How Evergreen Capital Keeps Community Health Working

By Caryn Capriccioso, President and CEO

Improving health in a community is long-term work. 

The funders who support health equity efforts often stay committed for years—even decades—across changing needs, organizations, and strategies. Grants are central to this work, allowing new interventions and programs to be developed and implemented, as well as supporting their growth and scale. 

Some moments in the life of a program or project, however, call for a different kind of capital that is flexible enough to meet an immediate need, patient as the work evolves, and when repaid can be put to work again. 

This is the basic promise of evergreen capital, which allows us to aggregate philanthropic capital once, and then invest and reinvest it. The same pool of funding can go on to support multiple organizations, projects, and opportunities, extending the impact of those dollars rather than ending with a single transaction. 

We recently saw this in practice at ReHealth Collaborative with a 5-year, below market rate construction loan to a community organization in New Orleans. Volunteers of America Southeast Louisiana was renovating an existing building to house a residential community health program. Canal Pointe, a family-focused recovery program, was designed so that pregnant and parenting mothers can live together with their children while in treatment for substance use disorder. Multiple sources of capital were at the table, and ReHealth’s contribution to the capital stack addressed a real financing gap at a critical point in the project. The loan was repaid in 9 months, enabling ReHealth to invest in other community-health projects. We are now actively sourcing opportunities to put that capital to work again in support of our mission.

This recycling of capital makes evergreen models compelling for funders, yet they remain underutilized, particularly by foundations that are seeking to drive sustained health impact and build long-term capacity among organizations in a target geography or sector.

Some Community Health Needs are Financing Needs

Community-based organizations working to improve health often operate within systems that have predictable capital challenges. For instance, a clinic may win a new contract to provide behavioral health services, but they need to hire clinicians to cover payroll for several months before reimbursement begins. Or a rural health provider may need to purchase a mobile unit or diagnostic equipment to reach patients across its large service area, but they lack access to affordable financing for the upfront costs. These are examples of situations where impact-first investing can help–when organizations have a strong plan and a credible source of repayment but still lack the cash they need to move the work forward.

Traditional debt financing may be available if organizations qualify, but the cost of capital is typically high, repayment schedules are aggressive, and the repaid capital and interest are often extracted, for the benefit of the capital provider, but not for the community. 

With geographically- or issue-restricted evergreen capital, those dollars can be put to work again, focusing on the very issues that community and funders have identified as priority for improving health outcomes.

Evergreen Capital is Not a New Invention 

To understand the power of evergreen capital and its potential to support improved individual and community health, ReHealth is studying proven and emerging models outside of our issue areas and ecosystem. Arts and culture, community development, climate, education, and other fields have been utilizing flexible and recyclable capital for years, and the underlying challenges and opportunities translate meaningfully to community health.

The MacArthur Foundation’s Arts and Culture Loan Fund is one example. The fund was created during the pandemic to help small- and medium-sized organizations in the Chicago area access working capital and enhance financial management. For many of these organizations there is a timing mismatch between when revenue arrives and when expenses must be paid as ticket sales, grants, and contract payments come later than payroll, facility costs, and marketing of programs. 

The Arts and Culture Loan Fund also recognizes that capital alone isn’t always enough. Financing is paired with technical assistance and capacity-building support to help organizations use the loan well and strengthen their financial position as a result of having this capital in the mix.

Another example comes from Colorado where a newer nonprofit bridge loan fund (a bit of a throwback to the Colorado Nonprofit Loan Fund of days gone by) addresses a similar timing problem by providing financing to nonprofits that have already secured government grants or contracts but that must wait for payment or reimbursement for services delivered. The model is intentionally designed to simplify access to funds so that organizations can get started on mission-critical work today, rather than waiting for a grant award or even stalling completely because working through complex financing mechanisms is too cumbersome.

For both of these examples, the important idea is not simply that nonprofits can borrow money—it’s that philanthropy can create financial infrastructure around recurring problems. As loans are repaid, the capital can support the next organization facing a similar challenge.

What Evergreen Capital Makes Possible in Health

The health sector has no shortage of needs that could benefit from the approaches shared above. With our earlier example of financing to hire behavioral health staff before reimbursement begins, that same funding could later finance construction to increase treatment capacity, upgrade testing equipment, or develop a proven intervention under a health plan contract. These investments could span any number of community health priorities ranging from maternal health to food access, chronic disease prevention to substance use treatment, or transportation to care coordination.

The point is not that every health need should be financed; many should not. Grants are an essential part of the health financing ecosystem, particularly for early-stage work, advocacy, community organizing, capacity-building and operating. However, some needs can benefit from financing, and when this works, the capital can return to address future community needs.

Evergreen capital for health gives funders another way to think about long-term impact.Instead of making a grant, closing the file, and beginning again with a new allocation, they can create a pool that remains available to the community. The uses may change over time in response to community health strategies and needs, but the infrastructure stays in place. And, for funders committed to a geography or issue area, that continuity matters.

Evergreen Does Not Mean Endless

Evergreen capital is sometimes described too simply as though a funder contributes once and the money circulates forever-more. With this type of funding, there will be losses. Investments carry risk, and some will be repaid more slowly than expected, some not fully, and occasionally, not at all. There are also costs associated with this work including legal, diligence, servicing, impact and fund management that all require resources. Technical assistance or grant support may be needed alongside the investment itself to support organizations in successfully accepting and repaying capital.

For truly impact-first investments, the financial return is not likely to fully cover these costs. But financial return is only one part of the value being created, and with impact-first financing, it is not the primary return. Capital is intentionally structured to produce health impact alongside repayment, whether that means more people receiving treatment, expanded access in a rural community, reduced emergency department utilization or hospital readmissions, increased treatment capacity, or improved outcomes for populations that have been served poorly by existing systems.

A well-designed evergreen pool accounts for these realities and recognizes that the return includes both the capital that comes back as well as the health outcomes made possible while it is deployed. At least a portion–often a significant portion–of the capital can be preserved and redeployed. 

At ReHealth, we believe that even the “losses” have value. As the life and reach of philanthropic dollars are extended, positive health impacts can happen in real time, and the borrowing history and financial capacity of organizations that historically have had limited access to this type of financing are developed. 

The goal of these offerings is not to make philanthropy behave like commercial finance, but to structure capital around the return being sought, matching the right kind of capital to the right kind of need, and creating measurable health impacts.

Funders Can Begin with Pilots Before Building a Fund

For many foundations and family offices, the biggest barrier to standing up impact-first, evergreen capital is not interest but infrastructure. Building programs of this type requires strategy, sourcing, diligence, legal expertise, investment management, monitoring, and impact measurement. The infrastructure piece makes the first step feel much larger than it needs to be, and we know from watching funders develop impact investing programs that the timeline from idea to implementation may be as long as 5-7 years.

But funders do not necessarily need to establish a formal fund or build a complex program-related investment program before they begin. In many cases, a pilot is a better path. 

Pilots allow funders to specify their geography, population, or health challenge, make one or more real impact-first investments, and learn from the experience before committing to a larger portfolio. This creates space to test assumptions, understand risk, bring staff and the board along with the idea, and decide what type of structure to build down the road.

ReHealth helps funders pilot and test their impact-first investing goals in partnership and practice. We work with foundations and family offices to understand health priorities in the areas they support and put grant dollars to work through our capital pool, providing technical assistance to nonprofits that are learning about different types of capital, sourcing and assessing opportunities, deploying and managing investments, and measuring performance and impact. Funders gain direct experience with impact-first investing while capital is already at work in their communities, and can walk alongside ReHealth’s processes to a degree that makes sense for the capacity and interest of the staff and/or board.

Impact-first investing works best when capital infrastructure is paired with deep geographic, population, or issue-area knowledge, and evergreen capital creates a way to sustain that work over time. For funders seeking deeper and longer-term impact, the question is not whether investments should replace grants—because they should not. And it’s not a question of whether or not impact-first or program related investments are “too risky”. If done well, repayment rates can be strong, and health outcomes created through the investments create a real, measurable difference in people’s lives.

If you’d like to explore how your foundation or family office can test a health-focused, impact-first, evergreen capital pool for your area of focus, please reach out. We’re happy to share our model and approach.