When a foundation changes the form or conditions of an investment and the investment is no longer linked to the program, it must be determined whether or not the investment compromises the performance of its independent objectives. The Bill and Melinda Gates Foundation, the world`s largest family foundation, is also one of Impact`s largest investors in the world. Since 2009, the Foundation has supplemented its grant budget with a significant endowment for program-related investments (PRIs). Julie Sunderland, Founding Director of Program Related Investments, said: “While most of the Foundation`s activities will continue to be traditional scholarships, we believe that PRIs can be an essential tool to promote innovation in the private sector, promote market-driven efficiency and attract external capital to support our charitable priorities.” 1 The Foundation is realistic about the types of high-risk and low-yield investments they make on behalf of their beneficiaries. In total, the Foundation expects a loss of approximately 10 per cent on its PRI capital. In other words, for every dollar invested, 90 cents will ultimately be repaid. (Of course, the “loss” for a grant is 100%, as no money is returned to the foundation.) Below are some typical examples of investments related to the program: Q, a developing country, produces a considerable amount of recyclable solid waste that is currently disposed of in landfills and by incineration, which contributes significantly to environmental degradation in Q. X, is a new company based in Q. X the unique activity will be to collect solid recyclable waste in Q and provide these materials to recycling centers that are inaccessible to the majority population. If successful, the recycling collection activity would prevent pollution in Q, which is due to the usual disposal of solid waste.

X has only been funded by a small number of commercial investors who are concerned about the environmental impact of solid waste management. Although X has made considerable efforts to secure additional funding, X has not been able to obtain sufficient funding, as the expected return is well below the acceptable return of such an investment. Since X was unable to attract additional investors on the same terms as the original investors, Y, a private foundation, enters into an investment agreement with X to acquire shares of X`s common shares on the same terms as X`s original investors. While investing in X presents a high risk, there is also a high potential for return if X succeeds in combating environmental degradation in the Q. Y recycling sector with the primary objective of the investment. No essential objective of the investment relates to the production of income or the valuation of real estate. The investment greatly promotes the completion of Y`s exempt activities and would not have been carried out, but for such a link between the investment and the activities exempted from Y. As a result, the purchase of X`s common stock is an investment related to the program. In the middle, the company has had a fair chance to become financially sustainable and carries reasonable risks. The PRI team gave bKash a risk assessment of two out of four possible stars.

Although the company has a strong market position and a close focus on charitable objectives and financial returns, the team felt that the proposed investment was not lacking in validation and support for the creation of a traditional investor. Overall, the Foundation expected to lose fifty cents of every dollar invested in bKash and to give the PRI a 50% risk share. Two commentators called for examples of investments in low-profit enterprises (low-profit companies) or in favour of capital firms.