CapShift is a guest author and contributor to our Outside Perspectives Series.
We recently reached out to CapShift to share their unique insights on impact investing in a multi-part series. CapShift’s impact investing platform and suite of solutions empower financial and philanthropic institutions, and their clients, to invest in their vision for a better tomorrow.
As the year winds down, many families feel the pull to do more good. But it may seem daunting to make permanent commitments before you’re sure where your giving will have the greatest effect.
Recoverable grants can be a flexible tool to fund high-impact work now, with the potential — though never the promise — that funds might be returned. Any recovered dollars can then be recycled to support your next priority or cause of choice.
What is a recoverable grant?
A recoverable grant is a grant with clear conditions under which some or all of the funds may be recovered — for example, if a program hits revenue or outcome milestones.
Philanthropy remains the first priority; any recovery simply allows the same dollars to do more good, again.
Why consider this at year-end?
This is the season when nonprofits are sharing their needs and philanthropists are thinking about how much they are going to give. Recoverable grants add a helpful tool to your toolbox as you evaluate these year-end priorities — a way to test, learn, and potentially amplify your impact while refining your long-term philanthropic goals.
- Flexibility without lock-in. Recoverable grants give philanthropists room to explore new causes or innovative models as they refine long-term priorities. This test-and-learn approach mirrors practical allocation playbooks: clarify purpose, define what “good” looks like, then act, and refine over time.
- One gift, many impacts. If funds from a recoverable grant are repaid, philanthropists can redeploy them to the next initiative, compounding impact over several years. Setting clear objectives and triggers up front helps align expectations and reduce friction.
- Confidence for cautious givers. For philanthropists still shaping their legacy plans, recoverable grants enable immediate support for urgent work, while gathering evidence and conviction to make decisions about permanent gifts or repeating the approach.
A comfortable on-ramp from a donor-advised fund or private foundation
For philanthropists already using a donor-advised fund (DAF) or private foundation, recoverable grants can be recommended after they’ve received the tax deduction for their gift. Many DAF providers curate mission-aligned opportunities, making it easier to start values-based conversations and focus on causes that fit their interest areas.
Where recoverable grants tend to shine
Recoverable grants are particularly useful in areas where impact is strong but revenue is emerging or uncertain — think community development, small business support, health access, or climate-related solutions. These are the kinds of places where clear milestones and aligned expectations can unlock action now and bring cautious donors off the sidelines.
Examples include:
1. Pilot to revenue. A nonprofit clinic wants to launch a fee-for-service model, or a workforce program starts selling training. Potential recovery could be tied to actual earned income as the model takes off. This mirrors how catalytic tools help bridge unfamiliar risk until a model proves itself.
2. Bridge timing gaps. Impact programs often face timing mismatches — for instance, pledged funding or contracts that arrive after costs have already started accruing. A recoverable grant can cover setup costs, with recovery linked to later reimbursements or revenues.
3. Support innovative experiments. New programs often need a push before they scale. A recoverable grant can underwrite outreach or initial inventory, with recovery tied to subscription uptake or cost-recovery thresholds.
The gift that can give again
Recoverable grants invite philanthropists to fund meaningful work now with the hope that those same funds may be available to regrant in the future. This added flexibility creates a test-and-learn pathway for donors who want to learn, adapt, and grow their impact over time.
About This Series
This article is the second in a new guest series from CapShift, designed to help philanthropists explore the full potential of impact investing — from foundational concepts to practical steps and real-world examples.
If you’re curious to learn more, follow along with our multi-part impact investing series and discover how to put more of your capital to work for good.
You can find additional resources at capshift.com.
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