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Participation Loan

An arrangement whereby two or more lenders pool their resources to provide a loan to a single borrower. Participation loans enable lenders to share risk (and profits) and to make loans in amounts that are higher than their limitations as individual lenders. Participation loans are particularly useful in advancing CDFI commercial or small business lending, and in attracting mainstream financial institutions into a deal.

Pay For Performance

Social Impact Bonds (SIB) are also known as Pay for Performance Bonds or Pay for Success (PFS) Bonds. A social impact bond is a new type of financing that includes a contract where payment from a government agency is tied solely to outcomes. Generally the public agency has few other controls or restrictions on the provider. As currently deployed and designed, SIBs or PFS projects typically involve three parties: the public agency payer contracting with a third party intermediary for payment based on outcomes. The intermediary contracts with a nonprofit service provider to deliver services and raises funds from investors. The intermediary contracts with the service provider with payment upfront for delivery of services and pays an incentive or bonus payment based on outcomes. The use of the word "bond" is actually a misnomer in this structure. The investment has more in common with venture capital that has a social value.


Payout refers to the 5% that private foundations are required by the IRS to expend on program (grants) and program-related administrative expenses. PRIs and related expenses are eligible to be counted in the 5% payout.

Permanent Financing

The long-term financing for a real estate project. The permanent loan usually has a term of 15-40 years, and is used to pay off the short-term construction loan, which provided funds to build the project.

Permanent Restriction

A donor-imposed restriction stipulating that resources be maintained permanently but permits the organization to use up or expend part or all of the income (or other economic benefits) derived from the donated assets.

Permanently Restricted Net Assets

The part of the net assets of an organization resulting from contributions and other inflows of assets whose use by the organization is limited by donor-imposed stipulations that neither expire by passage of time nor can be fulfilled or otherwise removed by actions of the organization.

Prepaid Expense

An expenditure paid in advance of its use, such as rent or insurance premiums. The payment is considered an asset because it entitles the organization to future benefits.

Prime Rate

The interest rate banks charge to their most credit-worthy corporate customers.


The stated amount of a loan, notwithstanding interest or other premiums.

Private Letter Ruling (PLR)

A private letter ruling (PLR) is a ruling by the IRS as to treatment of the particular set of facts presented in the ruling request by a taxpayer.  PLRs may not be used as binding precedent by anyone other than the recipient of the PLR, but they do provide guidance as to how the IRS might be likely to treat similar situations. 

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