In late January, we wrote on this blog about philanthropy’s “new normal” and explained how the Rasmuson Foundation is approaching its grantmaking in 2010. While the markets were not kind in late 2008 and 2009, we still have substantial capacity to help improve the quality of life for Alaskans through grantmaking and other financial instruments. One such instrument, called Program-Related Investments (PRI), garnered a lot of attention and interest in the 2010 outlook and deserves more explanation.
In the simplest possible description, a PRI is an investment that furthers a foundation’s programmatic goals. Usually structured as loans, PRIs can also be equity investments, linked deposits or loan guarantees. In considering a PRI, the Foundation prioritizes projects that will leverage additional capital or attract new dollars into Alaskan projects. In some cases, PRIs can be an option for short-term funding needs, or to fill a gap when partnerships are still coming together and project timelines are pressing.
Rasmuson’s programmatic interests for PRIs include affordable housing, community and economic development, and historic preservation. Our goals are to increase employment, engender home ownership and promote neighborhood stability.
One such project is the new Weeks Field Estates in Fairbanks. (The Weeks Field Estates project was also an early indicator of how the economic downturn would impact Alaska; read that blog post here.) The project, aimed at providing needed affordable housing, opened its first phase last fall with more construction slated to begin this spring. It was built on the site of the former Fairview Manor, which had, over its nearly 60-year lifespan, become a blight on the area. Much of the multi-building development was condemned for years before it was torn down. The new, clean, thoughtfully designed housing erected in its place was both an actual and psychological victory for Fairbanksans, who were rightly tired of the crime that took place in the abandoned portions of Fairview Manor and the shabby facade of the vacant buildings. On top of that, Weeks Field Estates will provide hundreds of qualified families an affordable, safe place to live.
Rasmuson is proud of what our PRI program was able to do to get that project off the ground and would like to provide other people or groups who may be planning similar projects more information on this funding mechanism. To be considered for funding, PRI projects must meet the following three tests:
1. The project’s primary purpose is to further the exempt objectives of the foundation.
2. No significant purpose is the production of income or the appreciation of property.
3. It is not used to lobby or support lobbying.
PRIs are usually structured as low-interest loans and allow foundations like Rasmuson to put its assets to work in the community. By investing in a grantee through a PRI, the money helps provide affordable housing or safety net services that are central to our mission, while generating a modest return that can be used for reinvestment in future projects.
There are some additional guidelines to consider. The Foundation will not consider PRI projects that seek to reduce debt associated with a current loan, seek only to lower the cost of capital, or are not necessary from a business perspective and could weaken the borrower.
We should emphasize that we do not accept unsolicited proposals for PRIs; applications are by invitation only. After reviewing the guidelines, if you think your project might qualify, please contact Program Officer Chris Perez at 907-334-0522 or firstname.lastname@example.org.