White House Announces MRI/PRI Guidance with a Focus on Climate Change and the Environment
On June 16, 2015, the White House issued a press release highlighting private sector commitments and a series of executive actions related to investment in clean energy innovation. The release coincided with yesterday’s clean energy investment summit, at which Vice President Joe Biden described more than $4 billion of independent commitments by major foundations, institutional investors, and other long-term investors to fund climate change solutions, including innovative technologies with the potential to reduce carbon pollution. These commitments more than doubled the White House’s initial goal of catalyzing $2 billion in clean energy investments, announced in February of this year. In addition, the White House announced, among other things, plans for the Treasury Department to issue new guidance clarifying that private foundations may make certain mission-related investments (MRI) in for-profit companies which further the foundations’ charitable purposes by promoting climate and environmental solutions. The Treasury Department will also finalize rules establishing new examples of permissible program-related investments (PRI) by foundations, including examples demonstrating various types of investments in for-profit companies whose efforts may combat environmental deterioration.
This is welcome news for many in the charitable sector who have increasingly been focusing grant, PRI and MRI dollars, as well as intellectual capital, on climate change solutions and combatting other threats to our natural environment, including by supporting the development of clean energy alternatives, energy efficiency programs, strategies to reduce carbon emissions and investments in innovative and transformative energy technologies. The PRI/MRI guidance will hopefully clear up some of the confusion created by recent IRS rulings in the environmental space and provide clarity for private foundations and other charitable organizations looking to deploy capital to support game changing ideas, technologies and services that can protect, preserve and prevent the degradation of our natural environment and provide alternative sources of clean energy.
The current state of the law relating to the charitability of environmental interventions in the age of climate change was the topic of a recent panel at the May 8 meeting of the Exempt Organizations Committee of the American Bar Association’s Section of Taxation in Washington, D.C., featuring Tomer Inbar of Patterson Belknap Webb & Tyler LLP, David Shevlin of Simpson Thacher & Bartlett LLP and Lois R. DeBacker of The Kresge Foundation.