Impact Investing Strategy

Program Related Investments

The KL Felicitas Foundation believes there is demand and need for ‘social’ capital (i.e., capital which expects below market returns), particularly for social entrepreneurs and social enterprises. We also believe that foundations have a fiduciary responsibility to allocate part of their endowment or yearly pay-out for this purpose. In order to grow and reach significant scale, social enterprises need to be partly market-based and able to tap into mainstream capital markets for financing needs.

PRIs are awarded to charitable organizations or commercial ventures providing charitable goods or services. PRIs employ financing methods such as loans, loan guarantees, lines of credit, linked deposits, or equity investments. PRIs were created under the Tax Reform Act of 1969, Section 4944. Under Section 4944, private foundations are allowed to make ‘program-related investments’ if:

  * The primary purpose of the investment is to advance the foundation’s charitable objectives;
  * Neither the production of income nor appreciation of property is the primary purpose; and
  * The funds cannot be used directly or indirectly to lobby or for political purposes.
  * PRIs can result in a market rate of return or above as long as they comply with the IRS rules.

Currently, we target 40% of our annual pay-out per year (2% of our annual 5% minimum charitable payout) to invest in PRIs through 2010.

Click below to read each of the KL Felicitas Foundation’s Investment Evaluators for all Program Related Investments. Please refer to the KL Felicitas Foundation’s “Impact Investment Evaluator Primer” for background information and help on completing an investment evaluator.
KL Felicitas Impact Investment Evaluator Primer

Current Program Related Investment Evaluators
Acumen Capital Markets
Calvert BRAC
Calvert REED Fund
E+CO
Pico Bonito
Root Capital
Healthpoint Services Global

The following investment evaluators will be available in April 2011:

• Triodos Sustainable Trade Fund