When we think of a private foundation supporting a charitable cause, most of us think in terms of grants—money given away with no expectation of it ever coming back. But loans, loan guarantees, and even equity investments can be made by foundations specifically to support a charitable purpose. These financial vehicles, called Program-Related Investments (PRIs), offer foundations an alternative beyond traditional grantmaking. Whereas grant dollars go out the door never to return, PRI dollars are generally recovered in part or in whole, and may even earn some return for the foundation in the form of interest or appreciation. PRIs offer several important advantages, including:
- The ability to comfortably give more funds to a worthy project than through a grant, knowing that the principal will eventually be repaid to the foundation.
- The ability to reuse or “recycle” the same dollars for the benefit of multiple organizations, as PRIs are paid back and then redistributed.
- Qualification towards the foundation’s 5% payout requirement in the year of disbursement, just like a traditional grant.