Mission, Program Investing Targeted as Tool in Climate Change Arena

Last week, the White House hosted a Clean Energy Investment Summit where Vice President Joe Biden highlighted more than $4 billion in commitments from private foundations, institutional investors and others to fund climate change solutions. In conjunction with that summit, the Treasury Department announced plans to issue guidance around certain investments that can contribute importantly to the climate change efforts.

Treasury plans to public new guidance to clarify that private foundations are permitted to make mission-related investments (MRIs) in companies that further the foundation’s charitable purposes. An MRI is an dual-purpose investment that seeks both a mission-based return and a financial return. In addition, Treasury plans to finalize rules around program-related investments (PRIs), which provide additional examples of what qualifies as a PRI. In contrast to an MRI, a PRI is motivated primarily by a foundation’s exempt purposes, and cannot have significant financial return purpose. For more information on PRIS, check out this previous blog post.

Both MRIs and PRIs have the potential to draw in foundations to clean energy development, which can have a tremendous impact on the climate change landscape. What often holds foundations back from making these types of investments is uncertainty or risk-aversion with respect to whether the investments are consistent with their tax-exempt status. Updated guidance could very well make more foundations comfortable with engaging in this area.

For more information on the White House clean energy and climate change effort, click here.

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