In a time when many nonprofit organizations are struggling and there is little support for potentially impactful projects, many foundations are beginning to rely on loans, loan guarantees, and program-related investments, or PRIs, as a way of supporting these organizations without diminishing their assets.
Private foundations are required to disperse 5 percent of the market value of their assets as a condition of their tax exemption. With the drastic decline in the stock market in 2008 and 2009, the amount that must be paid has likewise declined. Because of this, many foundations across the country have begun to rely on program-related investments. Program-related investments are similar to grants in that they put money toward projects that have financial need. However, unlike grants, they also provide a return of the principle to the granting foundation, enabling them to put more money to work in the community.
Using a PRI, the Community Health Foundation of Western and Central New York was able to provide a $650,000 loan to Community Care of Western New York to begin an initiative that allowed more than two hundred rural elderly people to remain in their homes.
