The following chart preliminarily depicts a somewhat complex system that private foundations and social enterprises would need to navigate in order to actively consider using PRIs and MRIs as useful tools to achieve their philanthropic goals.
One weak element in this system is the lack of consistent data to enable a strong feedback loop between the initial investment and the programmatic and financial outcomes from the investment over time. For example, the data in the Mission Investors Exchange database, which is the primary source of the data presented in this paper, is self-reported exclusively by foundations on a voluntary basis and therefore does not represent all mission investing by foundations in the U.S.
Further, the data only represents the investment at the time it is made and does not track performance over time. Investment in the infrastructure to improve the feedback loops should significantly enhance transparency and understanding of mission investing.
Legal requirements and costs can also be significant, which may result from a lack of clarity regarding the specific elements necessary for an individual investment to qualify as a PRI. Further work with foundations and legal experts with experience in implementing PRIs may be necessary to determine if it is useful to develop a set of recommendations for consideration by the IRS and other policy makers.
Players in the system are driven by different motivations and incentives
