Financial institutions such as a community development corporation, bank, credit union, or loan or venture capital fund, that has as its primary mission to provide credit and financial services to underserved markets and economically disadvantaged populations.
An amount owed for funds borrowed. Generally, debt is evidenced by a note, bond, mortgage or other instruments that states the repayment and interest provisions.
Cash or certificate of deposit in a bank or other financial institution
Environmental, Social and Governance (ESG) factors are those which social investors may consider as part of their investment analysis as a way to evaluate whether their investments promote sustainable, fair and effective practices and mitigate potential risks. ESG may be referred to as "ESG investments" or "Responsible investing."
Cash invested by owners, developers, or other investors in a project. Equity investments typically take the form of an owner's share in the business, and return on equity involves a share in the profits. Evidence of business equity is usually in the form of shares of stock.
These securities, commonly in the form of Treasury bonds, corporate bonds, CDs and preferred stock, provide periodic income payments at predictable intervals and an interest or dividend rate known in advance by the holder. The relatively low risk of fixed income securities generally translates into relatively lower returns.
An agreement to perform the obligations of a third party if that party defaults. When a third party guarantees a loan, it promises to pay in the event of default by the borrower.
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.
A term of art from Internal Revenue Code Section 4944 that refers to foundation investments (i) the primary purpose of which is to accomplish one or more of the foundation's exempt purposes, (ii) in which production of income or appreciation of property is not a significant purpose, and (iii) influencing legislation or taking part in political campaigns on behalf of candidates is not a purpose. A program-related investment (PRI) can take the form of equity, debt, guarantees, linked deposits, etc., and must be charitable in nature. PRIs are counted toward part of a private foundation’s annual distribution requirement (a 5% minimum). In the event repaid, investment returns are treated as PRIs, but the corpus is added back to the qualifying distribution requirement. Because PRIs are generally expected to be repaid, they can then be recycled into new charitable investments, increasing the leverage of the foundation's distributions.
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