Deciding to Make PRIs: Finding a Few Good Deals

The good news for inexperienced PRI makers is that finding good PRIs is a lot like finding good grants – but with a few twists. In most cases, PRIs emerge from a foundation’s existing program work, usually from current grantees. “Eighty percent of our PRIs go to groups that have been or are grantees,” one investor said. This is no coincidence, he explained, but a strategy that the foundation pursues for two underlying reasons: “One is programmatic, in that it helps assure programmatic alignment. The second is, frankly, risk management.” Grantmakers know things about a grantee’s leadership, financial position, and organizational competence that make it much easier to assess financial risk and underwrite an investment. Likewise, grantees are more likely to step forward if problems arise, and midcourse corrections can mitigate the risk of default.