Program-Related Investments

To pursue its goals, The Dakota Foundation makes program-related investments (PRIs), a type of low-interest financing.

PRIs are most commonly made as below-market rate loans or, occasionally, equity interest, and require that the agency receiving the PRI generate sufficient cash flow ultimately to repay the loan or provide a return on the equity. Our geographic focus primarily is on activities in North Dakota and New Mexico, although ventures in other areas may be funded infrequently if they meet our criteria and show promise to be transferable to activities in North Dakota and New Mexico. Most of our PRIs do not exceed $100,000.

Our foundation seeks to make PRIs to expand the range and impact of recipients' programs. PRIs usually help the recipient attract other sources of capital, thereby reducing its dependence on grant funds. As the PRIs are repaid, the funds become available for redistribution to other philanthropic projects by our foundation. Thus, more of the foundation's resources can be recycled to meet other funding needs.

The terms of a program-related investment from the Dakota Foundation are determined on a case-by-case basis. Most past and current investments have a term of five to seven years with a below-market rate of interest on the unpaid balance.

Criteria for evaluating proposals for PRIs include the project's potential impact, its financial feasibility and the extent to which it is related to our foundation's mission. In every case the foundation seeks to fund programs that enhance human self-sufficiency and that can become long-term self-sustaining entities.

We maintain an investment focus in all we undertake in that we seek a financial return AND a long-term, measurable social return. We want to be involved with committed and ethical people who seek entrepreneurial and creative ways to solve social problems.

PRI: A Powerful Tool for Grantmakers

(From Essentials, the quarterly newsletter of the Association of Small Foundations)

PRIs are loans or other investments made by a foundation to support its charitable purpose.  PRIs count toward a foundation’s distribution requirement as long as they meet a few basic requirements, and the best part is that the funds generally are returned to the foundation to be used for other PRIs or grants.

PRIs count toward a foundation’s distribution requirement as long as they meet the following criteria:

– Serve a charitable purpose.  A PRIs primary function must be to further the foundation’s   charitable purpose.

– Income or appreciation of property is not a significant purpose. An investor solely interested in profit would not make an investment on the same terms.

– Not used directly or indirectly to lobby for political campaign purposes.  Like grants, however, PRIs may fund voter registration, voter education and advocacy within legal guidelines.