• Engage: #2Gen

Two generations. One future.

Health and Well-Being: An In-Depth Look

What We Know

There is a well-documented correlation between poor health and poor family finances — with the causation believed to go in both directions.

Impact investors, and foundations in particular, have traditionally invested in the real estate to support the building or enhancement of community health centers. However, there is a growing diversity in health-related investments. Thirteen survey respondents indicated a focus on health and primarily invest in access to health services, facilities financing, and food and nutrition.

As the number of insured consumers grows, the economics of the health field are changing. There is a shift toward considering the links between non-medical services and effects on health.

Investment Examples

Lessons Learned from Investments

While recent health care reform has moved policy in the right direction, there is broad consensus that further extensive changes are necessary to improve access to and the quality of care, prevent disease, promote health, and reduce costs. Through grantmaking, other philanthropic initiatives, and now impact investing, health funders are actively addressing these challenges.

The two key challenges for health centers are limited access to financing for facilities expansion or improvements and reduced, uncertain, and/or delayed revenues from state government contractors and traditional grant sources. For conventional lenders, health centers are often difficult to finance, given the centers’ limited and complex revenue sources and the perceived financial risks associated with the disproportionate share of low-income and uninsured people they serve. Therefore health care investors like Kresge have stepped in to fill a huge gap through the use of CDFIs. Other examples include two national intermediaries — Capital Link and NCB Capital Impact. Capital Link, a nonprofit headquartered in Boston, is raising a program-related investment (PRI) fund to finance the expansion of federally qualified health centers, so they can meet their growing patient load. NCB Capital Impact, headquartered in Arlington, Virginia, lends to health centers as well as other community development projects.

Like CarePayment, groups are stepping in to provide safety net financing. The Colorado Health Foundation launched a $3 million loan fund in 2010 to help its safety net grantees offset delayed Medicaid payments from local government. Grantees with a stable management structure, a diverse income stream, and strong operating ratios can apply for loans between $50,000 and $300,000.

The Ford Foundation’s investments and the ongoing commitment of the Robert Wood Johnson Foundation are part of a long history of investments in health and well-being. The Ford Foundation’s first PRIs 40 years ago were loans to launch nonprofit health plans: $600,000 for the Harvard Community Health Plan and $1.2 million for the New Haven Community Health Plan. The aim was to explore whether creating ways for low- to moderate-income people to prepay for health care could encourage prevention and lower overall health care costs. In 1991, the Robert Wood Johnson Foundation awarded a $5.5 million, 25-year PRI loan to establish the Community Health Facilities Fund and lent another $2.8 million in 1995. These PRIs leveraged $100 million in financing for 32 projects, helping meet an estimated $2 billion in financing needs for community-based mental health centers, including housing for adults in group homes.

Opportunities for Impact Investing in Health

At the heart of philanthropic innovation is the aim to increase impact – to more effectively solve society’s problems, enrich community life, and ensure equity. Health care funders are making impact investments at the same time that health care policy makers, practitioners, and advocates are advancing their fields through practice, programs, and policy. The collective approaches seek to deliver better and more cost-effective health care for all.

To achieve this mission, health care funders focus on a number of areas: