Beyond Corporate Philanthropy: Why Businesses Should Consider Non-Grant Capital
Corporate philanthropy is changing.
For decades, companies have measured their grant-making primarily through their corporate foundation's philanthropic giving, or in some cases, the grants they make as part of sustainability programs. Additionally, employee volunteerism and engagement have been calculated to help augment a corporate philanthropic funding target.
These tools remain important. But they are no longer sufficient to meet the scale of today's social and environmental challenges especially with all of the changes we have experienced over the last few years. They certainly won't meet the growing expectations of young employees, intrapreneurs, and outspoken investors.
A growing number of companies are beginning to ask a different question:
What if grants aren't enough?
This is where the conversation around leveraging more of a corporate's balance sheet, relying on blended finance and catalytic capital becomes especially relevant.
A Shift from Giving to Capital Strategy
The traditional corporate philanthropy model is straightforward. Companies generate profits. A portion is allocated to philanthropy through a corporate foundation or sustainability program. Success is often measured by dollars granted or volunteer hours contributed.
Increasingly, however, organizations are exploring ways to align newer, non-grant forms of capital with their mission.
This does not necessarily mean becoming an impact investor or launching a billion-dollar investment fund (although many companies are going this route). It means recognizing that grants are only one tool in a much broader toolkit.
Recoverable grants, recyclable grants, low-interest debt, first-loss capital, concessionary investments, revolving funds and creative co-funding partnerships can all help unlock solutions that traditional grantmaking alone cannot support.
For many companies, this represents an evolution rather than a replacement of philanthropy.
Why This Matters Now
The funding and program delivery environment has changed dramatically.
Governments are facing budget constraints. International development funding has become increasingly sparse. Nonprofits are being asked to do more with fewer unrestricted resources. Social enterprises are keen to test new and innovative approaches but lack consistent capital. At the same time, businesses recognize there's a role for them to play in meeting this moment.
Many of the world's most pressing challenges require financing structures that combine grants with investment capital, innovative grant structures, or other risk-sharing mechanisms.
Corporate leaders have valuable assets they can deploy, unlike other donors that need to shift their giving practices to test non-grant philanthropy. Their balance sheets are built to give and take debt, different forms of cash, in-kind support, technical assistance, procurement relationships, innovation and more.
The question is no longer whether business should contribute. It is when.
This is Not "Impact Investing"
One reason these conversations sometimes stall is the terms we see and use.
"Impact investing", for example, can feel too focused on financial returns, or seemingly too one-dimensional.
A broader and more accessible framing for corporate philanthropy may be:
Looking beyond grants
Considering new and innovative granting tools for corporate impact
Utilizing catalytic capital for philanthropic efforts
Considering impact funds (internal or external)
Seeking co-funding partners that have similar aims
The underlying question is simple:
How can companies use more of their capital and resources to create greater social impact?
The Opportunity Ahead
The next decade will be defined by how we, as a global community, respond to the repeated shocks running rampant: environmental, economic, climatic, social, etc. Philanthropic capital alone will simply not be sufficient to help resource these new solutions.
Innovation requires thinking about things differently. And corporates have a major role to play in this space.
Corporates (and frankly most funding organizations) will need to rethink how every form of capital can contribute to solving these complex problems.
That does not diminish the importance of grants. Rather, it recognizes that grants are often most effective when combined with other financial tools that attract additional investment, reduce risk and strengthen organizations over the long term.
The conversation is no longer just about corporate giving. It is about how businesses can become a more sophisticated partner in building the financial ecosystems that lasting social impact requires.
If you are in the middle of strategy development around these questions, now is a great time to bring in a thought partner to help you move forward. I would love to help you think through what non-grant capital makes sense for your impact goals!