area of vaccine introduction and procurement. In the Pacific, the United Kingdom is supporting a US$100 million blended finance climate fund to catalyse private sector investment in renewable energy, and Japan has increased its direct financing of blended deals, from US$400 million to US$700 million in 2025. In 2024, blended finance deals in East Asia and the Pacific hit US$4 billion, with financial institutions, including multilateral development banks, accounting for a third of all deals. The model of using traditional development actors to encourage private finance was strongly promoted by leaders in the lead up to the Fourth International Conference on Development Financing taking place in July 2025. 

The Power of Remittances for the Pacific

Remittances are also becoming an increasingly large portion of foreign funds flows. In 2023, remittances to the Pacific amounted to US$1.3 billion, and the Asia-Pacific region accounted for 38 percent of the global remittance inflows, remaining the largest recipient of international remittances. In terms of remittances as a share of gross domestic product (GDP), two of the top five countries worldwide in 2023 were in the South Pacific. Remittances are also a key source of GDP in the North Pacific, with two in five Marshall Islanders living in the United States and about one in every three people born in the Federated States of Micronesia (and first generation descendants) living aboard. A 3.5 percent remittance tax recently proposed by the US for all non-US citizens sending money outside of the US would have significant implications for the Republic of the Marshal Islands and the Federated States of Micronesia as well as Palau, with the Compact of Free Association allowing these three Pacific Islands Countries visa-free travel to live, work or study in the US. 

Domestic Revenue: a sovereignty lever?

Countries are also turning towards domestic revenue to stimulate economic and sustainable development. Of course, this strategy is not new. The Parties to the Nauru Agreement fishing day scheme is a significant example of how the Pacific is achieving financial independence and sustainability through return on foreign assets. In 2024, PNA’s total assets amounted to US$83 million, with US$78 million in cash revenues, US$64 million of which belongs directly to member countries. Some Pacific Island Countries are exploring deep sea mining for rare minerals, which could have major economic returns but would need to be managed carefully to ensure environmental safeguarding. Other countries are nurturing tax systems so that tax revenue is collected efficiently and transparently. 

Domestic revenue has been raised by development leaders ahead of the upcoming International Conference on Development Financing, and a draft resolution on strengthening health financing at the World Health Assembly urged countries to raise their domestic spending on health – such as through taxing sugar and tobacco, which are major risk factors for non-communicable diseases.

Regional Financing Innovations

The Pacific is also tapping into regionalism and localism through owned initiatives where countries or communities retain sovereign control and decision-making. These initiatives mainly reflect the Pacific’s values and solutions in areas that are important to them. For example, the Pacific Resilience Facility, which is a regional owned and led solution for building resilience against climate change. 

All these are clear signs that Pacific Island Countries are asserting sovereignty over their development paths and want to reflect their lived realities, cultures, and priorities.