In an effort to help struggling nonprofits and support worthwhile projects that otherwise might not get off the ground, many foundations in upstate New York are turning to loans, loan guarantees, and program-related investments to boost the impact of their grantmaking, the Buffalo News reports.
As a condition of their tax exemption, private foundations are required to pay out 5 percent of the market value of their assets averaged over a twelve-month period, though many calculate their payout based on a three- to five-year rolling average. The steep stock market declines of 2008 and 2009 dragged down the endowments of many foundations, however, which in turn affected the amount they will be required to pay out in 2010 and 2011.
In response, many foundations in New York and across the country have turned to program-related investments, or PRIs, which generate income with relatively small risk, to augment their grant budgets. The Buffalo-based John R. Oishei Foundation, the area's largest private foundation, for example, has allocated more than $12 million — nearly 4 percent of its $280 million asset base — to PRIs, while the Community Health Foundation of Western and Central New York has provided a $650,000 loan to Community Care of Western New York to launch a program that enabled more than two hundred rural elderly people to remain in their homes.
"[PRIs] are another tool in our basket of philanthropy," said Robert D. Gioia, president of the Oishei Foundation. "It enables us to be a lot more flexible, and in some cases, enables us to put more money to work in the community."