Program-related investments can help foundations achieve their charitable goals while generating financial returns, but U.S. foundations have been slow to adopt their use.
A study released Tuesday by the Indiana University Lilly Family School of Philanthropy analyzed key trends in foundations' use of PRIs between 2000 and 2010, the latest year for which data were available.
PRIs, such as low-interest loans or equity investments, provide opportunities for foundations to go beyond grantmaking to allocate more of their resources to support and assist nonprofits and achieve the foundation's philanthropic goals while maintaining or growing its assets, the study noted.
This allows foundations to recycle their funds and leverage them for greater impact. In addition, private foundations can count PRIs as part of their required annual minimum payout.
The report, citing IRS data, said the total dollar amount foundations invested in PRIs increased from $139 million in 1990 to $701 million in 2009. The average dollar amount of PRIs made during the period grew from about $666,000 in 2000 to more than $1.5 million in 2009.
But recent trends in PRI use revealed a mixed picture, according to the report. Despite demonstrating increased interest in PRIs, U.S. foundations generally have been slow to adopt their use.
During the past two decades, only about 1% of U.S. foundations each year made PRIs. At the peak in 2004, 137 foundations made PRIs, according to Foundation Center data; by 2009, only 97 foundations did so. The number of PRIs made each year also declined, from 421 in 2004 to 244 in 2009.
