Program-Related Investment (PRI)
A term of art from the Internal Revenue Code (Section 4944(c)) enacted 50 years ago that refers to financial investments by U.S. foundations in which:
the primary purpose is accomplishing one or more of the foundation's charitable, religious, scientific, literary, educational, and other exempt purposes described in section 170(c)(2)(B) of the Internal Revenue Code. This requires that the investment:
must significantly further the accomplishment of the foundation’s exempt activities
would not have been made but for the relationship between the investment and the accomplishment of exempt purposes. The “but for” in the Code here is synonymous with additionality as Prime imagines it today.
the production of income or appreciation of property is not a significant purpose.
influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose, as described by section 170(c)(2)(D)1 of the Internal Revenue Code.
PRIs can be counted toward a foundation’s annual philanthropic distribution requirement — a 5% minimum of the foundation’s endowment. Through PRIs, a private foundation can make equity investments, loans, loan guarantees, and more.