Catalytic Capital: Let the Need Shape the Finance

Foreword

Over the past years, I’ve had the chance to meet investors, entrepreneurs and foundations across Belgium who are quietly redefining what finance can make possible. Again and again, I’m struck by the same reality: many of the organisations creating the deepest social and environmental value are also the ones struggling to find capital that truly matches their needs. They are solid, mission-driven businesses with committed teams and viable models, yet they sit in a space that traditional finance still overlooks. What was missing, I felt, was not ambition or evidence. It was a clear vocabulary and a concrete toolkit for the people in Belgium who want to act differently with their capital. This report is an attempt to provide both.

Catalytic capital is not an abstract idea. It is a practical way of supporting initiatives that deserve to grow but cannot, or should not, be forced into the mould of market-rate expectations. The Belgian examples highlighted here show what happens when capital is deployed with intention: new ventures emerge, proven solutions expand their reach, and long-standing organisations gain the stability they need to keep serving their communities. These stories remind us that meaningful impact often comes from enterprises that operate steadily and responsibly, even if their financial returns fall outside conventional benchmarks.

And yet, so much potential remains untouched. Too many impactful companies still find themselves in the “missing middle”: too entrepreneurial for grants, too modest for mainstream investors. If we want to address the challenges ahead of us, from climate resilience to social inclusion, we cannot afford to leave this space unattended. Catalytic capital allows committed teams to build at the pace that makes sense for their work, supporting models that create lasting value for communities and ecosystems.

My hope is that this report encourages more actors in Belgium to step into this space, to experiment with new approaches, to take considered risks and to support the enterprises that quietly hold our future together. The transition to a more inclusive and regenerative economy will only happen if we choose to finance it differently.

Let this be an invitation to do exactly that.

Some of the most transformative companies generate meaningful impact and healthy profits, just not at the pace or scale demanded by market rate investors. Catalytic capital gives these enterprises the time and flexibility they need to grow, allowing them to stay true to their mission while building solid, resilient businesses that deliver long term value for people and the planet. Pierre Harkay, CEO, Impact Finance Belgium

Acknowledgements

We would first like to extend our sincere thanks to the members of the working group whose early reflections and sustained engagement laid the groundwork for this report: Sarah Kawa (King Baudouin Foundation), Tanguy Vanloqueren (Foundation for Future Generations), Reynald Jacobs (Support Fund MM Delacroix), Gaëtan Herinckx (Phitrust), Jean de Crane (Belgian Federation of Philanthropic Foundations), Adeline Michaux (Colruyt Foundation), Luc Lallemand (Helios Foundation), and Olivier Alsteens (National Lottery). Their commitment and thoughtful contributions were essential in shaping the direction and ambition of this work.

We would also like to warmly thank those who contributed directly to the development of the report: Annika Cayrol (F’in Common), Silke Janssens (Telos Impact), Steven Serneels (Impact Finance Belgium), Patrick Somerhausen (Funds for Good), Pieter-Jan Van de Velde (trividend) and Wouter Vandersypen (Kampani). Their insights and experience have enriched both the analysis and the recommendations.

Executive summary

Achieving the UN Sustainable Development Goals (SDGs) by 2030 requires a fundamental shift in how capital is deployed. With an estimated annual funding gap of nearly USD 4 trillion, traditional public funding, philanthropy, and market-rate investment alone are insufficient. Catalytic capital, which is capital that deliberately accepts disproportionate risk and/or below-market returns to unlock impact that would otherwise not be financed, emerges as a critical enabler to bridge this gap.

This report explores what catalytic capital is, why it matters, how it can be structured, and the unique role it can play within the Belgian impact investing ecosystem. Catalytic capital is positioned between impact investing and grant making and targets capital gaps left by mainstream finance, particularly in underserved geographies, populations, sectors, and early-stage or innovative business models. By absorbing risk, providing flexibility, and accepting concessionary terms, catalytic capital helps de-risk opportunities, attract additional investors, and accelerate solutions that generate meaningful social and environmental impact.

The report highlights three core roles of catalytic capital:

• Seeding, by supporting early-stage enterprises and unproven models that lack a track record.
• Scaling, by enabling growth, market expansion, and the crowding in of additional capital through mechanisms such as blended finance.
• Sustaining, by providing long-term, patient capital to impact-driven organisations that are viable but cannot deliver market-rate returns without compromising impact.

Catalytic capital can take many forms, including equity, debt, guarantees, first-loss positions, and hybrid or repayable grant instruments, and is often most effective when combined with grants, technical assistance, and efforts to influence market actors and policy frameworks. The report underscores that catalytic capital is not only about financial structuring, but also about addressing mindset barriers, misaligned incentives, and systemic constraints that prevent capital from flowing where it is most needed.

A series of Belgian case studies illustrates how foundations, public actors, institutional investors, and impact funds are already deploying catalytic capital in practice, demonstrating seeding, scaling, and sustaining roles across sectors. These examples show that catalytic approaches can unlock additional capital, strengthen investees, and contribute to broader market development when applied intentionally and collaboratively.

The report also examines the relationship between catalytic capital and blended finance, highlighting how concessional capital from philanthropic and public sources can mobilise private investment at scale. While blended finance has traditionally relied on development finance institutions, philanthropic organisations are increasingly well positioned to play a stronger catalytic role, given their flexibility, long-term orientation, and tolerance for risk.

Key insights from the analysis include the importance of clarity on the capital gap being addressed, rigour in assessing investor additionality and risks, collaboration across actors, and alignment with a longer-term, systemic perspective. Catalytic capital is not an exact science but an iterative and exploratory practice that benefits from partnership, and adaptability.

Finally, the report is a call to action. It invites IFB members and stakeholders to deepen collaboration, explore innovative instruments and structures, address legal and fiscal barriers, and embrace catalytic capital as a strategic tool to mobilise capital where it matters most. IFB will take on an orchestrator role to accelerate the mobilisation of catalytic capital in Belgium by deepening research, mapping actors and case studies, and advancing work on enabling fiscal, legal and financial frameworks. It will convene partners to explore new instruments, ownership models and donor-funded vehicles, while engaging its members through a dedicated working group and regular knowledge-sharing moments leading up to a follow-on event in 2027.

The King Baudouin Foundation views catalytic impact investing as a powerful complement to traditional philanthropy, using patient and flexible capital to support innovative solutions that are often too early-stage or high-risk for conventional investors. By combining philanthropic intent with investment tools, these structures help de-risk new models, attract additional capital, and accelerate social and environmental impact. Importantly, recycled returns and repayments can be reinvested into future initiatives, creating a long-term and sustainable philanthropic impact engine.
Brieuc Van Damme, CEO, King Baudouin Foundation

Introduction

The UN SDGs face a widening annual funding gap of USD 4 trillion to achieve the SDGs by 2030. Catalytic capital is a crucial tool for addressing many of these challenges, yet it remains in short supply. How do we deploy it as strategically and powerfully as possible?

In common usage, a gap is an “empty space”, so one would expect capital gaps to be marked by the absence of capital available to potential investees, and sometimes that is true. However, in many other cases, capital is available but not in the amounts, and on the terms and conditions, appropriate to the investee. While capital may theoretically be available, it is so misaligned with the needs and constraints of enterprises that little ends up flowing into those areas.

Catalytic capital is a subset of impact finance that addresses capital gaps left by mainstream financiers, in pursuit of impact for people and planet that otherwise could not be achieved.

Over the last several decades, we have seen increasing amounts of capital deployed for positive impact, particularly in sectors such as financial inclusion and clean energy, and across emerging and developed markets. Catalytic capital played a critical role in developing and de-risking what are now vibrant markets for impact and commercial capital that previously did not exist. It also enabled both individual enterprises and entire impact-focused sectors to scale.

But the unfortunate reality is that numerous opportunities to deliver much-needed impact still fail to attract sufficient funding. This is particularly the case for opportunities targeting poor and marginalised communities, and in sectors where capital markets are less mature. As the impact investing field grows and becomes more mainstream, it is more important than ever that catalytic capital continues to push the boundaries of impact finance into capital gaps and impact needs that would otherwise not be addressed.

It is appealing to emphasise the possibility of risk-adjusted returns alongside positive impact. And many cases show it can be achieved. But the reality is as well that some of the most pressing societal challenges cannot, and may never, be tackled through business models providing market-rate returns. However, some investors are ready to deploy their capital in projects with below-market risk-adjusted returns or capital preservation. The role of catalytic investors is to act as an enabler, allowing projects to scale-up and demonstrate their potential.

The goal of this report is to clearly define catalytic capital, why it is important, how it can be structured and who the key players are (chapter 1). It also aims to inspire by presenting concrete examples from the Belgian impact investing ecosystem (chapter 2) and finally, based on key lessons learned, invite market players to take tangible actions to mobilize more catalytic capital in Belgium (chapter 3 and 4). We do not intend this document to be comprehensive and welcome the opportunity to continue the dialogue with others in the field on these questions and beyond.

Why catalytic capital matters

What is catalytic capital?

The most widely used definition of catalytic capital comes from Tideline:

Catalytic capital accepts disproportionate risk and/or concessionary return to generate positive impact and enable third-party investment that otherwise would not be possible. Tideline, 2019

Catalytic capital is a subset of impact finance that addresses capital gaps left by mainstream capital, in pursuit of impact for people and planet that otherwise could not be achieved. Capital gaps are investment opportunities that mainstream commercial investment markets fail to reach, partially or fully, because they do not fit the risk-return profile or other conventional investment norms and expectations that such projects require.

Without catalytic capital to seed new impact enterprises, develop market infrastructure, and help enterprises prove commercial viability to catalyse the entry of new investors, the flow of needed capital to some sectors and geographies may take much longer, or not happen at all.

Catalytic capital can take the form of equity, debt, guarantees, and other financial instruments. Actors involved in unlocking private capital investments include development finance institutions, governments, philanthropic organisations, private investors, and corporations. Investors can deploy catalytic capital directly to an enterprise or project, or indirectly through a fund or other intermediary.

Catalytic capital is closely related to other terms in use, including concessional capital, impact-first capital, sub-commercial capital, flexible capital, and patient capital. Each of these terms refers to investments that are distinct from “market-rate” impact investments in that they have expected financial returns that are explicitly “below-market-rate” or are affected by the significant uncertainty of an unproven enterprise, market, or innovation.

The key characteristics of catalytic capital are:

• Risk-Tolerant: Willing to absorb higher risks to encourage investment in impact initiatives.
• Flexible Returns: Accepts concessionary returns (below market rate) to achieve impact.
• Impact-Oriented: Primarily focused on generating social and environmental benefits.
• Attracts Additional Investment: Encourages other investors to participate in impact-driven projects.

While patience is not an inherent characteristic of catalytic capital, in practice it is frequently deployed with longer time horizons than commercial capital.

Most catalytic structures combine public and philanthropic finance to de-risk transactions, send market signals, build investable pipelines, and enable the mobilisation of private capital, especially in underserved regions or in nascent and underserved sectors such as sustainable agriculture, nature-based solutions, green infrastructure, and social inclusion.

Addressing the capital gap

As mentioned above, the main role of catalytic capital is to address capital gaps not covered by mainstream finance. Capital gaps can arise in relation to aspects such as, but not limited to:

• Population: the ability to reach underserved populations/demographics
• Place: the ability to reach underserved geographies
• Innovation: the capacity to de-risk novel products, services, or financing models
• Early-stage: the building of a meaningful track record or adequate scale for a solution or a new team/organisation
• Business model: the addressing of small transaction sizes, high transaction costs, or other economic issues related to product or service (e.g., capital intensity)
• Resilience: flexibility in the face of shocks and crises
• Historical biases in capital allocation (e.g., marginalisation of Black, Indigenous, and People of Colour (BIPOC) investees and communities in the United States)

The chart below maps companies by risk/return profile. The gap between the blue (grant making) line and red (impact investing market return) line is where catalytic capital operates.

Funding is readily available for impact investments that deliver market-rate returns (the red line), and grant making is also common for initiatives where the expected financial return is essentially zero (the blue line). But between these two poles lies a vast universe of transformative enterprises with diverse risk-return profiles (the blue dots): some may return 2x or 3x the invested capital, others may preserve capital, and some may return 0.5x. These businesses generate meaningful impact and healthy profits, just not at the pace or scale required by market-rate investors (the red line). Ignoring this entire segment means leaving a lot of impact on the table.

Addressing capital gaps is essential to solving some of the most pressing societal challenges, like inequality, fight against climate change, loss of biodiversity, and fragile supply chains. Effectively addressing these capital gaps requires expertise, collaboration and rigour. Here are some key guidelines which are important when targeting capital gaps:

• Separating investee characteristics from investment barriers. Being a small agricultural enterprise in rural Africa is a characteristic. Barriers emerge from misalignments between those characteristics and the prevailing requirements and norms of capital providers. This distinction matters because barriers are what we need to remove, while many characteristics are inherent and often inextricably linked to intended impact.
• Considering barriers in a comprehensive way. Not only rational, deal-specific factors are important but market-level and psychological mindset barriers matter equally. Rational barriers typically include risk, return, cost and liquidity while mindset barriers include awareness, familiarity and attitudes.
• Mindset barriers (lack of awareness, unfamiliarity, negative attitudes) often cause opportunities to be dismissed before rational analysis begins and can persist even after rational barriers are eliminated. Addressing these may require fundamentally different responses. This connects directly to systemic investing which is presented in the Annex.

Mindset barriers. “One of our deepest lessons, which is strongly reinforced in the new C3 guide, is that not all barriers are rational. Technical fixes don’t always move a market. Many constraints in rural MSME finance stem from mindset barriers: assumptions that rural markets are ‘too risky,’ that smaller deals aren’t worth the transaction effort, or that unfamiliar business models are inherently fragile. These are often automatic mental shortcuts that shape investor behaviour as powerfully as financial analysis.” “These experiences reinforced a few truths: being catalytic is not about being different, it is about being usefully different. It demands willingness to take risk, to learn, and to collaborate. It also requires continuous attention to mindsets, our own and those of the market. Because shifting a system often begins with shifting what people believe is possible.” “At its core, catalytic capital is about possibility. It’s about what becomes feasible when flexibility, collaboration, and long-term commitment combine.”
Karina Wong, Small Foundation

• Catalytic interventions often aim to move projects/companies to a certain stage where they can be financed by conventional capital, also referred to as the graduation pathway (scaling role). Therefore, it is important to remove all key barriers, being very clear on the relevant assumptions. However, it is important to emphasise that the “graduation” pathway might not be possible and even desirable for some impact companies/projects. These can become healthy and profitable companies without offering the returns expected by conventional capital. Catalytic capital plays a sustaining role in this case, as explained below.
• Taking a holistic approach that extends beyond catalytic capital itself. Effective responses may require grant funding for technical assistance and research, efforts to influence other market actors, and advocacy for the market rules changes. Understanding the full portfolio of potential responses, and opportunities for collaboration, enhances strategic impact. This also relates to systemic investing.

Roles of catalytic capital

When a capital gap is well understood, there are different ways to respond to a capital gap depending on whether the barrier is transient, i.e. addressable through seeding and scaling roles, or structural, i.e. requiring sustaining support:

Categories of response to capital gaps. The Catalytic Capital Consortium has identified four responses to capital gaps:

1. Investment. This refers to catalytic capital, which is the focus of this report.
2. Grants or technical assistance. These are often used to fund non-financial support (training introducing good practices, installing proper governance, etc) or to develop innovative financing instruments or fund structures.
3. Influencing market actors. This means working to change the knowledge, attitudes and behaviours of other market actors, such as peer investors, but also for example introducing “fair trade” certificates to influence all players in the value/supply chain.
4. Advocacy for rules change. This means informing and engaging public policy makers, legislators, regulators, standards setters, and other relevant stakeholders. Collectively, they create, evolve, and enforce the framework of market rules (e.g., laws, regulations, standards) that guide or constrain the behaviour of market participants. A well-known example is the 90/10 fund in France. These are savings products that invest at least 5-10% of their assets in solidarity or social-impact enterprises, while the remaining 90% is placed in conventional, lower-risk investments to protect savers’ capital.

Not every catalytic capital investor needs to or is able to pursue all these actions. They should instead be considered in light of a given investor’s capabilities, resources, and role, and can point to opportunities for collaboration with better-placed actors such as advocacy non-profits, industry associations, and market facilitators. This type of collaboration is common in systemic investing strategies (see Annex).

Positioning catalytic capital in the broader spectrum of capital

Catalytic capital is situated between impact investing and grant-making. It is important to highlight that there are no fixed lines in the picture below, one strategy gradually evolves into another on the spectrum of capital:

Catalytic capital is strongly linked with investor’s financial additionality and the “additional impact investing” strategy as defined in the “5 Ws of Impact Investing” from Impact Europe. Additional impact investing is also referred to as impact first investing.

Investor additionality refers to an intervention that leads, or has led, to effects which would not have occurred without it. Two types of investor additionality are distinguished:

• Financial additionality: accepting disproportionate risk/return ratios or providing patient, flexible, and/or concessional capital to undersupplied or underfunded projects. A notable example of achieving this is by deploying catalytic capital, which targets gaps left by mainstream finance or the public sector, in pursuit of impact for people and the planet, that would otherwise not be achievable. Financial additionality increases the further one moves towards the bottom right corner, meaning impact projects with high risk, low return.
• Non-financial additionality: reflecting active engagement from the investor that improves the investee’s impact performance.

To be categorised as catalytic capital, an additional impact investment needs to enable third-party investment that would otherwise not be possible.

Innovative financial instruments used in catalytic capital

Despite Silicon Valley’s unparalleled technological innovation, the core financing structures, especially venture capital, have remained remarkably stable and show limited innovation. Most companies have a limited choice between grant, equity (venture capital and private equity), and debt. To address major societal challenges and attract capital, it is essential to innovate both financing instruments and fund design.

The forms of concession and innovation can be built into traditional financial instruments in different ways:

• Debt instruments (loans and bonds): Catalytic capital can take the form of loans or bonds offered on more accommodating terms, for example, interest rates set below market levels, repayment schedules that allow for greater flexibility, extended grace periods, lighter collateral requirements, or underwriting standards that are less restrictive than those used by commercial lenders.
• Equity instruments: On the equity side, catalytic investors may accept limited track records, take a subordinated or first-loss position to shield other investors, or allow for longer and more flexible exit horizons than traditional equity investors would typically tolerate.
• Hybrid instruments: Catalytic capital can also be deployed through structures that blend features of debt and equity. These include instruments such as convertible loans, forgivable loans that can shift into grants, revenue- or royalty-based financing, redeemable equity that behaves more like debt over time, or preferred shares. Beyond incorporating concessionary elements from both debt and equity, hybrid instruments can be designed to align repayments with an enterprise’s growth or revenue patterns, helping manage volatility. This approach is often described as non-extractive finance.
• Guarantees and risk instruments are common instruments used by catalytic capital investors to provide assurance of principal repayment to other investors in the case of default. Such credit enhancement can be a capital-efficient way for catalytic capital investors to enable investment by others since capital is only drawn if a credit event occurs. Concessions may include a higher loss coverage ratio than conventional lenders would provide, or a reduced fee for the guarantee.
• Grant instruments such as recoverable grants (convert to debt), convertible grants (convert to equity) or non-recoverable grants, where, if the investee becomes profitable, a philanthropic donation is returned to the grantor under predetermined conditions.

It is inspiring to see that a whole community is already developing and testing new ideas in this field. The Innovative Finance Initiative is bringing together funders, builders, thinkers, and doers who believe the future of finance should serve real-world impact.

First Loss is a risk management mechanism or position in an investment structure, not a financial instrument itself. It refers to the first portion of losses absorbed by a specific party before other investors or stakeholders bear any losses. In financial markets, first loss is used in the context of structured finance, blended finance, and impact finance. For example, in a blended finance structure, the first loss might be covered by philanthropic organisations, development finance institutions, or governments, allowing private investors to enter with reduced risk while still driving social impact.

At launch, F’in Common faced the classic early stage barrier: no history, no portfolio, no investor confidence. The Foundation for Future Generations’ €150,000 guarantee helped us overcome that initial hurdle. It became our risk sharing structure basis, enabling us to leverage citizen investment, secure partner loans and guarantees as well as build the trust needed to scale.
Annika Cayrol, Co-director, Financité

First loss is used in conjunction with financial instruments such as equity, debt, grants or guarantees. When an organisation takes a first loss position and specifically seeks to achieve social and/or environmental goals, the capital can be referred to as catalytic first loss capital (CFLC). Such capital is usually provided by concessional investors (e.g., philanthropic organizations or development banks) to de-risk the investments of private investors at a later stage.

As mentioned above, a first loss position can also take the form of a guarantee from a third-party to cover a portion of an investment’s potential losses. The third party that agrees to provide the first loss guarantee will protect all or a percentage of the other investors’ capital in case the project defaults or fails to meet certain milestones or objectives. The difference from first loss equity, debt, or grants is that the capital is not transferred or invested in the project or company but rather kept available in case of need.

Types of investors investing with catalytic capital

In principle, all types of investors can invest with a catalytic mindset. In practice, however, the most active investors in this space are: philanthropic organisations, family offices, high net worth individuals (HNWIs) and (semi-)public investors. A specific category is the Donor-Funded Impact Investing Fund which by design focuses on impact first investment, potentially with a catalytic effect.

Philanthropic organisations. Because of their mission, resources, and long-term strategy, philanthropic organisations have an important role to play in mobilising catalytic capital. Philanthropic organizations can use both their endowment and their programmatic side for impact investing. While the asset allocation strategy of the endowment will in most cases prioritise financial returns alongside impact, the catalytic, impact-first potential of the programmatic funding is important. Philanthropic organizations can invest across the whole spectrum of finance, combining different impact and financial objectives.

Philanthropic organisations can (amongst other instruments):

• Deploy grants with a catalytic mindset for technical assistance.
• Use repayable financial instruments to invest in very early stage, high risk, high impact ventures.
• Use first-loss capital and guarantees to de-risk financial instruments and attract additional investors.

However, impact-first investing will not be suitable for all philanthropic organisations as they have their own setting and objectives. In addition, there are legal barriers to do this in some countries. Factors that influence the current and future engagement in impact investing include different cultures and laws, varying statutes (which, for example, stipulate the will of the founder), and autonomy in deciding the use of funds for grant-making, projects and investment.

It is important to highlight that grants remain crucial to support organisations without a revenue model. When impact projects have (or can develop) a revenue model, catalytic capital becomes especially powerful, it can be recycled and reinvested, multiplying impact over time. Catalytic capital is complementary to grants and philanthropy: it is a matter of using the right tool for the right context. Examples of philanthropic organisations in Belgium exploring alternative strategies like catalytic capital are the Foundation for Future Generations, the King Baudouin Foundation and the Helios Foundation.

Family offices & high net worth individuals. Family offices and high net worth individuals are also important providers of catalytic capital. They can select specific themes and geographies that align with their values and theory of change. Their ability to invest in different asset classes across the financial spectrum and with a long-term approach allows them to apply a systemic lens to their portfolio and deploy capital where it matters most. Some family offices using catalytic capital in Belgium are The Nest, Impact Capital, VP Capital and Victrix.

Public investors. Public-sector overseas aid budgets and official development finance institutions (DFIs) are active providers of catalytic capital. Governments can also support catalytic capital efforts domestically. An example is the guarantee provided by PMV to trividend, allowing the latter to take higher risks and charge lower interest rates to investees. This guarantee plays a catalytic role by mobilising additional capital. Another strong example is the Directorate-General for Development Cooperation and Humanitarian Aid (DGD) investing a first loss tranche in Kampani. These cases are more detailed in Chapter 2. Public investors can use catalytic capital to support certain policy choices and attract private investors through blended finance structures.

Kampani provides patient growth capital to organised farmers in emerging markets, made possible by a successive chain of investors willing to accept a high risk and low financial returns and by a first loss tranche.
Wouter Vandersypen, Executive Director, Kampani

Donor-funded impact investing fund. Donor-funded impact investing refers to pooled investment vehicles that are capitalised primarily by donations and that deploy that capital as patient, concessional, and/or catalytic investment into early-stage, high-risk enterprises whose principal objective is social and/or environmental impact rather than maximising financial return.

Unlike grant-only philanthropy, donor-funded impact funds recycle repaid capital and investment returns into the fund, so that a single euro can be reused multiple times to finance new pioneers. This “rotating capital” model increases the leverage of philanthropic resources and creates a semi-permanent pool of capital dedicated to the mission.

Depending on the source of donations, three structural forms can be considered:

1. Multi-donor pooled impact vehicles which aggregate donations from multiple, unconnected donors, including individuals, families, foundations, and corporates, into a single impact-first investment structure. An example is the Donor Impact Invest Fund.
2. Foundation-led impact investment vehicles, which deploy philanthropic capital originating from a single foundation, whether family, corporate, or independent, into impact-first investments. A well-known example is DOEN Ventures, supported by the Dutch Postcode Lottery.
3. Corporate-initiated revolving vehicle which are established by operating companies or asset managers and capitalised through a systematic allocation of commercial revenues, such as a fixed share of profits or management fees. A Belgian example is Funds for Good Impact. Another concrete example of a hosted donor-funded impact investment vehicle is Astorg Philanthropy Investments (API), a fund under the auspices of the King Baudouin Foundation. API is funded by contributions from Astorg Asset Management, notably through allocations from management fees and carried interest, and deploys this philanthropic capital into impact-first healthcare-related investments. Beyond financial support, colleagues from Astorg have contributed through board participation, advisory review groups, opportunity sourcing, due diligence, and ad hoc technical expertise. Importantly, API follows a revolving capital approach: proceeds and repayments remain within the structure and are systematically reinvested into future mission-aligned opportunities, thereby creating a long-term, recyclable philanthropic investment pool.

The particular use of catalytic capital in blended finance

In addition to being deployed directly into an enterprise or project, catalytic capital can serve an important purpose when invested into a fund or other pooled investment vehicle to align the investment requirements of its investors with the needs of its underlying portfolio companies or other investees. This structure is typically called a blended finance structure.

Blended finance is the use of catalytic capital from public or philanthropic sources combined with private-sector investment to increase sustainable development. Convergence, 2025

Blended finance is, in essence, a structuring approach that strategically combines concessional capital with commercial investment. It allows organizations with different objectives to invest alongside each other while achieving their own objectives (whether financial return, social impact, or a blend of both). By blending different types of capital, blended finance aims to address market failures and create opportunities for private investors to support social and environmental goals.

Concessionality refers to capital provided on terms that are intentionally more flexible or less financially demanding than the market would normally offer, with the aim of accelerating impact. In practice, concessionality generally appears in two ways:

• Downside protection. Here, catalytic capital takes on a greater share of the risk to protect other investors from potential losses. This can include first-loss positions, guarantees at the portfolio level, or broader credit-enhancement features such as subordination or other structural tools that improve the perceived credit quality of a tranche or fund (A to B in the diagram).
• Return enhancement. In this case, the return profile for certain investor groups is improved by reallocating part of the upside. A common example is capped-return tranches, where the concessional investor accepts a ceiling on their returns so that any excess distributions can flow to other investors (A to C in the diagram).

The primary objectives of blended finance are to (1) mobilize private sector investment, (2) reduce risks for private investors, and (3) enhance the financial viability of projects. It encourages market participation in areas that are traditionally underfunded.

Thanks to the support of the Flemish government, trividend is able to provide a low risk, highly liquid, and high impact investment fund.
Frederik Matthijs, Director, trividend

A blended finance structure can be built with four types of financial instruments: grants, equity, debt, and guarantees, and combines both a concessional and commercial component. Challenges to consider include the complexity of structuring and coordinating multiple stakeholders as well as the risk of potential misalignment between financial and impact-driven goals.

Blended finance structures can also be designed to better match the liquidity and time-horizon needs of different investors with those of the underlying enterprises. Catalytic capital can play a role here by funding or reinforcing liquidity reserves, or by providing guarantees that give other investors confidence in their ability to exit even when secondary markets are thin or non-existent.

Some catalytic capital providers also support alternative fund models that differ from traditional closed-end structures. Evergreen funds and holding-company models, for example, allow investors to receive dividends and value appreciation over time rather than relying solely on asset exits. These permanent-capital vehicles offer a way to channel more patient, long-term capital to impact enterprises.

Case studies

Several investors are already mobilizing catalytic capital in Belgium to create real positive social and environmental impact. Five of these case studies are highlighted in this chapter. A sixth case study is included in the Annex, as it relates to the systemic investing strategy and follows a different format.

Le Monde d’Ayden (Phitrust & Support Fund MM Delacroix)

Role: seeding & scaling. Le Monde d’Ayden’s mission is to create inclusive playgrounds for all children, regardless of age or disability, while also promoting inclusion through the employment of people with disabilities.

Investors. The Support Fund MM Delacroix contributes to the positive development of people with disabilities by undertaking and supporting scientific research projects and field initiatives. They were the first investor in Le Monde d’Ayden. Phitrust’s mission is to invest in and support the growth of companies that place human development and the preservation of the planet at the core of their strategy. Phitrust joined as a lead investor in the scale-up stage.

Investment overview. The pilot stage investment was a EUR 100,000 long-term, zero interest loan by the Support Fund MM Delacroix for the completion of the first playground in 2020, a catalytic investment that attracted new investors like Phitrust. The scale-up stage investment was EUR 1.6 million by the Support Fund MM Delacroix and Phitrust: EUR 0.2 million equity; EUR 1.4 million convertible loan with an 8-year duration and a 3 year grace period. The loan will be disbursed in 3 tranches based on the achievement of KPIs. Citizen Fund also provided a EUR 15,000 loan under the same terms.

Structure and terms: a small equity stake to limit dilution of the founder’s ownership; Phitrust and the Support Fund MM Delacroix have a seat at the Board of Directors; no management or structuring fees are being charged. The convertible loan sets a reference point at 8% return, structured for 8 years with the possibility to extend to 12 years. Five KPIs are based on projected playground openings and user reach, validated by the fund’s board and aligned with the business plan.

Catalytic role. The investment of Support Fund MM Delacroix accepted concessional returns (zero interest) and a long term loan hereby enabling the critical first pilot project to emerge. Their investment was catalytic to attract investors like Phitrust. Phitrust acted as an additional impact investor by providing patient non-extractive capital (with risk return profile below traditional VC expectation). By providing this follow on investment a so-called “graduation pathway” has been demonstrated. This investment in turn makes it possible today to access bank loans. Phitrust also showed non financial additionality by structuring and coordinating the transition from a non-profit to for-profit structure pro bono. Strictly speaking, Phitrust’s investment is not catalytic, since no new investors have been mobilized yet.

Key lessons learned. Flexible financial instruments are important, especially for early-stage ventures. They need room to pivot and adapt their targets. The close collaboration with the mission-driven entrepreneur led to not only achieving, but even surpassing that target.

De Lochting (trividend & ImpaktEU)

Role: sustaining. De Lochting is a company active in the cultivation, processing and packaging of organic vegetables and in the ecological management of green zones. They focus on offering employment, personal development and inclusion to people who have difficulty accessing the regular economic circuit due to physical, mental or social limitations.

Investors. trividend finances and supports impact entrepreneurs with a vision to create social added value. De Lochting matched with trividend’s two main investment verticals: work integration and circular economy. Funds for Good is a new kind of company based on a model of reasoned capitalism: Funds for Good IMPACT, active in the financing and support of social entrepreneurs or those in precarious situations, is financed by Funds for Good INVEST, creator of sustainable investment funds, which returns the profits it generates through this activity to Funds for Good. ImpaktEU is a fund set up by Funds for Good.

Investment overview. EUR 900,000 subordinated loan, 50% trividend and 50% Funds for Good. Disbursement in two tranches: EUR 600,000 in 2024 and EUR 300,000 in 2025. The loan was chosen because De Lochting is a nonprofit organisation. trividend is part of the Board of Directors and provides strong follow-up. No management or structuring fees are being charged. Interest rate of 7% on the loan, which is considered below market rate. Investment duration: 7 years with 2 years grace period + 5 years repayment. Impact KPIs: jobs for people with a distance to the labour market; validated through two dedicated follow-up meetings per year.

Catalytic role. By choosing to fund the non-profit with a subordinated loan, the investors accepted a higher risk than a conventional investor would. Furthermore, the fact that the investment happened when De Lochting was going through a hard time illustrates the risk that was taken. By supporting De Lochting financially and giving them room to focus on primary debt first, the impact investors help sustain the organisation’s activities in the long term. The investors also provided non-financial support by taking on an advisory role free of charge to help solve the challenges De Lochting was facing, as well as to improve the organisation’s impact measurement and management practices.

Key lessons learned. The investors have built a strong coalition to finance the company. The good collaboration flowed from sharing the same investment philosophy.

trividend (SIFO & PMV)

Role: sustaining. trividend finances and supports impact entrepreneurs with a vision to create social added value. It focuses on 3 target groups: creation of social employment, circular solutions and social innovation. It offers financing in the form of subordinated and convertible loans and participations.

Investor. The Flemish Regional Government provides max. 1/3 of the equity of trividend at the same, though concessionary, terms as other cooperative shareholders with the goal of investing long-term savings in a low-risk, highly liquid, and high-impact fund. However, a crucial element in the model lies in the public guarantees provided by the Participatiemaatschappij Vlaanderen (PMV). Those guarantees reduce the risk profile of trividend as a fund, which helps attract additional investors. Additionally, the Flemish Regional Government provides through SIFO (Sociaal Investeringsfonds) a co-financing instrument for impact investment deals with a strong focus on employment of people with a distance to the labour market. They also provide a grant to cover the operating costs of trividend.

Investment overview. EUR 7 million in equity from cooperative shareholders; EUR 2 million in a back-to-back loan from SIFO with risk sharing; operating grant by the Flemish Regional Government. SIFO steps in as a co-funder when trividend actively invests. PMV Standard Guarantees covers max. 75% of the disbursed amount for max. 10 years. No annual management fees thanks to the Flemish Government grant. Target return: capital preservation as ambition. Impact KPIs: development of a Theory of Change; key metric at fund level is number of jobs created for people with a distance to the labour market; other impact metrics reported per portfolio company; publication of an annual impact report.

Catalytic role. SIFO acts as a co-financer and allows trividend to invest higher amounts. This tranche doesn’t have a direct catalytic effect. In addition, trividend can enjoy up to 75% coverage of a PMV standard guarantee. This guarantee ensures that trividend can take higher risks and charge lower interest rates to investees. This guarantee has a catalytic role mobilizing additional capital. The grant by the Flemish Government covers a substantial part of the operating costs of the fund. It allows trividend to be active in a segment of the market where tickets and returns are otherwise too small to cover the operating costs of a fund. As it is a pure grant it cannot be considered as catalytic capital. This public-private partnership allows early-stage and high-risk funding to ventures that are not attractive enough for traditional VC investors.

Key lessons learned. Guarantees make the business model of the fund feasible and allow to take more risk on individual case level.

Kampani (KBF, MRBB & DGD)

Role: seeding & scaling. Kampani invests in producer organisations and agri SMEs in the Global South. Kampani gives equal weight to the social impact on smallholder farmers and to the financial return on investment.

Investors. The KBF (King Baudouin Foundation) is an independent foundation that strengthens the common good in Belgium and beyond. It supports people and organisations driving positive societal change across key social, environmental, and cultural domains. The MRBB (Maatschappij voor Roerend Bezit van de Boerenbond) is the investment company of Boerenbond, supporting the long-term development of the Belgian agri-food sector. The DGD (Directorate-General for Development Cooperation and Humanitarian Aid) is the federal administration responsible for shaping and implementing Belgium’s international development policy.

Investment overview. KBF and MRBB were the early stage investors in 2014. They respectively invested EUR 500,000 and EUR 300,000 of equity. KBF invested an additional EUR 500,000 in 2022, MRBB an additional EUR 1 million in 2023. DGD financed a first loss tranche (equity) of EUR 900,000 in 2021 with a public grant. Kampani itself is also a catalytic investor providing unsecured loans with ticket sizes between EUR 100,000-500,000 with follow-on investment capped at EUR 1 million.

Kampani is organised as a holding. Minimum investment period is 5 years. 2 shareholders have fully exited so far with 2 more planned in 2026. The return expectation for equity investors is net IRR equal to long term inflation in Belgium. The first loss tranche from DGD was financed by a grant, so no financial return expectations. Impact Measurement & Management improved over time. It is still hard to develop social KPIs that are easily aggregated across the portfolio. For each client, a social business charter is agreed upon, which fixes the impact objectives and sets the reporting obligations. Kampani’s clients grow on average 35% each year.

Catalytic role. KBF and MRBB took the first mover risk, investing at ideation phase (early stage) thus playing a seeding role. Without those investments, Kampani would probably not have been launched. These anchor investors added credibility to the initiative. The financial returns are concessional exactly because Kampani focuses on clients that cannot offer commercial returns. Kampani only invests in the agri-food sector, provides only long term and unsecured debt for capital expenditures, mostly in difficult country contexts. The DGD first loss was also highly catalytic. It is the only answer to systemically improve the risk/return ratio. Kampani is very attractive from an impact point of view, but not from a commercial point of view. The extent to which shareholders are willing to compromise (accept low liquidity, lower return, higher risk in exchange for the impact) varies and is limited. By reducing the downside risk, Kampani was able to fundraise much more easily and accelerate its growth (from EUR 4 to 14 million).

Key lessons learned. Occasionally, the promise of a significant and sustainable social impact is worth substantial risk. A process innovation can be as simple as smartly putting together existing practices and executing it well. Concessional financing can be highly catalytic.

F’in Common (Foundation for Future Generations)

Role: seeding. F’in Common is a social finance cooperative that channels citizen savings and third-party funding to lend to the social and solidarity economy to create SDG-aligned social and environmental benefits. To date, F’in Common has deployed over €3.4 million in loans to 22 social economy projects.

Investor. The Foundation for Future Generations, a public benefit foundation, supports a new generation of young talents developing solutions for a sustainable future. Its Impact-First investing strategy blends philanthropic and investment tools to support initiatives addressing underfunded societal needs not met by commercial funding.

Investment overview. Foundation for Future Generations: EUR 150,000 cornerstone guarantee (since launch in 2019, absorbs losses before cooperative shares). European Investment Fund’s ‘Micro and Social’ guarantee (since 2023, if applicable). F’in Common mutual reserve: borrower-funded (built up over time, used first in case of default). The guarantee of the Foundation for Future Generations was the first significant financial risk buffer effectively in place. The foundation provided the guarantee free of charge. Thanks to the success of F’in Common, the guarantee is being phased out: EUR 100,000 in 2025, EUR 50,000 in 2026.

Success factors of an impact first guarantee: risk tolerance and pre-existing trust are key enablers; addressing long-term concerns. Out of ideology or willingness to maximise impact, many foundations hesitate to absorb early losses if this later enables private investors to reap large profits. They fear that growth financed through traditional finance risks diluting the mission and impact. Possible solutions can be give-back clauses (help philanthropy benefit from potential success along the way) and mission-lock structures (e.g. legally enshrined purpose, steward ownership, benefit corporations, cooperatives) that safeguard long-term mission integrity, well beyond the foundation’s initial impact-first investment.

Catalytic role. At its inception in late 2018, F’in Common faced a classic chicken-and-egg problem: no track record, no diversified portfolio, no funder confidence. The Foundation’s €150,000 free-of-charge guarantee broke this stalemate from day one. This served as a cornerstone of a multi-layered risk mitigation strategy, enabling F’in Common to build credibility and unlock growth. It de-risked and leveraged mission-aligned capital (citizen shares, partner loans) and facilitated partnerships with co-lenders. In addition, the Foundation provided nonfinancial support to F’in Common. They joined the pre-launch steering committee and became a co-operator and board member, sharing expertise and helping to build further trust.

Key lessons learned. Notably, after 7 years the foundation’s guarantee has never been triggered. It is now gradually being phased out, as F’in Common has developed a strong track record and built other risk buffers.

Conclusion and key insights

Catalytic capital is an essential lever for accelerating the transition toward a more sustainable and resilient society. It enables impact that mainstream finance cannot reach, and while it is urgently needed at greater scale, not all capital must be catalytic. What matters is the smart blending of capital types to create deep, lasting, and system-level change.

Across Belgium and beyond, promising examples show investors experimenting with new structures, instruments, and collaborative models. These innovations demonstrate that catalytic capital can seed emerging solutions, scale impactful enterprises, and sustain models that deliver societal value but cannot meet traditional market-rate expectations. Yet the field remains early in its evolution: continued learning, iteration, and long-term commitment are essential.

A key lesson is that designing a clever financial instrument alone is not enough. To address capital gaps effectively, actors must adopt a broader approach grounded in:

• Collaboration, bringing together different types of capital such as philanthropic, public, and private investors, as well as non-financial support.
• Regulatory innovation, removing legal or fiscal barriers that inhibit catalytic approaches.
• Research and field building, to test models and generate evidence.
• Mindset shifts, recognising that perceived risks, conventions, and biases often block capital more than actual financial constraints.

Catalytic capital can reduce risk, for example through guarantees or first-loss positions, but if regulatory frameworks or prevailing investor mindsets still discourage the wider market from serving the target population, impact remains limited. This is why catalytic capital must be seen as part of a portfolio of responses, alongside grants for capacity building, peer engagement, and advocacy for policy change. Not every actor is positioned to activate all these levers; partnerships with open-ended, evolving commitments are therefore essential.

Catalytic capital is not a precise formula, it is an exploratory practice. The central question is always: How can we mobilize capital toward the gaps where it matters most? Doing so requires humility, flexibility, and a willingness to navigate a non-linear path. A key differentiator is that catalytic capital is treated as a means to an end. You start from the societal challenge you want to address, for example small but successful farmers who cannot grow because they lack access to growth capital. Then you work backwards to determine what is needed from an investment or capital perspective, from a non-financial support perspective, from a regulatory perspective, and so on.

Finally, catalytic capital is most powerful when anchored in a long-term perspective. Its effects extend well beyond the investment period. Intentional design, such as impact enhancing exits or alternative ownership structures, can ensure that each transaction contributes to deeper structural shifts rather than isolated outcomes. This long-term, systemic orientation aligns closely with the principles of systemic investing (see Annex for an introduction), which aims to transform the underlying systems that produce today’s social and environmental challenges.

Catalytic capital will not solve everything, but when used strategically, collaboratively, and with a systems lens, it can unlock the innovations, partnerships, and financial flows required to drive meaningful societal transition.

Next steps and action plan

The need for catalytic capital is clear, innovative financing instruments exist, and more and more investors are willing to explore ways to create more impact. The time is right to orchestrate these different elements into an architecture that can create lasting positive impact. This report is a call to action for all interested IFB members and stakeholders to engage in the conversation, explore new ways to deploy capital, challenge the status quo, and reflect on essential questions such as:

• What do market-rate, risk-adjusted returns really mean? Are they rightfully the overall reference point? Should we ask ourselves the question “how much is enough?” more often? There are plenty of investment opportunities in profitable, healthy businesses that provide an expected positive financial return but not at a “market-rate”.
• Impact companies are competing with companies that do not need to pay for negative externalities (biodiversity loss, health impact, etc). Would the latter still have a positive business case if they took responsibility for their negative impact? How can impact companies get recognised (including financially) for the positive impact they create, thereby offering returns closer to “market-rate”?
• The design of companies (and funds) creates incentives to maximize profits for their shareholders. Even for impact companies, it is very difficult to resist financial gravity. What are alternative ownership models that make companies independent and mission-driven by design? How can companies share value and decision making in a more equitable way?

As next steps, IFB will play an orchestrator role to stimulate mobilisation of catalytic capital:

• Continue research, dialogue and collaboration on: mapping relevant actors and case studies highlighting inspiring initiatives in Belgium and abroad; stimulating Belgian organizations to develop their own catalytic capital approach drawing inspiration from international initiatives such as DOEN Ventures in the Netherlands and Better Society Capital in the UK; fiscal and legal frameworks to allow financial innovation and limit fiscal risks, especially for foundations willing to explore innovative finance instruments; impact-linked revenues that improve the business case of impact companies; alternative ownership models making them mission driven by design; innovative financial instruments including use and sharing of catalytic model templates.
• Further explore donor-funded impact investments vehicles and build a coalition with the perspective to launch or consolidate a Belgian initiative and mobilize more capital.
• Mobilize its members and stakeholders via the continuation of the dedicated working group around the action points above and share the journey through its newsletters and social media channels as well as organize an annual follow-on event in 2027 based on new insights and initiatives.

So much positive impact is left unrealised simply because the first committed supporter was not there. Catalytic capital is not a specialist tool; it is a change of mindset. It is about stepping in early, accepting a risk others will not, so that others eventually can join, unlocking resources and impact that would simply not exist otherwise. I hope this publication encourages more foundations and investors to ask: where could our capital be that missing piece?
Benoit Derenne, CEO, Foundation for Future Generations

Annex: introduction to systemic investing

Systemic investing is an investment approach that seeks to address complex social and environmental challenges by targeting the underlying systems that generate these issues. Centre for Sustainable Finance and Private Wealth, 2025

Systemic investing seeks to catalyse deep, structural shifts rather than isolated improvements. Many current investment approaches still concentrate on narrow, stand-alone solutions, for example, swapping combustion engines for electric motors, without addressing the broader systems that shape these challenges, such as outdated mobility infrastructures.

The resulting portfolios often lack synergy or might even contain investments that counteract each other. There is a growing desire within the ‘investment for good’ community to move from incremental change towards more transformative change. A systemic mindset recognises that social and ecological issues are interdependent. It aims to understand the dynamics of the wider system and to generate value through portfolios of synergistic investments, developed in close collaboration with other investors and stakeholders.

Investing for systems change demands a fundamental shift in the mindset and practice of the investor. TWIST has identified 10 traits as core to the practice of investing for systems change:

1. Intentionality
2. Problem understanding
3. Strategy for systems change
4. Polycapital: utilises financial, social, intellectual, and cultural capital.
5. Integration of interventions
6. Power sharing: engages multiple stakeholders to drive systemic shifts.
7. Financial return expectations
8. Dynamic evaluation
9. Long-term horizon: focuses on sustained change rather than short-term fixes.
10. Mindset shift: looks at the entire system rather than isolated solutions.

The field of systemic investing is still nascent; therefore, definitions are still emerging. Other significant synonyms of systemic investing have emerged in parallel, including Transformative Investment/Capital, Investing for Systems Change, and System Level Investing, which are used interchangeably and all share the same underlying systemic investment philosophy.

Systemic investing as a long-term strategy. While catalytic capital and blended finance structures provide immediate funding solutions, systemic investing focuses on long-term transformation. It takes a holistic approach to shift entire industries and economic systems, rather than funding isolated projects. Systemic investing makes use of different types of capital: not only financial capital brought forward under blended finance structures, but also social, intellectual, and cultural capital. The combination of multiple asset classes is referred to as poly-capital and is an essential element of systemic investing.

Example: systemic investing in the food system wouldn’t just fund alternative protein startups, it would invest in supply chain infrastructure, farmer education, and policy advocacy to reshape the entire industry toward sustainability.

Katapult Ocean is an inspiring example of a systemic investing approach in the ocean space with the open-source publication of an ocean systems map. Any investor can make a single investment in a start-up or a small grant to a non-profit using the systems map to identify specific tipping points. Therefore, any individual investor, even with limited resources, can be a systemic investor, knowing that other investors are simultaneously investing in other parts of the system transition.

Case study: Erié Foundation (in collaboration with Telos Impact)

A single foundation deploys different catalytic instruments to support mental health in a systemic way.

Since 2019, Telos Impact has been advising a family in the creation and development of the Erié Foundation. Telos Impact supports investors, philanthropists, companies, foundations, and public institutions in turning their ambitions into measurable social and environmental outcomes. With mental health at the heart of its mission, Erié Foundation aims to develop and bring about an innovative and ambitious vision of mental health care. To achieve this goal, the Foundation supports projects that strengthen prevention, early diagnosis and care, and a full integration into society for people with mental health conditions, while also supporting research, de-stigmatisation, and advocacy efforts that can translate on-the-ground learning into broader public policy change.

Taking a pioneering stance in France and Belgium with a European perspective, the family has intentionally chosen to mobilise catalytic capital in their philanthropic activities, deploying different instruments across the impact finance spectrum (as defined by IFB) to support systemic change in mental health.

Since its creation in 2019, the Erié Foundation has relied on an ambitious and systemic strategy, developed together with a network of renowned international experts. Their strategy includes following traits of a systemic investing approach:

• Intentionality: the foundation has made a commitment to highlight daily ‘on the ground’ experiences and act as an advocate for changes in public policy that will lead to better mental health for all.
• A strategy for systems change: facilitating the earliest possible care, changing therapeutic practices, better integration of people with mental disorders into everyday life and changing how mental illness is perceived.
• Use of polycapital: financial through grants and investments, social through leveraging their ecosystem and intellectual through sharing of expertise.
• Long term horizon: financial support is generally spread over several years, allowing projects to stabilize and thus develop and maximise their impact.
• Mindset shift: moves from a narrow, problem-by-problem view to a holistic view of how the system functions.

Three complementary “investments” in the mental health care system:

Matching grant to the Institute for Child and Adolescent Developmental Pathologies (IDEAL). At one end of the spectrum, Erié Foundation uses grants as an ‘impact-only’ instrument which can generate catalytic effects when disbursed subject to specific conditions. An example is the use of matching grants by Erié Foundation, which leverages additional funding by requiring contributions from other donors before releasing the next tranche of funding. Erié Foundation used this approach to support the construction of the Institute for Child and Adolescent Developmental Pathologies (IDEAL) at the Armand-Trousseau AP-HP hospital in Paris. Led by Professor David Cohen, the IDEAL project consolidates child and adolescent psychiatry services within a leading European paediatric centre, creating an environment conducive to medical and academic synergies, particularly with neonatology, neuropediatrics, emergency care, adolescent medicine, and clinical genetics teams. Erié Foundation was among the first major donors in 2021, supporting the project through a matching grant covering part of the total €40 million budget, with Telos Impact providing support throughout the process. This matching grant created a dual catalytic effect. First, the size and early timing of the donation signalled Erié Foundation’s trust in the project and helped unlock additional public and private funding. Second, the matching mechanism boosted fundraising momentum by increasing the leverage on other donors’ contributions, as donors knew their donation would be matched. Ultimately, the matching grant proved to be a win-win: it allowed Erié Foundation to play a clear catalytic role by accelerating and de-risking the fundraising effort, while enabling the IDEAL project team to secure broader support and move forward with strengthened credibility and momentum.

Social Impact Bond to Déclic Emploi. Beyond grants, Erié Foundation has also mobilised outcome-based instruments to help bridge public and private funding, notably through a Social Impact Bond (SIB). Erié Foundation participated as a social investor in the programme Déclic Emploi, a proximity-based coaching programme designed to facilitate both access to, and sustained retention in, employment for individuals experiencing psychological vulnerabilities. Its target group includes people whose mental health fragilities make stable and durable employment in the open labour market difficult to reach or maintain. Structured by KOIS, the SIB runs over 2023-2026 with a total budget of €3.2 million. Investor repayments are performance-based and made by the French State via the Ministère du Travail, de l’Emploi et de l’Insertion, based on predefined outcome metrics and a set payment schedule. Three outcomes are used to determine payments: (i) the number of beneficiaries supported, (ii) the rate of participants progressing in the steps to remove barriers to employment, and (iii) the rate of positive exits towards employment.

Transformation Associés serves as an independent impact measurement partner to ensure robust monitoring and evaluation. Follow-up and governance are ensured through steering committees, bringing together key stakeholders, including government representatives and Erié Foundation. As of 2026, the project has already achieved two out of three objectives and is on track to reach the third, which has enabled a first repayment tranche to be made to investors. While the Déclic Emploi SIB illustrates how outcome-based models can work effectively, Telos Impact highlights several structural limitations of the model: long-term sustainability remains constrained when the programme is not absorbed by government services after the SIB ends. Furthermore, the SIB mechanism requires implementing organisations to have a relatively mature internal structure due to the heavy measurement, reporting, and governance workload. These findings reflect a growing call for more flexible models that allow for deeper involvement of stakeholders closest to the issue, such as more local SIBs anchored with corporates, schools, or hospitals.

Systemic investing requires fluency across the impact finance spectrum, knowing when to give, when to support and structure, when to invest… Each financing instrument plays a distinct role and you will have the most catalytic impact when your funding is tailored to answer your partners’ needs.
Frédéric Bérard, Venture Philanthropy Senior Manager, Telos Impact

Equity investment in Think Film fund. Further along the impact finance spectrum, Erié Foundation is pursuing its first impact investing transaction through a fund investment. The investment is being pursued in Europe’s leading Impact Film Fund, Think Film, manifesting a new vision for film and impact. Films, in combination with structured impact campaigns to bolster stakeholder outreach, can accelerate changes in perception, influence socio-political behaviours, and even contribute to lasting policy change, as illustrated by films such as The Territory. This approach is particularly relevant in the field of mental health, where shifting narratives and public understanding is a key lever for systemic change, and therefore aligns with Erié Foundation’s pioneering approach. The fund targets a medium-to-high risk profile and aims to produce five films, returns are expected to be generated through royalties. A key specificity is that the films are supported by European Impact Company, which brings specialist expertise in leveraging artistic works to drive social change, ensuring that the movies will obtain the impact of their potential. Erié Foundation entered the fund as an anchor investor, having committed ahead of other investors whose participation is still being finalised. This first-mover positioning carries an elevated risk profile, yet it also reinforces the catalytic nature of Erié Foundation’s participation: by signalling credibility at an early stage, it helps build trust and confidence among prospective co-investors.

The investment in the THINK-FILM Impact Film Fund marks the first step in Erié Foundation’s broader reflection on how to further develop its investment strategy. Building on this initial experience, the Foundation intends to move beyond investing in third-party funds and, over time, explore the creation of its own ‘impact-first’ fund employing different vehicles, deepening its holistic ambition to support mental health in a systemic manner. Erié Foundation’s goal is to cover the full impact finance spectrum (as defined by IFB) and to bring a pioneering, venture-capital-inspired approach through patient capital, notably via investments in mental health tech. By deploying patient capital and assuming the associated risk, the Foundation has a significant opportunity to play a catalytic role in enabling innovations and attracting additional investors.

The table below evaluates whether the 3 investments can be considered as catalytic capital, meaning whether they have accepted a disproportionate risk and/or a concessionary return in order to create positive impact and mobilise third party investment.

It is clear from the table above that Erié Foundation is deploying an ambitious impact-first investing strategy accepting disproportionate risk and/or concessionary returns with a systems lens. However, only the matching grant and Déclic Emploi can be considered as catalytic since they also mobilised third party investments.

Sources

• Catalytic Capital Consortium (2022). FAQs about catalytic capital.
• Centre for Sustainable Finance and Private Wealth (2025). Investor’s Guide to Systemic Investing.
• Climate-KIC Holding B.V. & Hofstetter, D. (2020). Transformation Capital: Systemic Investing for Sustainability.
• Convergence (2025). State of Blended Finance 2025.
• Davis, J. (2025). Family Enterprise: Latest Strategies to Build Value Across Generations. MIT Sloan Executive Education.
• Impact Europe & Philea (2024). Philanthropic organisations using the entire toolbox for more impact.
• Impact Finance Belgium (2026). Investing for a Better Tomorrow: Case Studies in Sustainable and Impact Investing.
• Koh, H. (2025). Addressing Capital Gaps: A Guide to Strategic Deployment of Catalytic Capital. The Catalytic Capital Consortium.
• Netherlands Advisory Board on Impact Investing (2025). Blended finance: An inventory of possible structures used by Dutch and European stakeholders.
• OECD (2018). OECD DAC Blended Finance Principles. Best Practices in Development Co-Operation.
• SDG Impact Finance Initiative (2024). SDG Impact Finance Initiative.
• The Global Impact Investing Network (2013). Catalytic First-Loss Capital.
• Tideline (2019). Catalytic Capital: Unlocking more investment and impact.
• UBS (2024). Trend in philanthropy: Blended finance deep dive.
• UBS (2026). Trends in Philanthropy: three ways family offices are shaping philanthropy, impact, and wealth.