(1) If the purpose of the grant is to make a program-related investment (PRI), the
written agreement must provide that the funds be used only for the purposes of
the investment and to repay any portion thereof not used for such purposes. Such
repayment is limited to the extent permitted by applicable law concerning
distributions to holders of equity interests. See Treas. Reg. 53.4945-5(b)(4).
(2) The grantee organization also must:
a. Submit full and complete annual financial reports for the life of the PRI
(except as provided in Treas. Reg. 53.4945-5(c)(2); see discussion of Charles
Stewart Mott Foundation v. United States, 938 F.2d 58 (6th Cir. 1991) infra);
b. Maintain adequate books and records; and
c. Make such books and records available to the grantor private foundation.
Note: The information in each of these specified items must be in the form
ordinarily required by commercial investors under similar circumstances.
(3) The grantee organization must also agree not to use any of the grant funds for
the following activities:
a. It must not carry on propaganda, or otherwise attempt to influence legislation,
within the meaning of Section 4945(d)(1). See also Treas. Reg. 53.49452(a)(4).
b. It must not influence the outcome of any specific public election, or to carry
on, directly or indirectly, any voter registration drive within the meaning of
Section 4945(d)(2).
c. In the case of a recipient which is a private foundation, it must not make any
grant which does not comply with the requirements of Section 4945(d)(3) or
(4). See Treas. Reg. 53.4945-5(b)(4)(iv).
(4) The term "program-related investment" (PRI) is defined in Section 4944(c) and
Treas. Reg. 53.4945-5(b)(4). A PRI is an investment whose primary purpose is to
accomplish one or more of the purposes described in Section 170(c)(2)(B), no
significant purpose of which is the production of income or the appreciation of
property, and no purpose of the investment is to influence legislation or
participate in political campaigns. A PRI is generally treated as a grant for
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purposes of Section 4945 but is sometimes subject to special rules such as
Treas. Reg. 53.4945-5(b)(4). See Treas. Reg. 53.4945-4(a)(2) and 53.49455(a)(2).
