Why Catalytic Capital
Catalytic capital unlocks investment and global impact that otherwise would not be possible.
What is Catalytic Capital?
Catalytic capital, as defined in the report Catalytic Capital: Unlocking More Investment and Impact, is debt, equity, guarantees, and other investments that accept disproportionate risk and/or concessionary returns relative to a conventional investment in order to generate positive impact and enable third-party investment that otherwise would not be possible.
Catalytic capital cuts across different asset classes and diverse types of providers, including private and community foundations; high-net-worth individuals and family offices; impact investment wholesalers; corporations and corporate foundations, and governments and development finance institutions (DFIs).
How does Catalytic Capital Drive Progress
Catalytic capital can play a number of distinct roles to seed, scale and sustain a wide range of impact funds, enterprises and initiatives. Because it enables impact that would not otherwise be possible, it is a critical resource for addressing urgent global challenges related to climate, health, poverty and justice.
Seeding
Catalytic capital can provide support to enterprises and intermediaries pioneering new models that have not yet demonstrated the commercial viability and track record required to attract conventional capital. By enabling these impact pioneers to test, refine, and ultimately prove out their business models, catalytic capital helps to build the future pipeline of investable impact opportunities for conventional investors.
Scaling
Catalytic capital can help impact enterprises and intermediaries to scale and expand their business into new situations, population segments, and geographies. In many cases, such investments are also intentionally structured and deployed in ways that de-risk and mobilize additional investment from conventional investors.
Sustaining
Catalytic capital can help to sustain impact enterprises and intermediaries that require subsidy on an ongoing basis, in order to maintain a focus on serving hard-to-reach beneficiaries or otherwise operate a business model that cannot achieve full commercial viability.
Catalytic Capital Resources
The following articles, reports and videos offer an introduction to catalytic capital and help illustrate how this vital form of impact investing is effectively deployed.
FAQs on Catalytic Capital
C3's Frequently Asked Questions, developed with FSG and Courageous Capital advisors introduces investors to core concepts about catalytic capital. (2022)
Catalytic Capital: Unlocking More Investment and Impact
This report from Tideline provides foundational information on catalytic capital and the ways that impact-oriented investors use it to fill financing gaps, enable third-party investment and generate impact that would not otherwise be possible. (2019)
ImpactAlpha: Catalytic Capital Beat
This curated hub for catalytic capital news covers a wide range of geographies, sectors and investors who are utilizing catalytic capital to create impact.
Catalytic Capital: An Essential Tool for Impact
In this blog, the MacArthur Foundation's Debra Schwartz describes the vital role that catalytic capital can and should play featuring examples of MacArthur’s work supporting community development financial institutions and in preserving affordable housing. (2017)
Across the Returns Continuum
This report from Omidyar Network considers a range of possible investment profiles, highlighting that while explicit tradeoffs between social return and financial impact may be required in some cases, in many others it is not. (2016)
The Ideal Role of Catalytic Capital in an Impact Economy
Leading catalytic capital voices discuss opportunities and challenges as part of Impact Entrepreneur’s Luminarias Webinar Series. (2023)
Catalytic Capital at a Tipping Point: Why the Time for Rapid Growth is Now
C3's strategic partners offer insight on why catalytic capital is so important and what is needed to advance the field. They came together during SOCAP to feature the work of C3 grantees. (2021)
Sparking Global Discussion on Catalytic Capital
Industry leaders from four global impact investing networks (EVPA, AVPN, AVPA and Latimpacto) discuss the future of catalytic capital. (2022)
The Power of Catalytic Capital: Foundation Leadership in Action
Key philanthropic leaders share their views during at the annual Mission Investors Exchange conference on how foundations utilize catalytic capital to advance their missions. (2018)
Banner Photo: Elvis Mulimba Feedlot SME, Uganda/©George Muriama, Aceli Africa.