Major foundations are increasingly relying on program-related investing to achieve their goals, putting money into for-profit firms whose work meshes with the donors’ causes, according to The New York Times.
The Bill & Melinda Gates Foundation has increased its pool for such investments, known as PRI’s, from $400-million to $1-billion since 2009, and earlier this year it bought a $10-million stake in Liquidia Technologies, a commercial firm working on vaccine delivery. The Omidyar Network, the David & Lucile Packard Foundation, and other funding entities have also stepped up PRI’s.
Money invested in PRI’s can go toward the federal requirement that foundations pay out 5 percent of their assets every year.
Grant makers “are increasingly agnostic about how they achieve their goals,” Independent Sector CEO Diana Aviv said. “If their purpose is, say, to eliminate food deserts, they may see supporting a grocery store chain as the best way of doing that rather than funding a nonprofit program.”
But, she said, the trend could have dire consequences for charities addressing the same issues, which are already experiencing a “slow erosion of nonprofit funding streams that threatens to undermine organizations that have been built over decades to meet high standards of public trust.”