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Unless otherwise noted, this issue of Responsive Philanthropy has adopted the Mission Investors Exchange’s definition of some key terms:
Investments by philanthropic and other charitable organizations that align with their missions. These investments can either be mission-related investments (MRI) or program related investments (PRIs).
MRIs (also commonly referred to as impact investments and socially responsible investments) are “market-rate investments that support the mission of the foundation by generating a positive social or environmental impact. … An MRI is a financial investment and must meet applicable prudent investor standards just like more conventional investments.”
PRIs are “below-market rate investments that are made with a targeted program objective. PRIs are defined by the IRS tax code, and they are eligible to count against the 5 percent payout that foundations are required to make each year to retain their tax-exempt status.” PRIs can be “loans, loan guarantees, cash deposits, equity investments and other investments made for a specific purpose such as affordable, workforce housing and community development facilities.”
According to As You Sow, proxy means “written authorization to act in place of another.” Companies use a proxy statement to solicit “approval from shareholders of issues relating to corporate governance, recognizing that most shareholders will be voting remotely ‘by proxy’ rather than in person at each company’s annual meeting.”
Investors use this method to either filter out “generally traded companies on perceived social harm” or select them based on desired benefit.
Shareholder activism involves proxy voting and “engaging management of generally traded companies to change corporate behavior.”
For more on these and other common terms used in mission investing, visit https://www.missioninvestors.org/mission-investing.
For more on terms associated with shareholder activism, visit www.asyousow.org.