In 2014, the Atlantic Philanthropies partnered with Arabella’s impact investing specialists to design an innovative grant to Vital Healthcare Capital (V-Cap), a community development financial institution. This high-risk, high-reward grant enabled V-Cap to move quickly through the startup phase and deploy $20 million to health care providers in underserved communities by the end of 2017.
Arabella initially conducted thorough due diligence of V-Cap to assess its capabilities and capacity. Upon concluding that a grant providing first-loss capital and operational support would be most effective, Arabella and Atlantic partnered to structure the schedule and terms of the disbursement. Atlantic monitored V-Cap’s progress against a two-year timeline.
The story of this V-Cap grant offers funders lessons on four key aspects of making innovative catalytic investments: 1) funder capacity, 2) nature of due diligence, 3) scale, and 4) flexibility and objectivity in grantee monitoring. While obtaining capital can be difficult for organizations serving vulnerable populations, V-Cap acquired $30 million in capital in just three years. We encourage philanthropists to take similarly smart risks.