Program-Related Investments: Will New Regulations Result in Greater and Better Use?

Gene Takagi, Nonprofit Quarterly

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. PRI financing methods mimic those associated with banks or other private investors. For instance, private foundations can make loans, loan guarantees, or equity investments in for-profit corporations as an alternative to traditional grantmaking. PRIs have been somewhat underutilized. As foundations typically make grants, their capacity to underwrite deals for investment and return may be a factor in their limited use or PRIs. However, recent changes in how the law is administered may encourage greater use, which could potentially increase competition for philanthropic dollars for nonprofit organizations. As public funding continues to decrease, more and more foundations may consider PRIs as an alternative funding mechanism. This article provides an overview of PRIs and summarizes the new regulations to help both foundations and nonprofits better understand this different stream of investment capital and the potential impact to the field.

To read the final regulations, access the IRS’ Examples of Program-Related Investments.


This article was originally published by NPQ online, on May 12, 2016 ( Used with permission.

Global Topics: Nonprofit Capital
Focus Areas: Nonprofit Capital
Resource Types: Article