Year-end is when many clients step back and ask how they want their giving to reflect their values. For advisors, it’s a timely opportunity to connect on a deeper level with clients — beyond just tax strategy or annual contribution amounts — on what they want for their legacy and long-term impact.
Yet, too often, we hear from advisors that they hesitate to go deeper because they feel they need to be philanthropy experts. The truth is: What clients value most is not technical mastery in every giving model, but guidance that helps them connect their resources to what matters to them.
Here’s where helping clients understand the full toolkit available to them can add outsized value. Many clients are seeking ways to maximize both impact and flexibility with what they have to give as they evaluate year-end priorities. Engaging them to offer approaches that can expand their sense of what’s possible can elevate their giving experience and strengthen your advisory relationship.
One often underutilized tool that offers a unique blend of high impact and flexibility is recoverable grants. A recoverable grant is a grant with clear conditions under which some or all of the funds may be recovered — for example, if a program hits revenue or outcome milestones. This allows for the potential for those funds to come back to your client and be re-granted in the future to another worthwhile cause.
Recoverable grants add a helpful tool to your clients’ toolkit as they think about where they’re going to give and what kind of change they hope to achieve — a way to test, learn and potentially amplify their impact.
The value of a recoverable grant
At its core, the idea of a recoverable grant is simple: It’s a grant with clearly defined conditions under which some or all of the funds may be returned to the donor.
Those conditions are typically linked to revenue or earned-income milestones, the successful completion of a program or pilot or other agreed-upon indicators of performance. If those milestones are met, some or all of the grant may be recovered, and clients can then re-grant those dollars to new priorities or deepen their commitment to existing partners.
For clients, the recoverable grant structure can be appealing because it:
- Helps maximize the use of each dollar: The same capital can support more than one initiative over time.
- Allows them to “lean in” to organizations they care about: Recoverable grants can provide catalytic, risk-tolerant capital for clients to support an organization they believe in at a pivotal stage — launching, scaling or bridging a gap.
- Aligns with how many clients already think about their charitable capital: Clients who are comfortable with risk, experimentation or investing in growth often resonate with the idea of funding innovation while keeping the door open to future reuse of capital.
For advisors, recoverable grants offer a way to bring something new and thoughtful to the table — particularly for clients who want their giving to go a step beyond typical fundraising cycles.
Where recoverable grants tend to shine
Recoverable grants are particularly useful in areas where impact potential is strong and pathways to revenue are clear, but need support to fully take shape. This may look like a nonprofit piloting a new fee-for-service program, an organization in need of bridge capital, or an initiative that requires affordable and patient funding to reach the next stage.
Recoverable grants provide nonprofits with the breathing room and catalytic capital they need to grow, while giving donors confidence that their support is structured in a way that can multiply over time if milestones are met. While recoverable grants can help drive transformative impact for the right organizations, they’re not always a fit for every situation. For recoverable grants to be effective, it’s important that the nonprofits have the operational and revenue model to reasonably carry recovery terms. Not every grant makes sense to be made recoverable.
A simple roadmap for advisors
There doesn’t need to be a complex process to bring recoverable grants to clients. Here’s a proposed framework you can walk through with clients who may be interested:
- Start with values and time horizon: Understand the causes and themes that matter most to your clients. Define the time horizon by which they would want to redeploy capital and clarify upfront what success looks like.
- Identify giving vehicles and starting size: Whether from a donor-advised fund or foundation, discuss how much capital your clients expect to put to work and across how many organizations.
- Select a nonprofit partner and grant terms: Evaluate the nonprofit’s model, including revenue streams, organizational capacity, metrics and timeline. Agree on key milestones or triggers for recovery and ensure these are reflected in grant documentation. For clients with donor-advised funds, many providers now offer curated menus of already vetted recoverable grant opportunities across a range of causes — from climate solutions to affordable housing, community development and more.
- Monitor impact and outcomes: Report on impact metrics to assess whether the grant is on track with expectations. Review results at least annually. Use this conversation to discuss with your clients whether the impact is what they hoped to achieve and if it’s aligned with the goals they envisioned. If the nonprofit is on track, discuss recovery and next steps for re-granting.
- Recycle and redeploy philanthropic capital: If the funds are returned, review motivations for re-granting — perhaps expanding into a new cause area or deepening impact in the same realm. Incorporate this cycle into your clients’ long-term philanthropic plans.
A year-end opportunity to deepen client impact
Year-end is when clients typically take stock of their philanthropy: how much they want to give, to whom and what they want their generosity to achieve over time. Recoverable grants align naturally with this moment of reflection. They offer clients a way to meet immediate needs while preserving the potential to extend their giving capacity well into the future.
Advisors have a unique opportunity to introduce recoverable grants to clients as a versatile tool for maximizing philanthropic impact during giving season. For clients with a deep commitment to a particular cause or nonprofit, recoverable grants provide a flexible structure that can help an organization move forward at a critical juncture. And for clients who prefer a more engaged, hands-on approach to their philanthropy, these grants create built-in opportunities for follow-up, shared learning and ongoing involvement.
This balance of immediacy and long-term vision is what makes recoverable grants so compelling during year-end planning. They give clients a way to act now — supporting meaningful work today — while keeping the door open for continued impact tomorrow.
Ready to dig in on recoverable grants? Explore more from CapShift’s resources or reach out to learn how we can help you guide your clients toward impactful giving this season.
Jordana Pleat is managing director of impact-first investments at CapShift.
Advisors’ Corner is a content partnership between ImpactAlpha and CapShift. CapShift’s impact investing platform empowers financial and philanthropic institutions — and their clients — to invest in their vision for a better tomorrow. All content is solely for informational purposes and should not be used as the basis for investment decisions.
