Many people are familiar with grants, which are often the way foundations support nonprofit organizations. Fewer people may be aware of another tool foundations can use: program-related investments, known as PRIs.
Unlike grants, PRIs are expected to be repaid to the funder, while grants are not. PRIs can take the form of loans, guarantees, or equity, and are not expected to provide a return at market rate.
The Steelcase Foundation recently made its first PRI to Habitat for Humanity of Kent County, Inc. A PRI was a great option for Habitat. It needed flexible access to capital, not program-related support. With a PRI from the Steelcase Foundation, Habitat can acquire up to $500,000 of land and property which may be undeveloped for five to 10 years, in which time Habitat can convene neighbors and partners to ensure equitable development. Flexible capital is essential so Habitat can purchase property quickly as it becomes available, and then hold on to that property to allow time for resident engagement to inform its end use.
A five-year $500,000 PRI from the Steelcase Foundation fulfills two main needs for Habitat:
- Property Acquisition – Habitat needs to be able to respond quickly when properties become available. Both land control and time are critical to an equitable development process in neighborhoods that are vulnerable to displacement of long-time residents or negative impact of redevelopment.
- Cash Flow – Habitat anticipates gaps in cash flow over the next several years while multi-year pledges are realized. A PRI will allow Habitat to be proactive as new opportunities arise and responsive to neighborhood needs.
Habitat generously served as the Steelcase Foundation’s PRI prototype, and we’re excited to see how this tool can be used to support equitable neighborhood revitalization!
Resources: more information about PRIs can be found via Grantspace and the Ford Foundation.