Program Related Investments: Changing Business as Usual for Philanthropy

Last week Tides attended the Mission Impact conference in Seattle, to continue to explore the best way to leverage program-related investments in Tides’ signature MRI Pooled Fund, and to learn more about the changes afoot in the philanthropic investors community. At the conference, More for Mission and PRI Makers Network announced they have joined forces to become Mission Investors Exchange, an organization dedicated to helping philanthropic investors increase the impact of their capital.

Composed of more than 200 philanthropic organizations, the Mission Investors Exchange will enable organizations to easily exchange resources and ideas on how to use investments to achieve their philanthropic goals. “The Mission Investors Exchange will be a great resource for all foundations looking for ways to make their investment portfolios support their missions – both their PRIs and their market-rate investments,” says China Brotsky, Mission Investors Exchange Steering Committee member and Tides Director of Facilities. “It will help educate foundations on new ways to align their assets with their ideals and to use money to promote social change.”

This merger comes just after the U.S. Treasury Department’s announcement of new regulations for program-related investments, vehicles that allow foundations to provide alternative forms of financial support to organizations beyond traditional grant-making. The new rules are intended to spur foundations to look beyond grant-making as a way to move capital to high-needs areas, such as through low-interest loans to nonprofits in rural communities or by investing in small businesses dedicated to social good.

“Program-related investments helps philanthropy becomes more capital agnostic,” says Irene Kao, Senior Strategic Advisor at Tides. “Instead of looking at what we fund solely through the lens of what can be done with a grant, we are able to identify the different types of capital needed in local communities, and customize our mode of financial support accordingly.”

Part of last week’s Mission Impact conference also saw a number of foundations commit to placing much more of their endowments in mission investments. The F.B. Heron Foundation committed to moving towards a mission-investing lens on 100% of their endowment. “It’s an exciting time to be a part of the philanthropic community,” says Brotsky. “As foundations start to move away from a more traditional, risk-averse mode of capital preservation, we’ll see an increased flow of capital to the sector, and an increase in money devoted to doing good.”

Sarah Eisinger, Senior Consultant for Real Estate at Tides, sees program-related investments as a great source of alternative funding for organizations across the sector, and specifically for nonprofit centers. “We’re really interested in how nonprofit centers can use program-related investments as part of their capital campaigns,” she says. The Thoreau Centers for Sustainability in San Francisco and New York, nonprofit centers that house more than eighty nonprofits and foundations, were made possible in part by program-related investments.

To support philanthropic investors interested in leveraging program-related or market-rate  investments to further their mission, Tides has established the MRI Pooled Fund. This fund will enable individual and institutional investors to leverage their dollars and focus on their mission, while Tides administers the back-end services and customized due-diligence needed to fulfill program-related investment reporting requirements. “We want to help philanthropists make their money more useful,” says Kao. “And program- and mission-related investments do just that.”