New Program-Related Investment Regulations Released by Treasury

Last summer, the Treasury Department announced their intention to finalize new regulations for program-related investments (PRIs). This week, it published nine new examples of permissible PRIs. Treasury responded to continued requests of the philanthropic community, which recognized that the existing regulations did not represent the full diversity of investment opportunities available to foundations. The Council on Foundations, with the Council of Michigan Foundations, Mission Investors Exchange, the National Advisory Board on Impact Investing, and others, provided input on the new regulations.

The new examples make clear that PRIs are an applicable tool in advancing all charitable purposes. The original regulations describe PRIs mainly as a tool to support economic development. Today, foundations are looking to use them to support programs in science, technology, education, arts, and the environment. The examples further clarify that PRIs can be used to support for-profit enterprises, individuals, and international recipients.

The final regulations track closely to the proposed regulations. In response to comments from the field, Treasury broadened three of the examples (11, 13, and 15).

A complete analysis of the final regulations is available on the Council's website. This announcement comes in the wake of previous announcements around the permissibility of mission-related investments by private foundations and the ability of ERISA fiduciaries to apply ESG criteria to invested assets. Each action has the goal of removing barriers to impact investing and promoting the use of this emerging tool among foundations and other institutional investors.

John Cochrane is Associate Director, Social Innovation, at the Council on Foundations.