De-Risking for Impact: How Guarantees Unlock Capital for Social Good
Guarantees are a powerful, yet underutilized, tool in the philanthropic investing toolkit. By taking on risk others won’t, guarantees can unlock private capital, de-risk bold ideas, and help mission-aligned projects attract more investors to scale.
On July 29, 2025, Mission Investors Exchange (MIE) hosted an in-depth Special Conversation on how foundations are using guarantees to drive impact across different sectors, from affordable housing to small business lending to climate. Speakers discussed examples, explored different guarantee structures, and offered insight on how guarantees fit into a broader impact investing strategy. This conversation provided practical guidance and inspiration for leveraging your capital for deeper impact.
Speakers:
- Jim Baek, Senior Vice President, Locus Impact Investing
- Eileen O’Rourke, Director of Impact Investing, Abell Foundation
- Chris Romano, Chief Operating Officer, Bush Foundation
- Lizzie Avila, Impact Fellow, MIE (Moderator)
- James Wahls, Senior Vice President, Programs and Initiatives, MIE (Moderator)
Key Takeaways:
- As Jim Baek explained, guarantees are three-way contracts involving a borrower, a lender, and a guarantor. They allow impact investors to mitigate specific risks and enable transactions that may otherwise not occur, serving as a “but-for” piece of the capital stack.
- Guarantees can unlock capital by de-risking transactions. Guarantees often give lenders the confidence to deploy capital by providing a backstop in the case of loss, particularly in sectors like small business, affordable housing, and climate finance.
- Guarantees can be structured flexibly to align with the unique needs of different foundations. Speakers shared that they do not charge fees for nonprofit guarantees and have created internal reserves for higher-risk guarantees. They emphasized the importance of working with trusted intermediaries and clearly defining impact objectives.
- For those new to guarantees: “Start small if you need to. Instead of saying, ‘this is too risky; we’re not going to do it,’ find a guarantee that’s not as risky. Jump in, and test your organization’s appetite for risk in ways that work for you.” -Chris Romano, COO, Bush Foundation
Resources:
- Lessons from Our Impact Investing Experience -Bush Foundation
- Anpetu Wi Native Owned Wind Farm -SAGE
- GroundBreak Coalition
- How Guarantees Can Advance Community Development and Racial Equity -Nonprofit Quarterly
- Leveraging Foundation Balance Sheets for Greater Impact: Piloting a Pooled Guarantee Program -The Foundation Review
- 2024 Impact Report: Courageous Financing -Locus
View the Recording:
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