This Arabella case study explores work the Atlantic Philanthropies has done to build up health care providers in underserved communities, by using an innovative grant process designed to catalyze subsequent financial investments.
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.