Take the Risk: Bolstering Health Nonprofits is the Next Stop for Impact Investing

one line man/shutterstock

one line man/shutterstock

One sign of the growing momentum behind impact investing is that this strategy has spread beyond elite private foundations and drawn new converts among community foundations, institutions that are often more conservative in ways that reflect the many stakeholders they must please.

Health legacy funders have also been getting into impact investing, including the Atlanta-based Healthcare Georgia Foundation (HGF).

The foundation recently launched its first program-related investment strategy through a funding and financing partnership with a certified community development financial institution called Community Health Center Capital Fund. This five-year, $500,000 effort will deliver fixed-rate and low-cost loans with five- to seven-year terms to qualifying health centers in Georgia. In the years ahead, this HGF commitment is expected to produce loans for construction and permanent facility financing in order to expand primary and preventative health services in the region.

As we’ve reported, health legacy foundations have become increasingly important players in philanthropy as their numbers and assets have grown. Two years ago, a Bridgespan study found 228 conversion foundations with $27.5 billion in assets. These numbers are certainly larger now, especially given the emergence of several big new health legacy foundations in the past year or so—most notably Mother Cabrini Health Foundation, which has $3.2 billion and will focus exclusively on New York State.


But it’s not just important that there are more health legacy foundations with more money; notably, these funders have embraced bolder strategies as they’ve pushed to improve the health of low-income Americans, whether it’s looking upstream to address the social determinants of health, or funding advocacy. In this sense, it’s not so surprising that impact investing is making new inroads among health legacy foundations.

The Colorado Health Foundation, for example, is among those institutions that have been experimenting with this strategy, making program-related investments since 2017. In December of that same year, the Nonprofit Finance Fund launched AIM Healthy, which “offers loans and lines of credit, as well as financial management advice and consulting, to help bridge gaps in capacity and infrastructure”—all with the goal of reducing health disparities and improving “health and resilience for low-income individuals and communities. AIM Healthy’s supporters include two leading California health legacy foundations, the California Endowment and Blue Shield of California Foundation, as well as the California Community Foundation, Dignity Health and the Kresge Foundation.

When we asked Healthcare Georgia Foundation President Gary D. Nelson why his foundation chose to go this route and put hundreds of thousands of dollars toward a program-related investment rather than traditional grantmaking, Nelson said that HGF saw a chance to accelerate its efforts to improve the health and quality of life in Georgia. “By bridging the gap between the 5 percent of financial capital dedicated to charitable giving with the 95 percent allocated to investments, the foundation is optimally positioned to harness its financial capital and deliver impact,” he said.

Nelson and the HGF team see impact investing as a financing strategy that can deliver big benefits to Georgia’s health nonprofits—thinking that’s been informed by conversations with community development financial institutions from around the country.

“Health impact investing combines traditional charitable resources (grant funding) with existing public and private capital (financing) to improve health outcomes,” he said. The foundation sees this as “a new untapped opportunity to expand and align our limited resources with the causes of poor health, including the social determinants of health.”

At this time, HGF does not yet know who the local loan recipients will be. However, it does expect to support critical health safety net providers that are among Georgia’s federally qualified health centers through this program. Looking ahead, Nelson told Inside Philanthropy that the biggest challenge associated with the newly launched program-related investment strategy will be measuring its health impact. One potential way to do this is to gauge progress in the various social determinants of health that shape access to care and health behaviors, such as economic stability, physical environment, education, food, community and social context, and the health care system.

For other locally focused health legacy funders who may be taking note of HGF’s strategy as a potential model, Nelson offers the following piece of advice: “Take the risk and apply your best thinking to a strategic combination of funding (grants) with financing (program-related investments).”

The Healthcare Georgia Foundation is a statewide foundation that focuses on health equity and has awarded at least 981 grants totaling more than $70 million to date.