Opinion: New Federal Rules Are a Boon for ‘Venture Philanthropy’

A Treasury Department proposal to remove possible legal hurdles to program-related investments by foundations gives charities a valuable new tool to pursue their missions, a Harvard Business School lecturer writes in The Wall Street Journal.

Robert Pozen, also a senior fellow at the Brookings Institution, says the new federal rules clarify that the terms under which foundations can buy stock in or loan money to private firms whose work matches their charitable objectives. For example, disease charities could invest in companies working on new drug and therapies.

While such investments, known as PRI’s, will not replace traditional grant-making, they “can be more effective in certain situations,” Mr. Pozen writes. “Some of the world’s most talented scientists work in commercial companies. And they have a financial incentive to make breakthroughs in areas that foundations consider vital to their charitable missions.”