Foundation Innovations

You'll find expert help with Strategeries.

Most foundations have not yet fully exploited all the ways they can make capital available to nonprofit organizations. Foundations can make grants, and loans that satisfy the Internal Revenue Services 5% payout requirement.

Unlike grants, loan funds (commonly called Program Related Investments) are returned to the foundation financial corpus. They are then recycled to the community as new loans and as part of a new 5% payout. PRI's create a useful and available source of funds to the community. Revolving loan funds provide capital to nonprofits at critical times. The loans also shore up foundation assets for future use, as part of an effective asset portfolio management strategy.

As the Executive Director of a foundation for more than twelve years, Strategeries' Peg Thomas is experienced at creating project-related investments, underwriting community lines of credit, and leveraging financing opportunities with banks. She believes that protecting assets while making capital available to qualified nonprofits will become a bigger part of how foundations support communities in the future.

These effective loans can provide needed capital to the nonprofit community while preserving foundation assets.

Other innovations include using foundation funds to collateralize projects, creating funding partnerships, focused initiatives that work, and the use of a Balanced Scorecard or benchmarks by governance to track effective philanthropy.