Program Related Investments

Jonas Bendiksen

A nonprofit loan fund has lent more than $150 million to small and growing businesses in developing countries over the past 10 years. A fund that lends to low-income housing developers has helped preserve more than 2,700 units of affordable New York City housing since 2006. A new private equity fund will invest millions of dollars in businesses that serve low-income populations in Africa and Asia. With the help of program related investments (PRIs) from the Rockefeller Foundation, these and other organizations are able not only to have a social impact but to provide financial returns to their investors as well.

What Is a PRI?

Similar to a grant, a program related investment is a tool foundations use to help achieve their programmatic objectives. Unlike grants, however, this type of investment allows the foundation to recycle its capital. PRIs can be structured in a variety of ways, including as a loan, an equity investment and a guarantee. They are frequently tailored to the needs of the recipient. This flexibility means that a PRI is sometimes a more effective use of foundation funds than a grant.

For charitable organizations or commercial ventures with socially-minded missions, PRIs can provide access to needed capital, generally on terms that are more favorable than the market would provide. Receiving this type of investment can assist an organization in obtaining future commercial credit, for example, by helping it improve its credit history or worthiness.

The Impact of PRIs

The Rockefeller Foundation has been making PRIs since the early 1990s. Like grants, PRIs are aligned with our initiatives and overall strategy. Among other efforts, Foundation PRIs are helping to

Provide affordable housing in sections of New Orleans devastated by Katrina and Rita
Build sanitation services in India
Revitalize blighted neighborhoods in San Diego

Featured PRIs

Here are examples of some of the organizations the Foundation has worked with closely during the past few years:

Enterprise Louisiana Loan Fund provided short-term take-out financing for construction loans on new and renovated single family homes for low and moderate income families in New Orleans affected by Hurricanes Katrina and Rita. The lenders include Goldman Sachs, Rockefeller, Gates, Robert Wood Johnson and Enterprise Community Partners. The fund is also benefiting from a significant Community Development Block Grant from the State of Louisiana.

Centenary Rural Development Bank (CERUDEB): In 2005, the Rockefeller Foundation decided to provide a three-year, $500,000 guarantee to CERUDEB, a financial institution in Uganda, so the bank would lend to smallholder farmers who would not have had access to financial credit otherwise. Initially, the bank agreed to lend up to $1 million, thereby leveraging the Rockefeller Foundation guarantee two times. At the end of the three-year period, the bank’s loan portfolio was more than $1 million but the default rate had been less than 2%, less than the interest earned on the guarantee deposit. CERUDEB and the Foundation renegotiated the guarantee in 2008, for an additional two years, so the original $500,000 guarantee would leverage up to $4 million. More than 2,000 farmers have benefited from this pioneering program.
Pacific Community Ventures (PCV): Since 1999, PCV has been helping companies in traditionally overlooked areas gain access to capital, business advice and resources that accelerate growth. They invest in businesses that provide economic gains to low- to moderate- income communities in California. PCV manages three community development venture capital funds. After having invested in PCV’s Fund I in 2001, the Rockefeller Foundation invested $1 million in PCV’s Fund III in 2007. PCV’s Fund III is a $40.5 million fund that has invested in companies such as Adina For Life, Inc., dedicated to producing healthy, fair trade beverages, and Fresh Dining, which prepares all-natural gourmet meals and delivers them to customers' homes. Since inception, Fund III has created or preserved close to 100 jobs.
Aavishkaar India Micro Venture Capital Fund (Aavishkaar): In 2008, the Rockefeller Foundation’s Innovation initiative invested $1 million in Aavishkaar, a 594 million Indian Rupee fund (approximately US$13 million). Aavishkaar seeks to empower disadvantaged and rural communities in India. It does so by making micro equity investments in small enterprises that employ and serve populations at the bottom of the pyramid. Aavishkaar’s investment can be truly transformative since, typically, these small entrepreneurs, operating at the lower end of the economic spectrum, are overlooked by financiers. Aavishkaar’s portfolio currently includes handicraft co-operatives, health care clinics and a company that provides training and consulting to disabled people.