Overview

Since 1986 the MacArthur Foundation has used program-related investments (PRIs) to expand the reach of its grantmaking, providing approximately $380 million to over 175 recipients in the U.S. and around the world. Foundation PRIs have supported nonprofits and for-profit businesses working in a range of fields, including health, conservation, education, independent media, affordable housing and development finance. The vast majority have been directed toward increasing economic opportunity among low-income people and fostering vibrant, stable communities.

PRIs can be made in the form of loans, equity investments, bank deposits and guarantees. Like traditional grants, PRIs are used to support to charitable organizations or to commercial ventures that fulfill a charitable purpose. But unlike grants, PRIs are designed to be repaid, usually along with a modest amount of interest or other type of financial return.

According to the applicable sections of the Internal Revenue Code and related Treasury regulations, the primary purpose of a PRI must be to advance the foundation’s charitable objectives. Further, neither the production of income nor appreciation of property can be a significant purpose of a PRI. In effect, this requires PRIs to take the form of a below-market investment that would not be made by an ordinary investor, seeking only to maximize financial gain.

The Foundation is a leading supporter and founding member of the PRI Makers Network, a national forum for networking, professional development, and funder collaboration. The Network’s website provides a wide range of informational resources on PRIs and its members include 90 foundations of all sizes from every region of the country, with a wide range of programmatic goals.

What MacArthur Funds

As of September 30, 2009, the Foundation had $271 million in active PRI commitments. Major programs and initiatives supported by these funds include the following:

1. To preserve and improve affordable rental homes throughout the U.S.

   Window of Opportunity: Preserving Affordable Rental Housing is a $150-million national initiative that includes PRI and grant support for twenty-five large nonprofit housing developers, nine specialized financial intermediaries, more than a dozen states and localities, and several national policy groups working to preserve and improve the existing supply of subsidized and unsubsidized affordable rental property in urban, suburban and rural communities across the country.

   The Foundation’s aim is to prevent a projected 10-year loss of one million affordable rental homes. It is pursuing this goal by helping a wide range of affordable housing leaders and policymakers devise, demonstrate and institute policies that can facilitate and sustain timely, cost-effective preservation activity.

   Download a list of all Window of Opportunity PRI recipients (PDF).

2. To revitalize and strengthen Chicago communities

   Since 2005, the Foundation has committed PRIs totaling $65 million to stimulate public and private sector investment in Chicago neighborhoods and thereby advance the work of the MacArthur-supported New Communities Program.

   These commitments include renewed support for seven leading community development financial institutions, $10 million to help finance the transformation of Chicago’s troubled public housing into new, mixed-income communities, and $42 million for a special Foreclosure Prevention and Mitigation Project.

   The Foreclosure Project, launched in October 2008, is helping residents of hard-hit neighborhoods stay in their homes or access favorable financing to rent or purchase a redeveloped, previously foreclosed home through the City of Chicago’s Neighborhood Stabilization Program, which is operated in partnership with the nonprofit Foundation grantee Mercy Portfolio Services, the Foundation-supported National Community Stabilization Trust, and other organizations.

3. To boost the scale and impact of the nation’s leading community development financial institutions

   Community development financial institutions, or CDFIs, are a leading source of innovative, market-based solutions for economically distressed communities and underserved people across the United States. Serving all 50 states, CDFIs include revolving loan funds, venture funds, banks and credit unions, providing more than $5 billion in loans, investments and financial services to urban, rural, and Native Communities. All of this financing directly benefits low-income and low-wealth people by increasing their access to homeownership opportunities, affordable rental housing, thriving small businesses and critical services such as childcare, healthcare and education.

   The track record of the CDFI industry over its 30-year history is impressive. CDFIs focus on markets and borrowers that most conventional financial institutions consider too risky or difficult to serve, yet their cumulative losses have totaled just 1.1 percent.

   The MacArthur Foundation has been a leading supporter of the CDFI field, providing approximately $250 million in grant and PRI support since the mid-1980s. In 2007, the Foundation awarded its largest PRI ever — $25 million — to create the Wachovia NEXT Awards for Opportunity Finance. Through this five-year program, two outstanding, high-potential CDFIs are chosen annually to receive flexible, long-term financial support that is intended to propel them to even greater levels of growth, impact, and staying power.

   The Opportunity Finance Network provides extensive information about the CDFI field.

Updated November 2009