How One Foundation Scales Its PRI Lending Program for Grantees

Program-related investments (PRIs) are one of the unique advantages afforded to private foundations. In fact, they’re one of the many ways our in-house experts support our clients to help them strategize and maximize their giving capabilities while tapping into their creativity. Whether in the form of loans, loan guarantees or equity investments, these financial vehicles offer philanthropists an alternative to traditional grantmaking—with the opportunity for charitable dollars to be recovered in part or in whole. In some cases, it may even earn some return for the foundation in the form of interest or appreciation.

In this special edition of our Foundation Friday Series, we’re sharing how one of our clients, the Archarios Foundation, sought to expand its impact beyond grantmaking by establishing a PRI lending program.

Read on to learn more about their journey—from the challenge they faced after launch to a solution they implemented that made all the difference.

Launching The PRI Lending Program

The Archarios Foundation aimed to provide capital funds to nonprofits and support projects that aligned with their mission to provide modern infrastructure for housing and educational facilities for women and at-risk youth. However, once the program was launched, managing and collecting repayment turned out to be more complicated and time consuming than expected.

“It only took one loan to realize we needed more than an Excel spreadsheet to properly manage, track and make accurate accounting entries,” said Steve Rabago, Founder and CEO of the Archarios Foundation.

Steve considered the PRI challenge through the lens of his other endeavor, ZimpleMoney, and realized that the platform originally designed to help private lenders track loans, automate accounting, and streamline payments online could be deployed for PRIs. A great partnership between the foundation and ZimpleMoney emerged. “Once we implemented ZimpleMoney’s private lending platform, we were able to grow our single loan to a larger, more impactful portfolio of PRI loans,” added Steve.

By implementing ZimpleMoney, the foundation was able to:

• Initiate the capital improvements before the non-profit raises money or secures capital grants.
• Earn interest on money loaned.
• Use the PRI loan as a portion of the foundation’s minimum annual contribution.
• Proactively track loan performance and repayment with real-time visibility into loan balances, payment history and delinquency rates.
• Provide online tools for flexible loan repayments.
• Generate detailed loan and portfolio reporting.
• Make it easier for their accountants to properly report PRIs to the IRS.
• Have secure login access to the records on the platform for the borrower and lender.
• Help nonprofit partners complete their capital investment and work with other donors to help repay 100% or portions of the outstanding PRI loan.
• Provide a mechanism for the foundation to convert its loan into a grant and maintain an accurate financial record.
• Grant access to the foundation’s records to accountants and advisors.

ZimpleMoney helped the Archarios Foundation manage and scale its PRI lending program while providing critical capital investment and financial support to organizations that support its mission.

We celebrate entrepreneurs like Steve who are similar to our own founders here at Foundation Source—two philanthropic brothers who saw a need for professional management of family foundations. When they couldn’t find a solution in the market, they created their own.

Thanks to the Archarios Foundation for sharing their story with us!

Want to Learn How Foundation Source Support Other Types of Advanced Grantmaking?

Whether you’re interested in making program-related investments or grants-to-individuals, take a few minutes to learn more about how we support private foundations with an upcoming?live presentation. Together, let’s #begiving.