Why impact stacks are the architecture our sector needs

First: what do we mean by impact stacks? 

An impact stack is a deliberately designed capital structure where different types of funding - government grants, philanthropic capital (both granting and corpus), and private for-purpose investment - are intentionally layered together, each playing a specific role, in service of a shared social outcome. 

The word 'stack' matters. This isn't about throwing multiple funders at the same problem and hoping for the best. It's about architecture. Each layer has a defined role. Each sits in relationship to the others - not just coexisting, but actively influencing and shaping the layers around it. The sequencing is intentional. The terms are designed to complement, not compete. And the coordination - the invisible hand that holds it all together - is where the real skill lies. 

At Sefa, we've spent 15 years developing that skill. We started as a capital provider. We added capability building when we realised that capital alone wasn't enough. And now, in what we think of as our third horizon, we're focusing on the true integration - coordinating blended, fit-for-purpose capital across public, philanthropic and private sources, alongside tailored capability support, to unlock sustainable growth for impact-led organisations. Impact stacks are how we get to scale. They're the architecture of a better impact economy. 

Impact stacks at transaction level 

The most tangible form of an impact stack is a carefully structured individual deal. And there are several distinct patterns we've seen work well. 

The blended stack - capital working together at a point in time 

Here, government, philanthropic and private capital combine at the same moment to create a capital structure that is affordable, appropriate and maximises the contribution of each funder. No single capital source could have done it alone, it's the combination that makes the structure fit for purpose. Jarjum Centre is a great example of this kind of intentional co-investing. 

The sequenced stack - capital following proof over time 

Sometimes the structure is about sequencing capital across time rather than deploying it simultaneously. Government or philanthropic capital comes first: de-risking, allowing the organisation to build their track record and demonstrate sustainability. Private capital follows once there's proof of concept and a clear return pathway. 42 Adelaide and Robofit  both illustrate this pattern: early public or philanthropic investment creating the conditions for private capital to scale what works. 

Investment readiness as part of the stack 

One of the most important - and often undervalued - layers in an impact stack is capability support. Many organisations aren't ready for capital. Not because they lack potential, but because their business model, financial systems or governance haven't caught up with their ambition yet. Building that readiness is not charity - as we explore in-depth in our article [Investment readiness isn't a luxury]. It is the de-risking infrastructure that makes deployment of impact capital possible. Shore Track received investment readiness support from Sefa before securing a loan from Whitebox's SELF loan fund. Schoolhouse Studios received capability support in the wake of Covid, followed by a Sefa loan once their model was strengthened. The readiness layer is not separate from the impact stack; it is part of it. 

The syndicated stack - the most unexpected pattern

Perhaps the most unexpected form of transaction-level impact stacking is the loan syndicate - because on the surface, it looks like everyone is in on the same terms. In a loan syndicate, investors co-invest alongside Sefa or as part of a larger club deal. Sefa leads origination, structures the deal, and stays closely involved over time. All investors are legally pari passu: on equal terms, equal standing. 

What makes it an impact stack is what sits behind those identical terms. In the Covidence deal, Sefa invested from our growth capital mandate. Snow Foundation contributed from their catalytic capital allocation: same legal terms on paper, but a completely different internal lens, purpose and investment thesis. A high-net-worth individual joined a later tranche seeking yield through their Private Ancillary Fund (PAF). Three investors, three distinct reasons for being in the deal together in one coordinated, pari passu structure. 

Impact stacks at portfolio level 

Transaction-level impact stacks are powerful. But portfolio-level thinking is where the real efficiencies emerge: through replication, aggregation and the evidence base that builds over time. 

Sefa itself was born from a portfolio-level impact stack. The SEDIF initiative - a Commonwealth Government program - provided $10m in first-loss capital, matched by $10m in private capital from foundations and impact investors. That $20m blended foundation is what we've since leveraged into over $160m unlocked for impact-led organisations across Australia. Government as the catalytic layer and private capital as the match, with the stack doing exactly what it's designed to do. 

Philanthropies are increasingly building catalytic capital portfolios designed to support higher-risk, earlier-stage social ventures that traditional finance won't touch. The Snow Foundation, Paul Ramsay Foundation and Wyatt Trust are doing this deliberately and well. Government, meanwhile, manages some of the largest social service portfolios in the country - with Workforce Australia recently described at a sector conference as the largest Payment by Outcomes portfolio in Australia. 

Our new program, Backing the Bold - a partnership between Sefa, Sefa Partnerships and Hand Heart Pocket - is our clearest current proof point of an impact stack operating at portfolio level. It brings together targeted capability building and investment readiness pathways for a cohort of impact-led organisations. These organisations aren't necessarily grant-dependent, their operations and business models are simply not yet ready for investment. They need to resolve a few things first, build confidence, and then step into capital on their own terms. 

Portfolios do something individual transactions cannot. They create levels of replication and aggregation that generate efficiencies. They bring together capital that looks alike and capital that complements each other. They create conditions for joint learning, and over time, that shared evidence base is what attracts more capital into the system. 

What's holding us back - and a big idea 

What's holding us back from scaling this approach is simply that we don't have clear enough visibility across the system of which capital is available, at what terms, for which stage of an organisation's journey.

For us here at Sefa, this means a load of lost time and inefficiency. We're knocking on door after door to find the missing layer in a stack, waiting on investment committee approvals, watching windows of opportunity close while the right capital sits idle somewhere else in the system. Organisations fall through the gaps between the layers and momentum is lost. 

The role of capital in a stack matters far more than its label. What one organisation calls catalytic capital, another calls business as usual. What matters is how that capital functions in the stack, how it connects to the layers around it, and how each layer influences and shapes the others. Until we have that shared understanding - and shared visibility - we'll keep losing time we don't have. 

Here's our blue-sky idea. Imagine bringing all capital providers into a room - a kind of conclave for impact finance. Everyone declares, with full transparency: what their capital can do, what terms it comes with, what risk it can absorb, what impact thesis it's pursuing, and what it has learned along the way. We then sort the capital that plays similar roles into clear categories - not by label, but by its function and role in the stack. And then we open the candy store. 

Backbone organisations and impact-led organisations can walk in, see the jars clearly labelled by role and risk appetite, and pick-and-mix the right combination for their context.

No more weeks (or years!) lost chasing a missing layer that might not even exist, no more misaligned expectations, and no more guessing. Just capital that knows its job, and partners who know how to put it together.

It's ambitious, but it's not theoretical. At Sefa, we're already doing versions of this in our deals, our programs, and our partnerships. We just need to do it at scale. 

Why this, why now?

Let's be honest about where we actually stand. Impact investing thinks of itself as the new cool kid on the block - and the growth numbers seem to support that story. But zoom out, and the picture is more confronting. As Rodney Foxworth argues in a piece worth reading in full: where are the big bets? The field sits trapped between philanthropy and traditional finance, rewarding caution over ambition and treating trillion-dollar challenges as niche investment opportunities. In the scheme of global capital markets, we are tiny. 

Australia reflects this global pattern. Most of the growth in our impact market has been concentrated in green bonds and large-scale environmental infrastructure, where institutional capital fits comfortably and returns are market-rate. For social impact investment - the kind that reaches community organisations, charities and social enterprises tackling the root causes of inequality - we remain significantly under-capitalised. The headline numbers flatter us but the underlying gap is vast. 

Our sector has produced thoughtful contributions on how to address this, including a compelling piece from SVA on clearer financial return labelling. We agree that clarity matters. But we'd go further: the deeper problem isn't that investors don't understand the label. It's that capital isn't yet designed to work together as a system. Clearer labels won't close a gap that requires structural coordination. Impact stacks will. 

We know they work; we've built them at transaction level, portfolio level, and we're beginning to understand what they need to succeed at systems level. Fifteen years of doing this - unlocking over $160m for impact-led organisations - has given us both the conviction and the humility to know what it takes. 

Now we want to go further - much further!

Over the coming months, we'll be publishing a series of deep dives into the respective roles in an impact stack: philanthropy, government, private capital, and coordinating backbone organisations. We'll share what 15 years of building this model has taught us. 

If you're a philanthropist, government agency, investor or intermediary who wants to play a role in what comes next - the door is open.

Come and find your place in the stack.