First, a review of terms: Program-related investments (PRIs) are those held by an organization to accomplish its charitable purpose and not primarily for a financial return. Impact, or mission, investing is done not only for financial gain, but also to achieve social or ethical benefit. In many areas of the world, both types of investments are increasingly utilized in vital initiatives — green growth, sustainability, agriculture, education and employment.
As an example, one reason to lead your organization into utilizing either of these investments might be to respond to the uptick in requests for microloans. These small loans to spur entrepreneurship and community development in struggling and emerging economies are made at generally higher risk and less profitability than accepted by traditional financial institutions. Not-for-profits are focusing more attention on providing microloans, as financial needs in distressed areas have risen, especially in communities experiencing mounting strife, agriculture shortages and climate calamities.
Program-related and impact investments can exert a powerful influence in today’s world, and with the economy improving, there is greater cash available to make such investments. These types of investments are no longer considered niche financing; they are moving to the mainstream. Given the increasing need for program/impact investments and their growing use as an important new source of funding, if your organization has not yet explored using this type of investing, it is time to take a closer look
. To effectively leverage this power to confer essential benefits, read the full article
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