Five Impact Investing Tools Foundations Can Use in Times of Crisis
Community Impact Fellow
Mission Investors Exchange
By Elizabeth Avila, Impact Fellow, Mission Investors Exchange
When disaster strikes, foundations often face the dilemma of moving beyond current grantmaking to be responsive to community needs and address the crisis at hand. In doing so, foundation impact investors need to ask themselves: How can we move additional forms of capital quickly, responsibly, and in a way that builds long-term resilience?
Whether facing natural disasters, pandemics, or political disruptions, foundations are empowered with a range of financial tools and approaches that can be well-suited to emergency response and recovery. These strategies may help foundations deploy capital faster directly or through intermediary partners, unlock additional funding, and support communities when they’re most vulnerable.
Below, we explore five key tools that can be used during crisis, and how each plays a role in disaster response, from emergency relief to long-term rebuilding, and the unique role of Mission Investors Exchange (MIE) members in this work.
When disaster strikes, foundations often face the dilemma of moving beyond current grantmaking to be responsive to community needs and address the crisis at hand. In doing so, foundation impact investors need to ask themselves: How can we move additional forms of capital quickly, responsibly, and in a way that builds long-term resilience?
Whether facing natural disasters, pandemics, or political disruptions, foundations are empowered with a range of financial tools and approaches that can be well-suited to emergency response and recovery. These strategies may help foundations deploy capital faster directly or through intermediary partners, unlock additional funding, and support communities when they’re most vulnerable.
Below, we explore five key tools that can be used during crisis, and how each plays a role in disaster response, from emergency relief to long-term rebuilding, and the unique role of Mission Investors Exchange (MIE) members in this work.
1. Rapid Response Funds - Mobilizing Capital in Days, Not Months
In the immediate aftermath of a crisis, speed is everything. Rapid response grant and loan funds are pooled vehicles designed to move capital quickly to frontline nonprofits, community organizations, or small businesses facing urgent needs.
These funds often blend philanthropic, government, and private dollars, offering low-barrier access to grants or low-interest loans that stabilize operations, cover lost income, or finance critical services like housing, food, and healthcare.
Examples:
These funds often blend philanthropic, government, and private dollars, offering low-barrier access to grants or low-interest loans that stabilize operations, cover lost income, or finance critical services like housing, food, and healthcare.
Examples:
- The Maui Strong Fund (MSF) which was launched by the Hawai‘i Community Foundation*, deployed grants after the 2023 Lahaina fires and continues to deploy grants today focused on long-term recovery and stabilization efforts. Anyone can contribute to the fund, and any interest earned on capital in the fund is recycled back into the MSF to further its impact.
- During the COVID-19 pandemic, the California Immigrant Resilience Fund was launched by Grantmakers Concerned with Immigrants and Refugees (GCIR) and backed by the Blue Shield of California Foundation, Chan Zuckerberg Initiative*, and other California foundations. This fund provided direct cash support to undocumented immigrants excluded from federal COVID relief efforts.
- The NYC COVID-19 Response & Impact Fund (hosted by The New York Community Trust and supported by Ford Foundation*, Doris Duke Charitable Foundation*, and others) delivered $95 million in emergency support in the form of zero-interest loans and grants. These loans went to nonprofits working in healthcare, food delivery, homelessness, workforce development, and education. This enabled loan recipients to continue their operations while revenue was delayed due to the pandemic.
- The Rural Community Assistance Corporation, with support from foundations such as The California Wellness Foundation*, processed Payment Protection Program loans that saved more than 2,000 jobs during the COVID-19 pandemic.
2. Recoverable Grants and Zero-Percent Loans - Bridging Gaps by Recycling Capital
Once the initial crisis subsides, many organizations still find themselves facing cash flow challenges because of delayed reimbursements or postponed fundraising events. Recoverable grants and zero-percent loans offer flexible solutions to address these challenges.
Recoverable grants are grants that include impact and financial milestones that trigger repayment under agreed upon conditions. Zero percent loans are loans that charge no interest to borrowers and typically include more flexible terms than traditional loans including loan forgiveness. These grants and loans can provide immediate working capital and support bridge financing.
Examples:
Recoverable grants are grants that include impact and financial milestones that trigger repayment under agreed upon conditions. Zero percent loans are loans that charge no interest to borrowers and typically include more flexible terms than traditional loans including loan forgiveness. These grants and loans can provide immediate working capital and support bridge financing.
Examples:
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Through its Maui Strong Fund, the Hawaiʻi Community Foundation* has awarded $7.5 million to the Partnership to Rebuild Lahaina to aid local families rebuilding their homes that were lost in the August 2023 wildfires. The County of Maui is matching $7.5 million in recoverable grants toward the initiative, bringing the combined total to $15 million.
3. Loan Guarantees - Unlocking Additional Capital for Borrowers
Borrowers (especially small businesses, health clinics, and nonprofits) can have trouble accessing traditional loans during or after a crisis. That’s where loan guarantees and/or other forms of credit enhancement can be useful.
Whether it’s a funded or unfunded guarantee, a foundation can reduce the risk for the lender by promising to cover a portion of a loan or equity investment if it defaults. This opens the door for commercial banks or Community Development Financial Institutions (CDFIs) to lend into high-need, high-risk environments and can unlock additional private capital that would be otherwise unavailable without a guarantee.
Examples:
Whether it’s a funded or unfunded guarantee, a foundation can reduce the risk for the lender by promising to cover a portion of a loan or equity investment if it defaults. This opens the door for commercial banks or Community Development Financial Institutions (CDFIs) to lend into high-need, high-risk environments and can unlock additional private capital that would be otherwise unavailable without a guarantee.
Examples:
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During the COVID-19 pandemic, the Gates Family Foundation* guaranteed a $12.5 million loan from FirstBank. This loan enabled the Paycheck Protection Program loans to provide small businesses in Colorado with funding for their employees.
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After COVID-19, administrative delays in deploying capital to nonprofits has only increased. The GoATL Fund from the Community Foundation for Greater Atlanta* launched a $1 million Community Guarantee Pool intended to bridge nonprofits to federal stimulus and contract funding, unlocking up to $20 million in additional capital.
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The Kresge Foundation* partnered with SBP, a national disaster resilience and recovery nonprofit, and Credit Human, a nonprofit federal credit union and financial cooperative, to accelerate recovery among underinsured and uninsured homeowners affected by federally declared disasters through SBP’s Recovery Acceleration Fund (RAF). Kresge and SBP will act as financial guarantors, with Kresge providing Credit Human a loan guarantee of up to $2 million.
4. Catalytic First-Loss Capital - Drawing in Private Capital for Recovery
As communities move from stabilization to recovery, the need for larger-scale investment grows: especially in housing, small businesses, and climate resiliency. Catalytic first-loss capital plays a critical role in this phase of disaster recovery.
By taking a first-loss position, for example, as a subordinate lender, a foundation agrees to absorb all or partial loss in an investment. This helps de-risk the opportunity for other investors such as senior investors, drawing in capital that might otherwise be unavailable.
Examples:
By taking a first-loss position, for example, as a subordinate lender, a foundation agrees to absorb all or partial loss in an investment. This helps de-risk the opportunity for other investors such as senior investors, drawing in capital that might otherwise be unavailable.
Examples:
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MacArthur Foundation’s* Catalytic Capital Consortium utilized a $2 million program-related investment (PRI) for first-loss investments to support the MicroBuild Fund, a fund created by Habitat for Humanity to produce safe and decent housing. As of 2019, the fund has leveraged 3.71 times the invested capital and is financially profitable.
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The California Endowment* provided $15 million in subordinated debt to the California FreshWorks Fund, and $2.5 million in first-loss capital. These investments allowed the fund to create healthy food access in Northgate, City Heights, and Inglewood.
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The Rockefeller Foundation*, along with Facebook, provided first-loss capital for SunFunder’s $47 million “Beyond the Grid” fund, which aims to deliver electricity access in rural areas of Sub-Saharan Africa.
5. Targeted Bonds - Financing Long-Term, Public Infrastructure Solutions
Finally, as communities rebuild, mission-driven investors can support equitable long-term recovery through public infrastructure financing. Foundations can utilize bonds (like social impact or green bonds) that fund housing, health clinics, transportation, and water systems in impacted areas.
Bonds offer fixed returns while supporting essential services, which makes them a good fit for foundations looking to align more of their endowment with public efforts.
Examples:
Bonds offer fixed returns while supporting essential services, which makes them a good fit for foundations looking to align more of their endowment with public efforts.
Examples:
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Community Capital Management set aside $100 million of bonds from the CRA Qualified Investment Fund to finance community and economic development programs in areas affected by Hurricane Sandy.
In conclusion, foundations don’t need to reinvent the wheel when faced with crisis; they just need to reach for the right tool at the right time. From rapid response funds that stabilize, to recoverable grants and zero-percent loans that bridge gaps, to catalytic capital that enables systemic recovery, each tool plays a role in building more resilient, equitable communities.
By combining urgency with mission, these tools can help impact capital do what it does best: fill gaps, unlock additional resources, and stand with communities when they need it most.
*Indicates 2025 MIE Foundation or Affiliate Members.
By combining urgency with mission, these tools can help impact capital do what it does best: fill gaps, unlock additional resources, and stand with communities when they need it most.
*Indicates 2025 MIE Foundation or Affiliate Members.
