The Real Cost of Powershifting Capital

A new study from Miller Center for Global Impact just confirmed what catalytic capital intermediaries have been saying — quietly, consistently, and often without the data to back us up:

Impact-first investing costs more because it is doing more. And if we want capital to reach the people and places traditional markets leave out, we have to fund the infrastructure that makes that possible.

This is not inefficiency. It’s the price of inclusion.

What the Research Shows

Miller Center’s analysis, comparing impact-first funds to conventional capital, reveals three critical truths:

• Impact-first funds close more deals per year (10+ vs. 6–7).
• They do it at a lower cost per deal (~$80k vs. ~$125k).
• Yet the cost per dollar deployed is 2.6x higher — $0.21 vs. $0.08.

Why? Because impact-first funds deploy smaller amounts, into harder places, with more hands-on support and greater structural complexity.

And that reality is deeply connected to the core purpose of this type of capital.

What We Mean When We Say “Catalytic Capital”

We often use the term catalytic capital — alongside synonyms like impact-first investing, philanthropic investment capital, and flexible capital.

A new report from the Catalytic Capital Consortium grounds this clearly:

“Catalytic capital is a vital form of impact investing that accepts 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.”

This is the kind of capital that steps into the gap. The kind that underwrites possibility. The kind that makes inclusion financially feasible.

Catalytic capital isn’t a style of investing. 

It’s a structural intervention.

Why the Cost Is Higher — and Why It Should Be

Impact-first investing takes more time and more effort because the work itself is different:

• Deals are smaller — but the stakes for communities are higher.
• Underwriting requires deeper contextual knowledge.
• Structures often need to be custom, not cookie-cutter.
• Entrepreneurs require support navigating systems not built for their realities.
• Risks are mispriced by traditional markets, creating gaps that intermediaries must bridge.

This is labor. This is expertise. This is infrastructure.

Who Absorbs the Cost — and Who Reaps the Reward

And here’s the nuance that rarely enters the public conversation:

In impact-first investing, the intermediary — not the entrepreneur — absorbs the cost of making inclusion possible.

Intermediaries (and their philanthropic partners) take on:

• the cost of patient cash flow modeling
• the cost of structuring recoverable grants and custom debt
• the cost of strategic due diligence on under-resourced founders
• the cost of navigating legal, compliance, and risk tolerance constraints
• the cost of bridging timing gaps that would kill a conventional deal

Communities do not pay these costs. Intermediaries, like IC, do.

And the reward?

• Entrepreneurs retain appropriate ownership instead of giving it up.
• Small businesses transition to community or employee hands.
• Land, homes, and assets stay rooted locally.
• Wealth circulates where it’s created.
• Donors see their capital actually move and produce durable, systemic impact.
• Power shifts toward the people and places conventional markets overlook.

Impact-first investing costs more up front, but the return is structural: the redistribution of ownership, opportunity, and stability.

The “But For” That Rewrites the System

Here is the structural truth:

But for catalytic intermediaries, capital consolidates power instead of shifting it.

But for this work:

• viable businesses are lost
• DAFs sit idle
• entrepreneurs fall into the Valley of Death
• community ownership remains aspirational instead of achievable
• systems replicate, rather than repair, inequity

Impact-first investing costs more up front, but the return is power, ownership, and long-term stability.

What This Means for the Field

The Miller Center report is a significant moment. It names — clearly and publicly — the real cost and real value of the infrastructure that makes catalytic capital possible.

This should shift how funders think about:

• resourcing intermediaries
• paying for technical assistance
• supporting pooled funds
• aligning DAF capital with community outcomes
• funding the scaffolding that moves investment from theory to action

Because without that scaffolding, the deals don’t move. The capital doesn’t shift. And the promise of inclusive wealth creation remains unrealized.

What This Means for Our Work at Impact Charitable

At Impact Charitable, this research puts numbers to what we experience every day in the field.

As a philanthropic capital intermediary, our mission is to serve as a bridge between funders and communities — designing responsive pathways that unlock and accelerate capital to ventures, projects, and funds that traditional markets overlook.

Over the past decade, we’ve deployed more than $100 million in catalytic capital across 18 financial pathways — from recoverable grants, guarantees, and flexible debt, to multi-donor funds, PRI structures, and community-rooted ownership tools. These are not abstract mechanisms. They are the infrastructure that turns intent into movement.

And every pathway reflects the same core truth: capital only becomes inclusive when the scaffolding is built to carry it.

We see this across our work:

• in flexible acquisition financing that helps entrepreneurs step into ownership
• in recoverable grants that close timing gaps and unlock co-investment
• in catalytic structures that de-risk early-stage community funds
• in donor collectives that can move capital in weeks, not years
• in DAF holders choosing activation over accumulation

This is labor-intensive work, but it is the work that powers systems change. Because when we design pathways that center community outcomes, capital doesn’t just move — ownership moves, and power moves with it.

Impact-first investing costs more because we are building the conditions for a just, inclusive, and sustainable world. That is our mission. And that is why this work matters.

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