Here's an unusual program that could give wealthy clients running family foundations the ability to help people in their own communities avoid financial ruin.

The program, offered by Foundation Source, allows foundations to provide no-interest loans to homeowners threatened with foreclosure. The Fairfield, Conn.-based firm, which works with financial advisors to provide services to private foundations, pioneered grants programs allowing family foundations to provide hardship, emergency and medical assistance, so its mortgage program was a natural, next step, says President Andrew Bangser.

IRS rules against self-dealing prevent foundations from making loans to insiders, such as officers, directors, trustees and substantial contributors, or to their respective children. But many wealthy families are interested in directly helping others-such as those who belong to their church, synagogue or other groups-who are affected by the economic crisis, and these loans allow them to do that, Bangser notes. Under the program, families can get up to $25,000 for mortgage payments that are paid directly to the lender.

Foundation Source works with nearly 900 foundations nationwide. Its average foundation has $4 million in assets, but those levels vary from as little as $250,000 to well over $100 million. The company provides all the back-office support to make running a foundation easier, but it does not manage the assets. That's where financial advisors come in.

A recent report in The Wall Street Journal said that the economic crisis and stock market dive have led more small foundations to convert their assets to donor-advised funds. But Bangser said he hasn't seen that trend and not one of the foundations his company works with has done the conversion.

Still, foundations have had to cut back on grants and other assistance as a result of depressed assets. Since the mortgage assistance program offers loans, not grants, the funds will be repaid to the foundation and then be available for other charitable purposes. Foundation Source worked with the law firm Adler & Colvin on the program.