Growth of PRIs

Growth of PRIs

By Jackie Jacobs

In the Tax Reform Act of 1969, the Internal Revenue Code permitted a giving vehicle for foundations, called “program-related investments” (PRIs). A PRI is a method of making capital available to both nonprofits and for-profits that are addressing social or environmental concerns.

The Internal Revenue Service recently issued new regulations that encourage foundations to enhance the impact of their philanthropically committed capital by using PRIs when investing at least some of the significant funds that sit in endowments. These regulations give nine new examples of different types of PRIs.

With a PRI, a foundation lends to or invests its endowment assets in a nonprofit or for-profit entity in a way that furthers its mission. At the same time, the investment has the potential of providing a positive financial return to the foundation.

To qualify as a PRI, three key criteria must be met:

  • The investment’s primary purpose must be to advance the foundation’s charitable objectives;
  • Neither the production of income nor appreciation of property can be a significant purpose of the investment; and
  • The funds can’t be used directly or indirectly to lobby for political purposes.

Examples of PRIs include:

  • Making a low interest rate loan to a nonprofit to pay off a building mortgage – saving the nonprofit significant interest over the life of the loan; and
  • Making an investment in a for-profit company researching and developing an “orphan drug” to help cure a disease that primarily affects people in developing countries.


The Columbus Jewish Foundation has provided millions of dollars of program related loans to assure that major Jewish community initiatives come to fruition. The largest was for the New Albany Jewish community campus that now houses the JCC Northeast facility and the Columbus Jewish Day School.

Others were for Wexner Heritage Village and a forgivable PRI to cover all interest payments on the Jewish Community Center’s recent capital campaign.

PRIs help foundations solve social problems by allowing them to use market-based tools to grow and recycle at least a portion of their sizable philanthropic assets for future use.

Article appears as originally published in the Ohio Jewish Chronicle Thursday March 9, 2017.

Jackie Jacobs is the Chief Executive Officer of the Columbus Jewish Foundation, the Central Ohio Jewish community’s planned giving and endowment headquarters.