It’s hard to imagine that something that’s been around for 40-plus years is actually energizing philanthropy. But, that’s exactly what program-related investments (PRIs) are doing.
“While foundations traditionally have given great attention to the 5 percent of their assets they typically pay out each year, PRIs provide us with an opportunity to think about what we do with the other 95 percent and what our role could be in working with our community partners,” suggests Kathleen Fluegel, executive director of HRK Foundation, a member of the Minnesota Council on Foundations (MCF).
The Spring 2010 issue of MCF’s Giving Forum focuses on how Minnesota grantmakers are magnifying impact and creating change through innovative philanthropic initiatives. PRIs – loans, loan guarantees, lines of credit and equity investments that earn a foundation a return on its investment of 1 to 2 percent in most cases – are playing a prevalent role in energizing the field.
Fluegel recalls that when the younger generation of HRK trustees introduced PRIs to the board as a new foundation tool, the idea was “embraced by the older generation, and it energized all of us because of new, creative possibilities,” she says.
For example, HRK offered a PRI to one of its long-time nonprofit partners who was having difficulty timing cash flow to acquire pieces for its museum. “We realized that a line of credit could give the organization more flexibility,” Fluegel explains. “Raising money for the acquisitions wasn’t an issue; it was quick turn-around that presented challenges.” With the line of credit, the museum could purchase an object and then take the time needed to raise the money and repay the loan.
In this issue of Giving Forum, we also spotlight PRI maker Sunrise Community Banks.
With its community development mission, Sunrise provides financing that other institutions might view as risky. “We’re willing to take the extra steps to make some of these projects work, because we know they will positively impact the community,” acknowledges Nikki Foster, Sunrise Community Banks’ vice president of community development.
Through its Sunrise Homeownership Alliance, an innovative, nationally recognized initiative, Sunrise Banks secured deposits from organizations such as The Minneapolis Foundation and the John Larsen Foundation. These deposits fuel lending through the Greater Metropolitan Housing Corporation and Dayton’s Bluff Neighborhood Housing Services. These nonprofits provide financing to individuals to buy homes on a three-year contract for deed, during which time the individuals participate in credit counseling to learn how to repair their credit and set aside savings, so they’re able to refinance into a conventional mortgage. Also part of the financing mix are federal dollars from the Family Housing Fund.
In this issue’s “Giving Trends” article, MCF research manager Juliana Tillema outlines how PRIs got their start, some recent trends and the opportunities and benefits that PRIs can present for both foundations and nonprofits. She notes that, because PRIs require funders to integrate deep program knowledge with financial and legal expertise, PRIs are most often made to organizations with which a grantmaker has a well-established relationship, when a strategic investing opportunity arises with those partners, and when capital is needed to realize a shared goal.
Who are Minnesota’s PRI Makers? Tillema cites MCF research that lists 11 MCF members, about half of whom made their first PRI recently – in either 2008 or 2009. The list includes: Blandin Foundation, Duluth Superior Area Community Foundation, HRK Foundation, John Larsen Foundation, Lutheran Community Foundation, The McKnight Foundation, The Minneapolis Foundation, Otto Bremer Foundation, Carl and Eloise Pohlad Family Foundation, Thrivent Financial for Lutherans Foundation, and the West Central Initiative.
- Chris Murakami Noonan, MCF communications associate
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