Program-related investments (PRIs) have emerged in recent years as an innovative social investment tool that combines financial returns with positive social impact. PRIs refer to investments made by foundations and non-profits into companies, organizations or funds that align with and further their philanthropic missions. Unlike grants which only provide funding without expectation of repayment, PRIs function more like investments as they can generate at least some financial returns. However, maximizing social returns takes priority over maximizing financial returns for PRIs. By bridging the gap between traditional grants and conventional investments, PRIs allow foundations and non-profits to mobilize significantly more capital towards achieving social objectives. The Rockefeller Foundation has been a pioneer in using PRIs. This article analyzes how the Rockefeller Foundation develops and manages its PRI portfolio to drive social change on a global scale.
PRIs fill the gap between grants and commercial investments
PRIs occupy the middle ground between outright grants on one end of the spectrum that foundations provide to recipients with no expectation of repayment, and commercial investments on the other end that aim to maximize financial returns. With PRIs, foundations and non-profits can invest in enterprises and funds in the non-profit sector and social enterprises that can generate modest financial returns in addition to social impact. The partial financial returns allow the invested capital to revolve so that it can be redeployed for greater impact over time. Thus, PRIs can mobilize far more capital than grants towards achieving social missions.
The Rockefeller Foundation creates a $1 billion PRI fund
In June 2020, the Rockefeller Foundation created a $1 billion PRI fund to help non-profits worldwide that were facing financial difficulties due to the Covid-19 pandemic. The Foundation issued $1 billion in social bonds with maturities up to 30 years, with proceeds going into PRIs over 2020-2021. This allowed the Foundation to increase its grant-making budget significantly in the next two years to reinforce the operations of many struggling non-profits. The Rockefeller Foundation also developed a comprehensive PRI governance framework aligned with industry best practices to manage the funds responsibly towards positive impact.
Rigorous processes instituted for impact measurement and management
For each PRI, the Rockefeller Foundation works closely with the investee to define the intended social impact goals, key metrics, measurement methodologies and reporting procedures. Data on financial performance and social impact gets tracked ongoingly and analyzed to support decision-making and risk management. Periodic third-party assessments on the overall PRI portfolio’s impact are also conducted for greater accountability and transparency.
Innovative PRIs catalyze new financing mechanisms for social sector
Since 2015, the Rockefeller Foundation has committed over $95 million into trailblazing PRIs across 28 countries that are inventing new financing mechanisms for sustainable development. Examples include the Zero Gap Fund on Rockefeller’s Impact Investment Management platform that aggregates capital towards filling SDG funding gaps. By demonstrating the viability of PRIs, the Rockefeller Foundation aims to catalyze greater adoption of such innovative social finance models that unlock new streams of capital for impact.
Program-related investments allow foundations and non-profits to invest capital into socially-driven organizations while also generating financial returns, creating a virtuous cycle where funding can be perpetually re-invested for impact. The Rockefeller Foundation has hugely advanced the PRI concept globally through developing a vast portfolio itself and championing PRI adoption. With rigorous impact assessment and management protocols instituted, PRIs can drive significant and sustainable social change.