Program-Related Investments in the 2020 Landscape
Author: Katherine E. David, J.D..
Source: Volume 19, Number 04, May/June 2020 , pp.1-6(6)
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Abstract:
Under IRC ยง4942, each year, a private foundation must make qualifying distributions in an amount roughly equal to 5% of the net value of its non-exempt-use assets. A typical grant-making family foundation satisfies most of its minimum distribution requirement by making grants to public charities. During the COVID-19 pandemic and resulting economic downturn, many public charities face unprecedented need, and a foundation looking to satisfy its minimum distribution requirement by making grants currently easily could find worthy recipients. However, current grant-making might not be the best choice for all foundations. As discussed in our prior issue, set-asides create an avenue for foundations to meet the minimum distribution requirement without having to liquidate investments at a loss or fund projects that have been paused because of stay-at-home orders. This article describes how program-related investments (PRIs) can be used to meet specific challenges brought by the COVID-19 pandemic and other recent events.Keywords: Program-Related Investments (PRI); Structured as Loan; Structured as Capital Investment; Streamlined Procedure for Rulings on PRIs
Affiliations:
1: Clark Hill PLC.