Recoverable Grants: Amplifying Philanthropic Dollars
This resource page is designed for funders interested in learning about recoverable grants — a philanthropic tool that blends traditional giving with the potential for capital to be reused. Recoverable grants allow funders to provide upfront support for high-impact projects while giving grantees flexibility to repay funds if goals are met. The repaid funds can then be recycled into future grants, stretching philanthropic dollars further.
What is a Recoverable Grant?
A recoverable grant (sometimes called a recyclable grant or recoverable philanthropic capital) is a time-bound charitable grant that can be repaid to the funder if specific conditions are met. Unlike loans or investments, recoverable grants remain philanthropic in nature — repayment is not guaranteed or legally enforceable. They are typically used to support revenue-generating or cost-saving activities that can reasonably be expected to generate repayment funds.
Why Funders Use Recoverable Grants
Recoverable grants offer funders a flexible way to deploy capital for impact, especially in situations where traditional grants or investments may not be ideal. Key benefits include:
- Extending the life of philanthropic capital — recovered funds can be re-granted to new initiatives.
- Supporting innovation — funders can take calculated risks on new or revenue-generating projects.
- Enabling bridge funding — nonprofits can cover temporary cash flow needs while waiting for committed revenue.
- Advancing equitable funding — can help smaller organizations access capital without the burden of a loan.
When They Make Sense (and When They Don’t)
Recoverable grants are most effective when the funded activity has a clear path to revenue or reimbursement — for example, government contracts, earned income projects, or program expansion with predictable cash flow. They are less appropriate when the grantee’s work does not generate income or repayment capacity, such as pure advocacy, community engagement, or general operating support.
Example Structures
- Bridge Support: A nonprofit receives a $100,000 recoverable grant to launch a program with pending government funding. Once the contract is paid, the nonprofit repays the grant (in whole or in part).
- Revolving Fund: A foundation creates a pool of recoverable grants to support predevelopment costs for affordable housing projects. As projects close financing and repay grants, new grants are issued.
- Revenue-Based Recovery: A social enterprise receives $50,000, to be repaid only if earned income exceeds $200,000 within three years.
Risks and Considerations
- Legal structure — while not a loan, recoverable grants require clear written agreements outlining expectations, repayment triggers, and accounting treatment.
- Administrative complexity — structuring and monitoring recoverable grants requires additional staff capacity or legal support.
- Communication — funders should frame recoverable grants as philanthropic, not as debt, to avoid burdening grantees.
- Equity lens — consider who benefits and who bears the risk if repayment does not occur.
Examples and Resources
- Bromberger Law's Fact Sheet on Recoverable Grants
- Social Finance and The Boston Foundation – examples of recoverable grant portfolios focused on advancing equity.
Key Takeaways
Recoverable grants can help funders balance impact with sustainability. They are best suited for funders comfortable with some financial risk and interested in leveraging philanthropic dollars for greater long-term impact. When used thoughtfully, they can provide critical risk-tolerant capital for innovation while recycling funds for future work.
To learn more or explore how recoverable grants might fit within your strategy, visit resources listed above, talk to your legal team, or contact the Maine Philanthropy Center for additional guidance.