Philanthropy Northwest (PNW) announced last week the merger of PRI Makers Network and More for Mission to establish Mission Investors Exchange. In today's blog, we explore how PRI's are being used by Rasmuson Foundation in Alaska, and how these financial tools are gaining more attention elsewhere,
Philanthropy Northwest (PNW) announced last week the merger of PRI Makers Network and More for Mission to establish Mission Investors Exchange. In their blog post, PNW said that Mission Investors Exchange will be a resource for foundations and related organizations that use investments as tools to achieve their philanthropic goals.
“The new organization reflects the growing interest among foundations in using a range of financial strategies, including both below-market and market rate investments in their philanthropy,” explained Peter Berliner, managing director of Mission Investors Exchange.
Program-related investments (PRIs) and mission-related investments are financial tools that allow foundations to accomplish their missions and charitable goals outside of traditional grantmaking, and can be structured as low-interest loans, equity investments, linked deposits, and loan guarantees.
Rasmuson Foundation has been an active member of the PRI Makers Network since the first steering committee meeting in 2003. Since then, the Foundation’s PRI partnerships have developed into three general interest areas: affordable housing, community and economic development, and historic preservation. Investments that have potential to leverage additional capital and grant funding are more likely to receive Foundation support. Read more about Rasmuson Foundation’s PRI program here.
In 2006, the Foundation began a partnership with CDI-Alaska for the construction of the affordable housing development, Weeks Field Estates, in Fairbanks. The Foundation financed a portion of the project with a low-interest PRI, and CDI-Alaska gained additional financing from Alaska Housing Finance Corporation. The housing complex now provides safe and adequate housing for hundreds of qualified families.
Rasmuson Foundation provided contingent funding support to Tundra Women’s Coalition (TWC) in procuring New Markets Tax Credit financing. The funding would allow TWC to construct a thrift store, storage, and renovate two transitional housing properties.
As PRIs generally generate a modest return and allow for future reinvestment in other projects, foundations are able to initially invest more through PRIs, than traditional grants. PRIs allow foundations to take innovative risks with the potential for greater social impact.
Just last week, the Obama administration announced its proposal, drafted by the Treasury Department and Internal Revenue Service, to expand and clarify PRI guidelines. The administration hopes to mitigate the potential legal liability and high cost that have deterred some foundations from utilizing PRIs. White House Director of the Office of Social Innovation and Civic Participation states: “This approach can leverage the balance sheets of foundations, enabling ‘capital activation’ and potentially adding significantly to their capacity to drive social impact.”
The establishment of Mission Investors Exchange and updated PRI regulations will hopefully streamline developing PRI partnerships and decrease liability, so that more innovative solutions can be applied for social good.
Has your foundation or nonprofit partnered in a program related investment? Share your story here.