By: Connie Lewin, Founder and Principal Consultant

Building on the valuable insights from the Miller Center report “The True Cost of Impact-First Investing,” I’m sharing practical lessons for donors, advisors, and foundations who want to put impact-first investing to work with their charitable capital.

I learned directly about the benefits of impact-first investing while working with a Rwandan social enterprise that received a program-related investment with no interest to grow our manufacturing business and education program over 3 years. I then saw the value creation at scale at a national community development financial institution (CDFI) that gave grants and different types of funding—like loans, guarantees, and ownership shares—to hundreds of nonprofits and mission-focused businesses. On the deployment side, I managed an impact investing portfolio focused on ownership shares in early-stage startups that support government innovation in Miami-Dade. Across these roles, I saw how impact-first capital can unlock impact that grants or commercial loans alone could not.

Let's clarify impact-first investing by defining it as a strategy that prioritizes social and environmental results over financial returns, often using loans, equity, or guarantees, with donors accepting smaller or delayed financial gains to achieve impact.

Impact-first investing sits between market-rate impact investing and traditional grants: it focuses on social or environmental results more than financial returns, often using loans, equity, guarantees, or repayable grants where donors accept smaller, delayed, or riskier financial returns to reach impact goals.

Often called catalytic capital, this type of funding can unlock projects and partnerships that conventional investors overlook by taking disproportionate risk, offering more flexible terms, or attracting other investors who wouldn’t otherwise participate. We see it in action as low-interest loans from local foundations to build community clinics, as equity for climate social enterprises and recoverable grants for nonprofits building affordable housing. 

In my work with donors and institutions, I’ve seen catalytic capital in ways that move beyond short-term grants, such as:

• Providing low-interest loans to nonprofits building childcare centers, charter schools, or housing in high-need areas, where commercial lenders would not accept the risk or would expect lower returns.

• Offering guarantees that enable local banks or CDFIs to provide loans for minority-owned or -led developers with limited balance sheets, expanding opportunity while sharing risk.

• Making recoverable grants or patient equity investments in emerging technologies to help local governments improve their service delivery for residents, while providing startups the flexible, early-stage capital to prove and scale their models.

How Impact-First Investing Helps Donors

For donors eager to make a lasting difference, impact-first investing can empower you to use your charitable and investable funds to discover new solutions, fill funding gaps, and attract more partners for the causes you care about.

I’ve seen donors become more confident once they see how catalytic capital can recycle dollars and attract co-investors. For example, 

How Do I Know if I am Ready to Begin Impact-First Investing?

Drawing on work with social enterprises, CDFIs, and government innovation portfolios, I help donors decide when impact-first investing is the right tool, when grants or commercial capital are a better fit, and then structure deals and manage expectations.

If you’re exploring how to use donor-advised funds, foundation assets, or other capital in an impact-first way, I’d welcome a conversation about where catalytic capital might fit within your broader giving strategy. You can book a 30-minute clarity call using the link below.