I am working on a proposal to expand the PRI money available to philanthropic causes, as part of a group of lawyers and nonprofit experts that includes Rikki Abzug, chairman of the nonprofit management department at the Milano Graduate School of Management and Urban Policy at New School University in New York, and Tom Blaney, a partner in charge of the private foundation practice at the accounting firm O’Connor Davies Munns & Dobbins.

In truth, there is no such thing as a nonprofit organization.

The basic concept we have in mind is to organize PRIs through an existing vehicle, the limited liability company, and create a low-profit, limited liability company, which we call an L3C. Our proposal would enable a foundation to put money into an L3C, then, after several years, sell its stake to another foundation or individual donor and put the proceeds into another project, perhaps one larger than what it could otherwise afford in a normal year. An L3C would use its profits to either expand and strengthen its programs or pay small dividends to its investors, who would use the money to make more PRI investments or give it away under normal grant procedures.

This strategy could be used to provide low-cost or affordable housing or loans. Certain types of museums are another potential recipient. Under current practices, a small, struggling museum can bring in revenue through profit-making ventures such as a gift shop, a restaurant or amusement park-like exhibitions, but in most cases, it must establish a profit-making subsidiary. An L3C with a carefully written operating agreement, however, could perform the best services of both a profit and a nonprofit under one structure.

Some public-private alliances might also function well with L3C partners, such as redevelopment projects in hurricane-ravaged neighborhoods. An L3C might even make it viable to keep a U.S. factory in business. Say a corporation decides to close a plant in a small town, putting 200 people out of work. The company shutters the factory because the product line has limited growth potential, and it would cost $25 million to modernize the plant. For $10 million, the company could move production to China and make a 50 percent higher return on investment. From an investment perspective, there is no question what the company should do; but for the 200 workers, the town and the governmental districts responsible for the area, the resulting costs could be as high as, say, $100 million in economic losses.

Suppose, however, that a foundation or group of philanthropic investors purchases the factory with a PRI of $30 million. The corporation might go on to produce a more profitable line in China, but the newly independent U.S. factory could carry on with investment earnings of 2 to 3 percent per year. If the investment comes in the form of a PRI equity purchase, our hypothetical company would be debt free, and escape the pressures of the package of corporate bonds, tax incentives and bank loans that are the normal vehicles for such rescues.

We are now discussing the possibility of securitizing PRIs with several brokerage houses. If philanthropic investors had pools of L3Cs to trade, they could spread their risk, with the added benefit of greatly reducing the cost of due diligence, because it would need to be performed by just one securities underwriter instead of a dozen foundations, each investigating for its own purposes.

It is likely the IRS would accept this due diligence as prima facie evidence that the buyer is in compliance with all the rules governing PRIs. The more sophisticated these instruments become, the easier they will be to use and justify.

For our PRI white paper, write: L3C, P.O. Box 361, Cross River, NY 10518.

Robert Lang is CEO of the Mary Elizabeth and Gordon B. Mannweiler Foundation in Cross River, N.Y., and also CEO of Fabrique Cosmetique.