Direct Participation Program

A direct participation program (DPP) allows investors to invest directly in assets like real estate, energy, or commodities, typically structured as limited partnerships. In a DPP, investors pool their money to fund a project or business, and they receive a share of the profits, tax benefits, and potential losses. Unlike traditional stock investments, DPPs often provide tax advantages and a direct stake in the project’s success or failure. DPPs are usually illiquid, meaning investors can’t easily sell their shares, and they carry significant risks depending on the project’s outcome. However, they offer opportunities for diversification and potential high returns.

Example

An investor participates in a DPP by investing in an oil and gas partnership, sharing the profits and losses of the drilling project.