Why recoverable grants?

Between 2021 and 2022, Revolve Fund strategically influenced over $2.8 million dollars for BIPOC-led businesses and nonprofits. As a response to community feedback, Revolve is updating its website throughout this year, starting with a clearer public definition of recoverable grant (also provided at?https://revolvefund.org/recoverable-grant-defined).

What is a recoverable grant?

A recoverable grant is a financial grant to a for-profit or nonprofit entity where all or part is returned (or directed elsewhere) if certain financial or impact milestones that support the grant’s charitable purposes are achieved.?For tax and accounting purposes, recoverable grants are most commonly treated as grants by both the grantor and the grantee.?

How are recoverable grants different from zero-percent loans??

Unlike recoverable grants, loans must be repaid by a borrower regardless of project or grantee financial performance. They may be forgiven by the lender, but they are always considered debt for accounting purposes. By couching 0% loans or other debt financial products as recoverable grants, funders and investors may place unforeseen accounting or other cost consequences on funding recipients.?

Why are recoverable grants important funding vehicles??

Recoverable grants minimize financial harm if a project or venture does not succeed. Further, they can serve as bridge funding while a grantee builds momentum or seeks other funding or investment.?

For our recoverable grants, Revolve underwrites its grantee partners with the primary objective of moving emerging businesses and nonprofits and their founders that have been historically discriminated against into traditional financial markets or closer to self-sufficiency. We do not require financial covenants. We do not require recourse or collateral. Revolve accepts 100% of the burden of calculating risk, loss, and likelihood of a venture's success because that is the mission.?