Have you checked out Breaking the Binary: Policy Guide to Scaling Social Innovation? If not, it is the most recent report that PCV InSight published in collaboration with The World Economic Forum, The Schwab Foundation, the IRI at Harvard University and the SK Group. This report was launched at the first ever Social Innovation Summit as part of the World Economic Forum summit in Lima, Peru!
Breaking the Binary includes twelve case studies from around the globe that focus on what governments are doing to work with private investors and businesses to solve difficult social and environmental problems. At the end of each case study, readers (many of whom include top government officials) are given recommendations for implementing the policies in their own countries. Earlier this month, this ambitious report was used as a framework at the Pre-G8 meetings dedicated to social impact investing!
This report is really a great example of how PCV’s research and policy work on impact investing and social enterprise is being shared with governments around the world in order to drive more resources to vulnerable communities. In case you missed it, here’s a recap of just one of the case studies found in the report.
Case Study: Program-Related Investments, United States
The Policy Explained: Foundations in the United States are required to distribute 5% of their assets each year to maintain their tax-exempt status. Most foundations do this by providing funding to underserved communities in the form of grants – capital with no expectation for financial return. During the 1960s, many of these foundations wanted to start making investments in support of their mission, which would allow them to multiply their impact by recycling investment returns into future projects. In 1969, the IRS created a new category of investment for foundations called Program-Related Investments (PRIs), which could be counted toward that 5% distribution requirement that foundations must abide by to maintain their tax-exempt status.
Impact to Date: According to The Foundation Center, PRI investments total well over $4 billion dollars so far, and the use of PRIs is increasing! In addition to their direct impacts, PRIs in the US have helped create a network of investors and investments intermediaries with specialized skills in serving vulnerable communities.
Policy in Action: The Kresge Foundation, in conjunction with the Local Initiatives Support Corporation and Wells Fargo, built an impact investing fund of $100 million in capital to build community health centers and affordable housing with integrated health treatment.
As with all of the case studies, there are several recommendations for policymakers interested in adopting PRIs in other countries. To read the full case study, and to see the other eleven case studies from around the world, check out the online report.