PRIs Popular But Not Widely Understood, Study Finds

Although program-related investments are becoming more popular with foundations looking to advance their charitable purposes while generating financial returns, their use remains limited, a new study by the Indiana University Lilly Family School of Philanthropy finds.

Based on IRS data and funded in part by Mission Throttle, a Michigan-based L3C, the report, Leveraging the Power of Foundations: An Analysis of Program-Related Investments (52 pages, PDF), found that between 1990 and 2009 the total dollar amount invested in PRIs rose from $139 million to $701 million, while from 2000 to 2009 the average dollar amount of a PRI increased from more than $666,000 to over $1.5 million. At the same time, the number of foundations making PRIs and the number of PRIs made each year declined between 2004 and 2009, with the number of foundations making at least one PRI falling from 137 in 2004 to 97 in 2009, according to Foundation Center, while the number of PRIs made annually during that period declined from 421 to 244.

The report also found that housing, community development, and education were the program areas receiving both the highest total dollar amount and largest number of PRIs between 2000 and 2010, and that more than half of all the PRIs awarded were loans — although foundations steadily increased their use of equity investments and debt other than loans.