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The New York Pooled PRI Fund: An Opt-In Approach to Program Related Investment

Updated: Jul 1

This blog post features Bromberger Law’s client SeaChange Capital Partners, sharing information from their newsletter and report.



In 2014, SeaChange Capital Partners (“SeaChange”), a New York nonprofit founded in 2007 by senior Wall Street executives to help nonprofits facing complex financial and organizational challenges, established The New York Pooled PRI Fund (“NYPRI”) to connect New York City foundations interested in making program-related investments with nonprofits that need access to flexible, impact-first loans. Specifically, NYPRI provides loans to New York City nonprofits while offering attractive program-related investment (“PRI”) opportunities to foundations.

While PRIs should be the type of impact investing most attractive to foundations, 52 years after the enabling legislation was passed, it remains a woefully underutilized tool. NYPRI was founded to help change that.

NYPRI has been a great success for its 12 participating foundations, who do almost all of their program-related investment through the fund. NYPRI has steadily increased foundation investment in the fund and has provided financing to 19 carefully selected nonprofits that would not otherwise have had access to capital for their projects.

A recent assessment of NYPRI – The New York Pooled PRI Fund: An Opt-in Approach to Program Related Investment -- by Dick Henriques, former CFO of the Bill and Melinda Gates Foundation and Senior Fellow at the Center for High Impact Philanthropy, suggests that NYPRI's unique "opt-in" model might be worthy of consideration in other situations, and that its unique structure might be replicable to facilitate impact investing by mid-sized foundations to support even more nonprofits, including nonprofits outside of New York.

New York Pooled PRI Fund Legal and Governance

NYPRI is organized as a Delaware LLC that has elected to be treated as a partnership for tax purposes. As the Managing Member, SeaChange manages NYPRI and also participates in each investment as an investor. The other members of NYPRI are NYC-focused foundations who make a minimum capital commitment to NYPRI, have the right to participate in each investment pro rata to their respective capital commitments, agree to cover their share of the operating costs, and appoint one person to a Members Committee to review and approve investments. Although the Board of each foundation makes its own decision to join NYPRI, how much capital to commit, and in which investments it will participate, the approval of individual investments by NYPRI is made by the Manager or a committee of the Board that can meet when needed to respond on a timely basis to nonprofit needs.

As a pass-through fund, NYPRI’s members earn the returns of the underlying investments in which they have participated less in the fund’s operating costs. Although NYPRI is always the lender (i.e., the single counter-party on all the legal documents and point of contact for reporting, etc.), the profits and losses associated with each investment are allocated pro rata to those members elected to participate in it. These “participating members” fund the investment through capital calls and later receive distributions from the payments received by the fund from the investment. Regardless of how many underlying investments a member has participated in, it holds only one NYPRI membership interest on its balance sheet and receives one K-1 for tax and accounting purposes. While NYPRI is intended to be open-ended (i.e., perpetual), individual members may elect to withdraw from making new investments. In addition, a supermajority of the members can remove SeaChange as the Manager.

Bromberger Law has been a long-time legal advisor to SeaChange, which supports nonprofits with grants, loans, consulting, and research. Although active on a national basis, most of SeaChange’s activities are concentrated in New York, where it has become deeply embedded in the local nonprofit and philanthropic ecosystem, and Philadelphia, where it has also built a strong presence. SeaChange has a staff of seven, primarily with backgrounds in finance, an independent board of directors, and works with an active network of consultants and volunteers.

Feel free to share the report or contact us (below) if you have any questions or would like to know more.

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