The Brief: The counterintuitive case for government as an impact investor

Greetings Agents of Impact!

In today’s Brief:

• Antony Bugg-Levine on government as an impact investor
• Kimberlee Cornett on changing narratives around public policy
• Investing in land restoration in South Africa 
• Zócalo Health’s culturally-grounded care for Latinos  

Featured: Investing in America 

Five ways government can invest with the private sector to benefit communities. At a time of soaring deficits and deep budget cuts, the notion that the government can effectively invest public assets may seem counterintuitive. There is widespread skepticism about the government’s capacity to do anything well. But public investment is a powerful way to make progress on seemingly intractable social challenges. The government’s role as an investor, not just a spender, writes ImpactAlpha contributing editor Antony Bugg-Levine, “is an old American tradition overdue for revival.” New York City’s $4 billion NYC Housing Investment Initiative, announced this month, points to one way government can harness investment to address national challenges. Comptroller Mark Levine directed the city’s $300 billion public pension fund to invest $1 billion annually over four years in affordable housing production and preservation, doubling the pension system’s housing exposure. The initiative seeks to generate risk-adjusted financial returns and address financing gaps that slow housing development and preservation. “These tools are not about government replacing the market,” Bugg-Levine says. “They are about government working alongside it, shaping incentives so that private capital flows to places and people that markets tend to overlook.” 

• Public policy, private investment. Bugg-Levine identifies five levers government can pull to harness private investment. Public pension funds and treasury assets can be directed to invest some of their more than $6.5 trillion in assets for community benefit, as in the New York housing investment initiative. “Directing even a modest slice of that capital toward economically targeted investments can move markets,” Bugg-Levine writes. Government can provide low-cost or concessional capital to private fund managers who agree to invest in priority areas. The Small Business Investment Company program, created in 1958, today supports roughly 300 active funds managing more than $50 billion. Licensed managers can borrow long-term, fixed-rate capital from the US Treasury at low rates, enabling them to attract institutional investors while serving job-creating small businesses in markets that commercial lenders overlook. This structure, he notes, is now being adapted for new priorities: The bipartisan American Ownership and Resilience Act proposes $5 billion in low-cost loans for fund managers financing worker ownership transitions (see, “Better financing can make employee ownership a game-changer for workers”).
  
• Direct lending. The US has a long tradition of direct government investment in companies and industries at moments of crisis. During the Great Depression, the Reconstruction Finance Corporation loaned directly to banks, railroads and industrial companies when private credit collapsed. The Troubled Asset Relief Program bailed out banks in 2008. The Energy Department’s  Loan Programs Office made a $465 million loan to Tesla in 2010, which was repaid in full and helped anchor a domestic EV supply chain. There is fresh appetite for such an approach, repackaged as a “sovereign wealth fund” (see, “What kind of investments can we expect from Trump’s sovereign wealth fund?”). The Trump administration’s proposal reflects the same underlying logic that animated Franklin D. Roosevelt: Some strategic investments will not get made by private markets alone. “These levers for harnessing private investment for public purposes,” writes Bugg-Levine, “are a way to expand the money available to tackle political priorities while also supporting private sector action and limiting taxpayer costs.”
  
• Keep reading, “Five ways government can invest with the private sector to benefit communities,” by Antony Bugg-Levine. His book, “Investing in America: Expanding access to finance to solve our shared challenges,” is due out in June.

Three narratives investors should rewrite around government subsidies, policies and programs. Impact capital is patient capital. But it can be hard to feel patient amid rising costs, aging infrastructure and an AI rollout that is threatening the livelihoods and security of many families, Kimberlee Cornett of the Robert Wood Johnson Foundation writes in a guest post. “The need for private investment has never been greater,” she says. “The policy infrastructure that makes it viable is being eroded despite broad public support for the outcomes it produces.” (Disclosure: Robert Wood Johnson Foundation sponsors ImpactAlpha’s Muni Impact coverage.) The foundation, which is participating in this week’s Mission Investors Exchange conference in Atlanta, has deployed $525 million in impact investments over the last six years, targeting people and places overlooked by legacy financial institutions. To help decision makers understand the long-term value and return on investment of public policy tools, impact investors can help reframe three public policy narratives, she says. 

• Narrative change. Public programs pay real dividends, not just social ones. They “steer capital to lending for small businesses, jobs, home building and preservation, childcare centers and healthcare facilities,” writes Cornett. The CDFI Fund, which narrowly escaped the axe in last year’s budget, leverages up to $10 in private investment for every $1 in federal funds to community lenders. Subsidies are not handouts, she says. “Government subsidies in the form of tax benefits or cash payments spur local economic growth and create jobs while also meeting community needs.” A third narrative: Public policy can drive wealth-building, not red tape. Good policy “can catalyze private investment by providing clear guidelines and incentives, such as reducing bureaucratic hurdles, streamlining permitting, and creating frameworks that make capital more accessible to underserved markets,” writes Cornett. “Our collective progress is being hampered by the retreat of the public sector. We cannot lose our sense of urgency and momentum while remaining patient with our capital.”

• Keep reading, “Three narratives investors should help rewrite around government subsidies, policies and programs,” by RWJF’s Kimberlee Cornett. 

Dealflow: Nature-Based Solutions

Outcomes and offtakes spur a 250,000-acre restoration project in South Africa. Livestock grazing has caused severe land degradation in a critical biodiversity zone in South Africa’s Eastern Cape. An ambitious project underway by Singapore-based nature restoration planner Imperative is looking to restore at least 100,000 hectares (247,000 acres) of the area, known as the Albany thicket. Imperative is planting a robust native desert plant called spekboom to replenish the soil, sequester carbon and help restore other native plant species. The project, underway for two years, has covered nearly 25,000 acres of the thicket. The World Bank is directing $25 million from an outcomes-based bond to support phase two of the project, which will scale up to 124,000 acres. Private investors including Mirova, GenZero, Rubicon Carbon and Bregal Sphere are investing an additional $66 million.

• Impact-linked. Singapore-based Imperative has raised a total of $114 million for its spekboom initiative, including the $91 million secured for the second phase. The World Bank financing is part of a larger $120 million bond the bank issued to support nature restoration projects globally. Investors signed on for a 2.4% fixed-rate coupon, with protections on the principal, until the bond matures in 2040. Beginning in late 2031, they’ll receive payments linked to the sales of carbon credits through a fixed-price, 10-year offtake agreement with Amazon. The offtake “provided the demand certainty required to unlock both commercial financing from investors and outcome financing from the World Bank,” said GenZero’s Kimberly Tan in a statement. The bond was arranged by BNP Paribas and listed on the Luxembourg Stock Exchange. Investors include Nuveen, AllianceBernstein, Impax Asset Management, L&G and MetLife Investment Management.
  
• Dive in.

Zócalo Health raises $15 million to expand culturally-grounded care for Latino communities. Seattle-based Zócalo Health has built a business based on the thesis that Latino patients are better served by care that comes from their own communities. With $15 million in new funding, the company is betting that health plans are finally ready to pay for it. “This milestone means something deeper to me,” said Mariza Hardin, who co-founded Zócalo with Erik Cardenas five years ago. “It’s about representation, responsibility and the opportunity to build a system that finally works for our communities.” The Series A funding was led by Equal Opportunity Ventures. Other investors in the round include Vamos Ventures, Animo Ventures, Acumen America, Sorenson Ventures, Kapor Center, BarronKent Ventures and Mexico City-based family office investor Talipot. 

• Community-based. Health plans that offer Medicaid-managed care plans are under pressure to cut costs and improve outcomes, and are looking to community health workers to engage patients. Zócalo’s model integrates promotoras de salud, Spanish for community health workers, into whole-person care plans for patients with complex medical, behavioral and social needs. The promotoras live and work in the communities they serve and lead outreach and relationship building with patients. “We built Zócalo to consistently engage the patients the system misses,” said Cardenas. “When you connect and engage high-need members, you change both clinical outcomes and cost.” 

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Dealflow overflow. Investment news crossing our desks:

• Netherlands-based Affix Labs raised €1 million ($1.2 million) from VP Capital, Oost NL and other investors to roll out its sustainable, water-based insect repellant that adheres to the EU’s tightened pesticide requirements. (Affix Labs)
  
• Amethis, Proparco and Ccap.ai acquired South Africa-based Vertice MedTech, a digital healthcare developer and medical equipment supplier. (Proparco)
  
• Agri-focused impact investor Omnivore led a $5.5 million round for Bangalore-based STCH, which supports fashion brands by designing and manufacturing sustainable textiles. (YourStory)

Agents of Impact: Follow the Talent

New Hampshire Community Loan Fund taps Keith Sandbloom, previously with Finca Impact Finance, as senior vice president of residential lending and portfolio management… Enterprise Community Partners welcomes Neill Coleman, formerly with Trinity Wall Street, as its first chief external affairs officer… Purpose Built Communities recruits Lynnette McRae, previously with the Chicago Community Trust, as vice president of prospects and growth… Bridget Meller, previously with Capitala Group, joins Mosaic Capital Partners as vice president of business development.

Overdeck Family Foundation seeks a New York-based portfolio associate for its School Success, a grantmaking initiative focused on K-12 educational outcomes… Shell Foundation is partnering with Double Feather Partners and NEC in Japan and the UK’s Foreign, Commonwealth and Development Office on the Africa Corporate Innovation Program, a new initiative to spur Japanese–African startup collaboration (see, “Japanese investors dial up deal-making in Africa“).

Village Capital’s Future of Aging 2026 program, in partnership with Next50, is open for social enterprises supporting healthy aging in the US… Positive Investment Imperial is facilitating a conversation on mobilizing capital and building careers in impact investing, this evening, at Imperial Business School in London… Ownership Capital Lab is hosting a discussion on the ownership economy Wednesday, April 29, on the sidelines of the MIE conference in Atlanta… Italy’s Cámara de Comercio en México is hosting an event on circular economy innovation in Mexico City, Thursday, May 7. 

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– April 28, 2026