More accurately used as Net Interest Margin, this term refers to the difference between the interest earned on loans and investments and the interest paid on borrowings and/or deposits (or cost of funds), divided by average earning assets. For example, if in a year a CDFI earns $6,000 on loans, pays out $3,000 in interest to investors, and has average loans outstanding of $100,000, the calculation would be: ($6,000 - $3,000)/$100,000, or 3% net interest margin.
A generally agreed upon "going rate" or usual rate that commercial banks typically charge lenders for a particular loan. Since PRIs are defined by terms that are below market rate, foundations have an obligation to monitor and adjust terms, e.g., on debt instruments.
A mission-related investment (MRI) designed to result in positive social or environmental benefits while generating financial returns that are comparable to similar conventional instruments.
The gain or loss realized on the market as a whole, including income and capital gains.
Microfinance is usually understood to entail the provision of financial services to micro-entrepreneurs and small businesses that lack access to banking and related services due to the high transaction costs associated with serving these client categories. The two main mechanisms for the delivery of financial services to such clients are (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.
Foundations working with CDFIs, Community Development Banking Institutions and other finance organizations addressing the needs of under-banked populations. Carried out in a number of ways, e.g. cash deposits linked to bank branch development, and community loans for new and diverse enterprises.
A mission investment can be either a program-related investment (PRI) or mission-related investment (MRI). Mission investing is the practice of foundations who invest to advance their missions and programmatic goals. Private foundations make PRIs as part of their annual distribution strategy. MRIs are risk-adjusted, market-rate investments made from the foundation's assets. Read more about MI, PRIs, and MRIs on the "About Mission Investing" pages.
A mission investment can be either a program-related investment (PRI) or mission-related investment (MRI). Mission investing is the practice of foundations who invest to advance their missions and programmatic goals. Private foundations make PRIs as part of their annual distribution strategy. MRIs are risk-adjusted, market-rate investments made from the foundation's assets.
Coined by the W.K. Kellogg Foundation, mission-driven investments align mission and financial return objectives along with what Kellogg calls its "learning return."
MRIs are typically risk-adjusted or “prudent”, market-rate investments made from the foundation’s endowment — or what some affectionately call the other 95% — to advance a foundation’s mission across asset class and issue area. Unlike program-related investments (PRIs), MRIs are not an official IRS designation, and different funders utilize different names to refer to this kind of impact investment. PRIs are another tool foundations can use to align their assets in service of their mission. The key differentiator between MRIs and PRIs is that PRIs are essentially a program activity for tax and compliance purposes and must primarily be made to advance the charitable purpose of the foundation, and not to achieve an investment return.
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