In June of 2008, the Sustainable Agriculture & Food Systems Funders (SAFSF) Annual Forum featured a closing plenary session: Cultivating Economic Sustainability. Almost every participant of this multi-day conference stayed after hours to continue the conversation sparked by this session, which explored the various economic tools — in addition to grant-making — that foundations can use to promote food systems healthy for people and the environment.

One tool that garnered quite a bit of excitement amongst the audience and panel was Program Related Investment (PRI), which several food system funders have already begun using to leverage their philanthropic dollars.

PRI is made out of the 5% minimum payout required by foundation law. Unlike grants, however, PRIs provide a return on foundations’ investments, either through repayment or return on equity, which means that the funds can be “recycled” and applied to additional PRI or grants. (Note that PRI is distinct from Mission Related Investing, or MRI, which refers to the investment of endowment funds.) While PRI has been available to foundations since the 70s, only in the last few years has it been gaining in popularity amongst food system funders; three top PRI makers according to the SAFSF report Trends in Sustainable Agriculture and Food Systems Funding, 2003-2006 are the William Penn Foundation, the Blue Moon Fund, and the Presbyterian Hunger Program.

Enter the financial crisis, which has affected foundations in many ways: not only are many grantees scrambling to meet operating costs due to losses in revenues from government and individual sources, foundations find themselves with ever-smaller endowments with which to generate the grant-making pool.

Now more than ever, PRI offers foundations a unique opportunity to respond to the challenge of using fewer resources to provide support to communities with greater needs. Organizations that were already promoting PRI as a means for foundations to support their missions are now upping the ante.

“As we know, the turn of 2008 to 2009 caught many foundations by surprise,” says Dana Lanza, Executive Director of the Environmental Grantmakers Association. “Within the environmental grantmaking community, assets are down by an average of 30%-40% in many cases. We are noting that in this climate, PRI is garnering significant interest from our members as a means to continue to support innovative efforts while essentially ‘recycling’ funds. I expect this to become a critical form of grantmaking as we pull ourselves through this rough period over the next few years.”

The PRI Makers Network, which provides a wealth of resources and data related to PRI, organized a call last month for funders to discuss the results of a recent member survey: PRI in Tough Economic Times.  The survey revealed what callers confirmed: while there are reasons to be cautious, there are even more reasons to seize the opportunities inherent in PRI. According to the survey summary, “last year, in many cases, PRIs constituted [foundations’] highest performing asset class – providing downside protection in the bear market.”

If your foundation is considering doing PRI directly, this Council on Foundations interview with Carol Lewis, president and CEO of Philanthropy Northwest, and Doug Stamm, CEO of the Meyer Memorial Trust and co-chair of PRI Makers Network, includes a list of things to consider before diving in. It’s a substantial list, and not every foundation will have the staff, expertise, or back-end support to find and evaluate appropriate recipients, draft term sheets, and administer the actual investments over time.

We decided to launch the RSF PRI Funds after hearing from several foundations that they want to participate in PRI to maximize their social impact, and would rather take advantage of RSF’s 25 years of experience in social enterprise lending rather than start the learning process from scratch. Meanwhile, we’ve been hearing from staff at foundations that would prefer to do PRI through an intermediary like RSF rather than continue doing it on their own, allowing them to stay engaged with PRI while focusing their staff’s energy on grantmaking and support of grantees.

The RSF PRI Funds will launch next week, giving foundations an intermediated PRI option for focusing charitable PRI impact within specific regions and/or focus areas: Food & Agriculture (eg, loans to projects supporting local food systems based on sustainable agriculture); Education & the Arts (eg, loans to charter schools with holistic approaches to education); and/or Ecological Stewardship (eg, loans to organizations creating green jobs in low-income areas).

Our pooled PRI model means that each foundation’s investment will work alongside other funds, re-invested into a portfolio of borrowers doing critical work on the ground. This approach maximizes the power of leveraged PRI impact while also mitigating risk. Already, three foundations have committed to investing in the RSF PRI Funds, and we’re in active conversations with interested staff at many more. We’re inspired by this opportunity to catalyze positive social impact, and look forward to connecting with other foundations who want to learn more about PRI.

An earlier version of this post appeared on RSF’s Reimagine Money blog, an online conversation about the nature of money.