Earlier this spring, Liz Sessler, Vice President of Products and Partnerships at CapShift, was happy to join Cyrus Kharas, Co-Head of Arabella Advisors Impact Investing Team, and Loren Blackford, Chair of the Sierra Club Foundation’s Investment Committee, for a webinar Confluence hosted to discuss how recoverable grants are an innovative tool for donors with donor-advised funds (DAFs).m Through CapShift’s work with DAF providers and nonprofits such as Partners In Health, we’ve seen firsthand how recoverable grants can expand donors’ philanthropic impact.
In 2019, Partners In Health (PIH), a pioneering global health care organization, sought to build a tuberculosis-focused center in Peru. While tuberculosis (TB) is curable and preventable, Peru struggles with rising cases and inadequate treatment facilities. With the highest number of cases of multi-drug-resistant TB, the deadliest strain of the disease, in South America, Peru was the right place for PIH to build The Center for Global Health.
Once built, the Center will offer a state-of-the-art facility for patients and healthcare professionals in Peru. Long-term, the Center is projected to be self-sustaining through contracts with the Peruvian government. PIH’s world-renowned, community-focused healthcare model, coupled with the treatment and technology at the Center, would likely have a sizeable impact on the treatment and cure of the toughest forms of TB.
Time was of the essence for funding – the faster PIH could raise the capital, the sooner the Center would be able to treat patients. PIH needed a way to quickly raise several million dollars of funding that, since the Center aims to generate its own income, could potentially be repaid over time.
Enter recoverable grants. This unique funding tool offered PIH a way to raise philanthropic capital that, due to the potential for donors to recover the granted capital over time, could move faster and in larger check sizes than traditional grants. Through recoverable grants, PIH was able to reach its full fundraising goal in a matter of months, which was a significantly shorter timeline than expected, and begin the development process for the Center by the end of 2019.
PIH’s Center for Global Health is just one example of the catalytic power of recoverable grants. As indicated by its name, a recoverable grant is a philanthropic donation that has the potential to recover the granted capital and, potentially, offers a small return if the recipient nonprofit meets a predetermined success scenario. In the case of the Center, donors may receive a return of their granted capital if the Center successfully generates revenue for the treatments of patients that exceed expenses.
Recoverable grants enable donors to broaden the ways they use philanthropic dollars to support nonprofits whose activities seek to meaningfully transform societies and environments. For example, a recoverable grant to Prime Coalition can help fund potentially breakthrough climate technologies that are not a fit for traditional grants and too early-stage for venture capital. The UNICEF USA Bridge Fund, as another example, uses recoverable grants to finance UNICEF’s up-front costs for immediate response as crises and health needs arise, and then repays the grant commitments once UNICEF receives the funding that government and philanthropic institutions had pledged months prior.
For many individuals with DAFs or private foundations, the opportunity to deploy recoverable grants in tandem with their traditional grantmaking may help them effectively and sustainably support the issues they care about. Through recoverable grants, donors can make big bets, support game-changing nonprofits, and advance innovation with philanthropic capital – all with the potential to recycle funds back into their philanthropic corpus for even more grantmaking.
- Liz Sessler, Vice President of Products and Partnerships at CapShift