Finding and Using PRI Consultants

  • The old-fashioned way, through networking. "Finding good consultants is always a challenge," one PRI maker noted. There are a handful of reputable firms that specialize in PRI consulting, she said, but "the best way to go about it is to talk to colleagues" with a lot of experience and lots of contacts. Another recommended checking with regional intermediaries, such as loan funds, community banks, and community venture capital funds: "These folks issue loans all the time for all kinds of different purposes. They will know what consultants are available to meet your needs."
  • Buy the numbers. Several investors underscored the efficiency of buying financial analysis and general market data. "We buy off-the-shelf analysis when we can," one large PRI maker said. In community development finance, many investors use the CDFI Assessment and Rating System (CARS™) - a commercial service developed by the National Community Capital Association to evaluate investments in financial institutions like loan funds, credit unions, and community banks. "All we're trying to do is minimize overhead," she continued. "It's efficient for us to have an attorney in-house, but it usually makes sense for us to buy analyst reports."

… and using it.

  • Expertise for rent. Foundations often establish core functions in-house - such as financial analysis, legal compliance, and deal structuring - while outsourcing others. The executive director of a foundation whose mission is to bring "social benefit" to the residents of a particular geographic region underscored the pivotal role consultants play in his organization. "There's no way we could have all the in-house expertise we need, even in the program areas we invest in," he said. The foundation often hires outside experts to help evaluate prospective grants and investments - for a socially motivated landscaping business, a real estate deal, or an environmentally sound timber investment fund. "I've told our program officers and trustees that we don't have to know everything, but we have to know what we don't know - and find someone who does."
  • Buy to build capacity. A consulting engagement can also be a form of staff development, or the first step in building in-house expertise. "If you do end up working with a consultant, think about what you want to learn from the engagement so you can build in-house capacity," one investor advised. "You should be looking at how to think about structuring an investment, the broad outlines of underwriting, how to select a third party that will perform additional due diligence on your behalf, and how to ask good questions about that due diligence before, during, and after the due diligence." Consultants worth their salt, he continued, should help foundations build those skills for themselves.

Takeaways are critical, bite-sized resources either excerpted from our guides or written by Candid Learning for Funders using the guide's research data or themes post-publication. Attribution is given if the takeaway is a quotation.

This takeaway was derived from Program-Related Investing.

Categories