The John D. and Catherine T. MacArthur Foundation has announced a $150 million commitment to help address financing gaps in impact investing, with a focus on funds and intermediaries that are not a good fit for conventional investment.
Launched in partnership with the Rockefeller Foundation and Omidyar Network, the Catalytic Capital Consortium will provide "catalytic" capital that is patient, risk-tolerant, concessionary, and flexible — the kind of capital, according to a report released by the consulting firm Tideline, needed to achieve the United Nations' Sustainable Development Goals by the 2030 target date. According to the consortium, the SDGs are facing an annual $5 trillion to $7 trillion financing gap, and catalytic capital can help meet the demand for more investment across the risk-return spectrum while mobilizing additional capital through a range of blended finance solutions.
Since it was launched in 2015, the Rockefeller Foundation's Zero Gap finance portfolio has grown to include nearly fifty financial instruments in twenty-eight countries. An initial investment by MacArthur of $30 million — to be matched by Rockefeller — will build on this work, with the ultimate goal of mobilizing more than $1 billion in new capital. The funds will be managed by Rockefeller's new impact investment management platform, Rockefeller Foundation Impact Investment Management.
MacArthur also will provide matching investments to select funds and intermediaries using catalytic capital in innovative ways to advance the SDGs in a range of areas, including forest conservation, sustainable agriculture, inclusive entrepreneurship, education, reproductive health, energy access, and refugee finance. In addition, MacArthur, Rockefeller, and Omidyar Network will commit $10 million over three years in support of learning and market development, with a focus on demonstrating when and how catalytic capital can be most effective and what additional impact investing tools and practices are needed.
"Catalytic capital is needed for impact investing to realize its full potential," said MacArthur Foundation president Julia M. Stasch, who announced the launch of the consortium at the Global Impact Investing Network Investors' Council annual meeting. "While impact investing is growing rapidly, much of the attention focuses on market-rate returns, leaving a serious gap in financing opportunities for many promising impact enterprises and funds that could help address critical social challenges. The Catalytic Capital Consortium will help more investors appreciate the importance of this type of capital in yielding deeper, more sustainable impact for people and the planet."
(Photo credit: Spark Schools)