Giving Compass' Take:

• The Atlantic Philanthropies and Arabella Advisors innovated a grantmaking strategy to catalyze investment capital in order to increase access to affordable, quality health care.

• How can other funders successfully use this model to increase their impact? What issue areas does this approach make sense for? 

• Learn about the power of seed grants.

Over 35 years, the Atlantic Philanthropies invested more than $8 billion to advance opportunity and promote equity and dignity. In its final years, Atlantic concentrated on making grants that would have impact well beyond the foundation’s life. This culminating work included a focus on health equity, with the goal of helping all people, no matter where they live or their socioeconomic status, access affordable, quality health care.

Atlantic partnered with impact investing specialists at Arabella Advisors. In 2014, the foundation made an innovative grant to Vital Healthcare Capital (V-Cap), a community development financial institution (CDFI).

Atlantic’s grant was designed to help V-Cap sustainably finance community-based health care providers who could fill the market gap and help solve the growing health care dilemma plaguing many US communities. The story of Atlantic’s high-risk, high-reward grant to V-Cap offers useful lessons to funders seeking ways to deploy catalytic capital and to use innovative financing mechanisms.

Atlantic’s grant provided “first-loss” capital—funding that acts as credit from a grant maker who can take the first losses on an investment. By being able to absorb the first loss, Atlantic enabled V-Cap to move quickly through the often-difficult startup phase and attract over $11.5 million in additional investment, leaving it well positioned to deploy $20 million to health care providers in underserved communities by the end of 2017.