Program-related investments (PRIs) are investments made by foundations to support charitable activities that involve the potential return of capital within an established time frame. PRIs include financing methods commonly associated with banks or other private investors, such as loans, loan guarantees, linked deposits, and even equity investments in charitable organizations or in commercial ventures for charitable purposes. Characteristics of PRIs and PRI-making include the following:
- Of the many thousands of grantmaking foundations in the United States, only a few hundred make PRIs. In addition, relatively few PRI funders maintain formal PRI programs or make PRIs on an annual basis (about one out of three).
- Foundations make PRIs to further some aspect of their charitable mission (e.g., in the areas in which they make grants). PRIs are often made to organizations with an established relationship with the grantmaker.
- Foundations commonly make PRIs as a supplement to their existing grant programs when the circumstances of the request suggest an alternative form of financing, when the borrower has the potential for generating income to repay a loan, and as a last resort when an organization — in most cases a charitable nonprofit but occasionally a commercial venture — has been unable to secure financing from traditional sources.
- While a large portion of PRI dollars support affordable housing and community development, they also have funded capital projects ranging from preserving historic buildings and repairing churches to providing emergency loans to social service agencies and protecting and preserving open space and wildlife habitats.
- For the recipient, the primary benefit of PRIs is access to capital at lower rates than may otherwise be available. For the funder, the principal benefit is that the repayment or return of equity can be recycled for another charitable purpose. PRIs are valued as a means of leveraging philanthropic dollars.
To locate PRI-makers:
Use Foundation Directory Online to identify funders that make PRIs. Search for “Program-related investments” under the Transaction Type field. Subscribe to search from your own location, or search for free at our libraries and Funding Information Network locations.
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