New Players and New Approaches for Improving Health Outcomes

November 19, 2014

Faith Mitchell and Meryl Dann
Grantmakers In Health

The fields of health and health philanthropy have seen dramatic changes in recent years. As the professional home of health philanthropy, Grantmakers In Health (GIH) is deeply interested in these changes and their implications. In 2013, we partnered with Arabella Advisors on a report about certain new players in health philanthropy that we term “nontraditional actors” (NTAs), to distinguish them from traditional health foundations. Our report, “Health Philanthropy: New Players and New Approaches,” examines key characteristics and categories of NTAs, and demonstrates how the approaches and priorities that they bring to the field are can address the needs currently facing health philanthropy. It concludes that NTAs can have a significant impact on health and health care, especially if the extensive content knowledge of traditional health foundations informs their work. Meanwhile, by working with NTAs, traditional foundations can stretch limited resources and increase their own effectiveness.

NTAs in health philanthropy include a wide variety of organizations and institutions, including community development financial institutions, high-tech start-ups, next-generation donors, and venture philanthropists. One defining characteristic of NTAs is their interest in prioritizing results and impact over specific funding methods or organizations. For example, their focus is not exclusively on traditional health care agencies or providers. Instead, they might frame their support of health care services within broader economic development goals.

NTAs are also motivated by cost savings and creating efficiencies, and they are sometimes less risk averse than traditional funders. Many are interested in using program-related investments and other so-called “impact investing” approaches to fund activities, rather than traditional grants. Impact investing uses an organization’s assets to advance mission while recovering principal or earning a financial return. It is attractive to NTAs for many reasons. There is the potential of recycling dollars; an ability to combine resources from several sources, including traditional foundations; and an opportunity to invest in for-profit organizations, as well as non-profits. Interestingly, traditional health foundations are experimenting with these strategies as well, and may be more willing partners than NTAs assume. (See GIH’s Guide to Impact Investing for more on this subject.)

Among NTAs, community development financial institutions (CDFIs) are well-established and primary players. (For background on CDFI’s, see “The Past, Present, and Future of Community Development in the United States” in Investing in What Works for America’s Communities: Essays on People, Place & Purpose.) The bridges CDFIs are beginning to establish between the built environment and health are a new and welcome contribution to improved outcomes in low-income communities. CDFIs have helped lead the charge in making the argument for community as the foundation for positive health. Across the country, they are doing this in a variety of ways, such as building new community health centers and clinics, renovating deteriorating health care facilities, and constructing grocery stores in communities that lack them. 

CDFIs are also taking the lead on impact investing to improve health. A good example is the San Francisco-based Low Income Investment Fund (LIIF). A few years ago, LIIF leveraged funds from the Bay Area Metropolitan Transit Commission and support from various other sectors—public, private, and philanthropic, including the Ford, San Francisco, and Silicon Valley Community foundations—to establish a $50 million Bay Area Transit Oriented Affordable Housing Fund. The Fund invested in senior living and dental facilities, grocery stores and transit-oriented residential developments. Meanwhile, investors were able to contribute in ways that met their mission and investment criteria, and risk was distributed among them. Across the country, there are similar examples of CDFIs and traditional funders coming together to aid underserved communities.

There is more that CDFIs and traditional foundations can do together. As NTAs, CDFIs have a powerful sense of the links between community, housing, and health—and financial resources to bring to the table. For their part, health foundations have a profound understanding of local health needs and of the complexities of working with community-based organizations and leaders. These powerful and complementary assets can make a profound difference for underserved people and places.   

The views expressed are not necessarily those of the Federal Reserve Bank of San Francisco or of the Federal Reserve System.