Open Road Impact raises $35 million to bridge social enterprises through funding delays

Open Road Impact has for a dozen years bridged funding gaps for social enterprises to see them through the Covid pandemic, wars, unexpected funding delays, and now, the abrupt shuttering of USAID. 

Via its impact fund, Washington DC-based Open Road has lent $54 million to some 94 enterprises to keep nearly $550 million in committed funding on track since 2020. 

With that fund fully deployed and investors repaid, the impact lender — which earlier this year created a nonprofit to succeed the Open Road Impact Fund and rebranded itself from Open Road Alliance — has raised $35 million through the first half of the year to continue the work. 

That includes a first close on the nonprofit’s new evergreen vehicle, which will expand its bridge loans to cover working capital, nature-based solutions such as carbon credit projects, and reimbursable state and local government contracts. 

For example, Open Road made a recent bridge loan to West Africa Blue, a “blue carbon” developer that works with communities in Sierra Leone to preserve and restore mangroves. The loan will tide the group over as they go through the lengthy process of getting a voluntary carbon credit agreement signed by an offtaker. In California, Open Road fronted cash in advance of reimbursements from a state grant to a company that is installing EV charging infrastructure in multifamily buildings.

As a nonprofit, Open Road can gather donations, grants, program-related investments and other charitable contributions. Family offices including Ceniarth, A to Z Impact, and Stardust backed the new initiative. Blue Haven Initiative returned as a debt investor. 

“Being a second-time fund manager definitely made this an easier path,” Open Road’s Caroline Bressan told ImpactAlpha. 

Open Road, which was founded by philanthropist Dr. Laurie Michaels, plans to convene family offices later this year in an effort to get more families to step up. 

“As the world becomes more uncertain, philanthropy has an obligation to move quickly and fix things,” Michaels said in a statement announcing the fundraise. “In Open Road’s case, our hybrid philanthropic and investment approach allows us to maximize our impact with every dollar we deploy.” 

‘Urgent & Vetted’ USAID projects

The funding announcement includes the $9 million in philanthropic funds Open Road raised in late March to extend zero-interest loans to certain USAID grant awardees that have already completed work and that the government is required to pay. Open Road got its first loan repaid two weeks ago. Reimbursements from the State Department for completed work are trickling in. The word is that all eligible contractors will be repaid by September, Bressan said.  

Open Road raised an additional $4 million earmarked for grants to continue some of the most urgent work by USAID’s Development Innovation Ventures, a grant initiative that supported organizations testing new ideas, building evidence of what works, and scaling cost-effective solutions.

Open Road is one just a handful of funders that are stepping up to plug holes left by the shuttering by the Trump administration of USAID, a 65-year old pillar of humanitarian aid and US soft power.  

If the Trump administration’s gutting of the agency was chaotic and capricious, the funders stepping up to salvage parts of the sprawling program are taking a methodical approach to salvaging some of the most critical and viable programs.

Project Resource Optimization, or PRO, founded by former USAID staffers, have analyzed thousands of USAID programs to identify the most cost-effective interventions at risk of shutting down without funding. The group’s “Urgent & Vetted List,” available at proimpact.tools, helps funders identify opportunities that align with their missions and can have the most impact. It also operates a pooled fund for funders that don’t want to make individual grants. 

PRO, which is hosted at the Center for Global Development, has raised some $24 million to date to close the gap for 22 projects across 19 countries, said Sasha Gallant of PRO. Funding has come mostly from family offices, philanthropic organizations and individuals giving through DAFs. 

The needs remain significant, said Gallant. “Dozens of proven, cost-effective programs are still on hold, and their infrastructure, local teams, and hard-won community trust are at risk. In the coming months, we’re coming up on hard deadlines for a number of some of the most effective programs,” she said. 

Adds Bressan, “These projects are now at a point where, if the money’s not there, they’re not going to be saved.”

The Gates Foundation, a major backer of global health, is stepping up its spending in response to the challenges. The foundation last week said it would commit $1.6 billion over the next five years to support Gavi, the public-private partnership to get vaccines to poor countries that the Gates Foundation helped to launch. 

With international aid nonprofits facing existential risk, Accountability Lab is taking a different approach: it has launched a merger marketplace to match nonprofits looking to merge with others to strengthen their hand. 

Aid experts have warned that the dismantling of USAID could put millions of lives in danger. The shutdown will cost the US an estimated $6 billion, according to a State Department memo reported by Bloomberg Government.