For the first time in 40-plus years of supporting charitable efforts in Chicago and around the world, the storied John D. and Catherine T. MacArthur Foundation is issuing $125 million in taxable "social bonds," with possibly more to come, to boost its grant-making.

The initiative is part of MacArthur's commitment, along with the pledge of four of America's other leading private foundations, to increase their charitable giving by a total of $1.7 billion. With that additional funding, they hope to help redress the economic problems stemming from the historic crises engulfing the nation—the pandemic, its financial fallout and the social unrest following the unjustified police killings of African Americans.

MacArthur's surprising decision to incur debt comes as increasing numbers of socially conscious investors seek to combine profit and purpose to address growing inequities created or exacerbated by the coronavirus. Social bonds, along with other "impact investments," are designed to help raise funds for projects that can deliver financial returns along with positive social outcomes.

Social bonds have already reached record levels, more than quadrupling this year. According to Morgan Stanley, $32 billion of social and sustainability bonds were issued in April alone. And the five legacy foundations' entry into the bond market is likely to encourage impact investing to move mainstream even faster than it otherwise might.

Joining the growing roster of social bond issuers made perfect sense to the members of MacArthur's board. Rather than liquidating assets in turbulent times, they decided to leverage the organization's strong credit rating and the low cost of borrowing to increase its annual payouts in order to hasten recovery and reinvention for nonprofits and communities.

The move comes as welcome news to nonprofit leaders who face once-in-a-century challenges from COVID-19 and the recession it brought with it. Their fundraisers have been postponed or moved online; their artistic seasons have been canceled; their corporate sponsorships have been lost; their grant revenue has shrunk; and their government contracts have been put at risk.

But MacArthur's unprecedented decision is not without controversy. While acknowledging that borrowing against the foundation's balance sheet to make more grants at a lower cost is creative, some critics argue that the strategy may one day strain the foundation's performance as a fiduciary by forcing mission-compromised investment decisions. Others see MacArthur, which benefits from the generous tax breaks afforded foundations, as hoarding publicly subsidized dollars to safeguard its endowment instead of using them to help those in need.

By balancing the resources the foundation uses today against those to become available in the future, the foundation has legitimately staked its public claim to sound stewardship, reasonably ensuring that MacArthur can help address not only the current crises, but also those which lie ahead. And thanks to the foundation's leadership, more individual and institutional investors—sensitized to the compelling opportunity to drive positive social change—are likely to deploy their own funds for both financial rewards and measurable social returns.

As fears rise around the world of dwindling central bank ammunition and ballooning debt-to-GDP ratios, MacArthur deserves our gratitude for helping mobilize private capital for the public good.