Building Board Support for Using Non-Grant Capital

A foundation’s impact depends on its partners’ ability to sustain results. When recurring grants end, organizations can lose capacity and communities can lose essential services.

How can Boards strengthen partner resilience and make philanthropic funding go further?

Non-grant capital (including recyclable grants, zero-interest loans, forgivable loans, and other flexible capital) can help partners bridge temporary funding gaps, expand and scale, or test new approaches. Where repayment is feasible, returned funds can support future work.

The opportunity is to match flexible capital to partner needs, with clear risk limits.

Here are four steps to build leadership and Board support.

1. Understand the hesitation

Is the concern about potential financial loss, reputational risk, fiduciary responsibility, staff capacity, or structure? Ask: “What would you need to see to feel comfortable considering this?” Share resources around why non-grant capital can be a tool in the toolbox. Position these tools as a complement to ongoing grant making.

2. Start with partner needs and demonstrate value

Ask partners what funding challenge they face and whether flexible capital would help. A bridge loan could cover a gap while awaiting committed funding; forgivable financing could support testing a revenue model. Explain why the proposed tool fits, what it adds compared with a traditional grant, and whether repayment is realistic.

3. Address risk

Show how funding would be tied up, and how that would affect grantmaking. Set exposure limits and establish due diligence, monitoring, and reporting. Bring in counsel early to confirm the appropriate structure, documentation, and applicable tax or regulatory requirements.

4. Request a limited pilot

Choose one willing partner and a manageable allocation. Jointly define success through program outcomes, repayment where applicable, and administrative burden. Set reporting and review dates, and bring the findings to the Board before expanding.

Ready to explore a pilot? Let’s identify a partner need and design a capital approach that fits.

Download this guide HERE.