Below Martket Rate Loan to Nonprofit as Seed Funding

credit: Flickr by Jeua

X is a business enterprise which is owned by a nonprofit community development corporation. When fully operational, X will market agricultural products, thereby providing a marketing outlet for low-income farmers in a depressed rural area.

Y, a private foundation, makes a loan to X bearing interest at a rate less than the rate charged by financial institutions which have agreed to lend funds to X if Y makes the loan. The loan is made pursuant to a program run by Y to encourage economic redevelopment of depressed areas, and no significant purpose involves the production of income or the appreciation of property.

The loan significantly furthers the accomplishment of Y's exempt activities and would not have been made but for such relationship between the loan and Y's exempt activities. Accordingly, the loan is a program-related investment.

This is an illustration modified from examples provided by the Internal Revenue Service. It is not a legal opinion on the tax treatment of any specific agreement between a private foundation and other entity.

PRI News from...

Kresge Foundation

Social Entrepreneurship

Why Social Enterprise is the Way Moving Forward

Thousands of social enterprises in the UK are emerging and they are employing more than one million people. According to the trade body Social Enterprise UK (SEUK)’s estimates, these social businesses contribute £24 billion to the economy.

Social Services Jobs

  Education Jobs
  Substance Abuse Jobs
  Human Services Jobs
  Social Work Jobs
  Fundraising & Development Jobs

Federal Government Grant and Assistance Programs

Boating Safety | Land Buy-Back Program For Tribal Nations | State Planning and Establishment Grants for the Affordable Care Act (ACA) s Exchanges | Harry S Truman Scholarship Program | Equitable Sharing Program | TANF Program Integrity Innovation Grants | Services for Trafficking Victims | 93.712 ARRA IMMUNIZATION | | Site Style by YAML | | Grants | Grants News | Sitemap | Privacy Policy

Edited by: Michael Saunders

© 2008-2021 Copyright Michael Saunders