The philanthropic landscape is witnessing a significant shift with the launch of Promote Giving, an innovative investment model pioneered by Joel Holsinger that channels a percentage of investment fund fees directly to charities, promising stable, long-term capital and complementing traditional fundraising strategies.
For nonprofit organizations and schools, securing reliable funding is a constant challenge, essential for sustaining operations and achieving their missions. While traditional fundraising methods like individual donations, events, and grants remain crucial, the landscape of charitable giving is continually evolving, driven by innovation and a growing desire for impactful philanthropy. The recent launch of the Promote Giving initiative represents a significant leap forward in this evolution, offering a novel model to funnel substantial capital to charities.
The Genesis of Promote Giving: A Dual Mandate for Impact
The vision for Promote Giving began in 2019, when investment manager Joel Holsinger, a partner and co-head of alternative credit at Ares Management Corp., witnessed firsthand the funding gaps hindering life-saving programs during a trip to India with the global health nonprofit PATH. This experience crystallized his belief in the need for new mechanisms to drive capital to charitable causes.
Holsinger’s response was to create a new line of investment funds, the Pathfinder family, where Ares Management committed to donating at least 5% of its performance fee—often referred to as the “promote”—to charities. These initial funds have already amassed over $10 billion in investments and pledged more than $40 million to charity by June. The success of this model led Holsinger to expand the concept, officially launching Promote Giving, an initiative that encourages other investment managers to adopt this impactful strategy.
As of its launch, Promote Giving includes funds from nine firms, including Ares Management, Pantheon, and Pretium, representing approximately $35 billion in assets. This collective effort could translate into charitable donations of up to $250 million over the next decade, as reported by the Associated Press.
A New Approach to Philanthropic Investment
What distinguishes Promote Giving from other philanthropic investment models like ESG investing or impact investing is its primary focus. While ESG (Environmental, Social, and Governance) investing integrates ethical and sustainable factors into business decisions, and impact investing seeks both social and financial returns, Promote Giving prioritizes maximizing financial returns for investors first. Charitable donations are derived solely from the manager’s fees, *after* investors have received their promised returns.
Joel Holsinger emphasizes this “dual mandate,” stating that if they achieve strong returns for institutional investors, they will also generate returns that go directly to charity. This structure ensures that philanthropic contributions are a direct result of successful financial performance, appealing to firms that prioritize maximizing investor returns while also seeking significant social impact.
Addressing a Critical Funding Gap for Charities
The introduction of Promote Giving comes at a crucial time for charities, particularly those engaged in international work. The current funding landscape is described as difficult, with recent policy changes, such as the dismantling of the U.S. Agency for International Development (USAID) and significant cuts to foreign aid, profoundly affecting many nonprofits. These cuts have intensified competition for grants even among organizations not directly funded by the U.S. government.
Kammerle Schneider, Chief Global Health Programs Officer at PATH, highlights the fragility of public health systems and the urgent need for “agile catalytic capital” that initiatives like Promote Giving can provide. While acknowledging that private donations cannot entirely replace government funding, Schneider expresses hope that this new model will attract private donors to help address specific global health challenges.
Similarly, Sal Khan, founder and CEO of Khan Academy, sees Promote Giving as a potential source of stable, multi-year income. This stability would allow nonprofits to redirect resources from constant fundraising efforts to their core charitable work. Khan notes that despite having the knowledge and international interest to expand, Khan Academy has faced challenges in raising the necessary philanthropic funds for costly software development, localization, and infrastructure building globally. He hopes this model can help educate anyone in the world by providing the consistent capital needed for such initiatives.
The Broader Ecosystem of Nonprofit Fundraising
While Promote Giving offers an innovative pathway for large-scale funding, it exists within a diverse ecosystem of strategies nonprofits employ to secure resources. Corporate giving, in particular, has emerged as a key trend, fostering symbiotic relationships between fundraising teams and businesses interested in supporting social causes.
Key Corporate Giving Strategies:
- Corporate Grants: Financial contributions from companies or corporate foundations for specific projects. Organizations can research businesses aligning with their mission and reach out to CSR departments.
- Matching Gift Opportunities: Programs where companies match their employees’ charitable donations, often doubling or tripling impact. Nonprofits must actively market these opportunities to donors.
- Dollars for Doers (Volunteer Grants): Corporate funding provided in response to employee volunteerism, incentivizing staff to give back. Organizations should educate volunteers about these programs.
- Tailored Partnership Opportunities: Custom collaborations between nonprofits and companies, leveraging mutual objectives and strengths. These can include sponsorships, cause-related marketing, and employee volunteer activities.
- Event Sponsorships: Financial support from companies for specific fundraising events in exchange for branding and marketing exposure. Aligning sponsors with event mission and target audience is key.
- In-Kind Donations: Contributions of goods, services, or expertise that reduce costs and enhance program operations. Nonprofits can solicit these by outlining specific impact and company benefits.
These traditional corporate strategies, along with the burgeoning field of digital fundraising, are essential components of a robust funding model. Each method, whether securing a grant or leveraging a matching gift, contributes significantly to a nonprofit’s ability to achieve its mission.
Harnessing Digital Platforms for Donor Acquisition
In parallel to corporate giving, digital strategies have become indispensable for donor acquisition and engagement. Social media and targeted advertising offer unparalleled reach and efficiency for nonprofits.
Effective Digital Fundraising Methods:
- Social Media Campaigns: Creating goal-oriented plans, picking the right platforms (Facebook, Instagram, Twitter, LinkedIn, TikTok, YouTube), optimizing for mobile, and telling compelling stories are vital. Integrating direct donation links and utilizing bios for calls-to-action significantly boosts success.
- Enlisting Supporters: Encouraging peer-to-peer fundraising, like birthday campaigns or giving days, amplifies reach through network effects.
- Collaborating with Creators and KOLs: Partnering with micro-influencers or like-minded organizations to tap into existing audiences.
- Paid Posts: Utilizing sponsored posts on platforms like Facebook and Google to target specific demographics, interests, or “look-alike” audiences, maximizing return on investment. Google Ad Grants, for instance, offers $10,000 a month in free advertising to eligible nonprofits, as noted by Donorbox.
- Facebook Lookalike Audiences: Uploading current donor lists to Facebook’s advertising platform to target new individuals with similar demographics and interests, increasing conversion rates.
- Remarketing: Displaying ads to individuals who have previously visited a nonprofit’s website, providing a “gentle reminder” to return and donate, a highly effective follow-up strategy.
- Co-Marketing Partnerships: Collaborating with for-profit companies to advertise causes, often through email campaigns or brochures, offering employees opportunities to give back.
These digital tools, when used strategically, not only acquire new donors but also foster community, celebrate achievements, and provide valuable data for optimizing future campaigns.
The Long-Term Impact and Vision for Philanthropy
Joel Holsinger envisions Promote Giving growing into a widespread phenomenon, similar to how billionaires commit to giving away half their wealth through initiatives like the Giving Pledge. He hopes this model will inspire other industries to integrate charitable donations directly into their business operations, creating a systemic shift in how philanthropy is conducted.
Research supports the notion that companies establishing mission statements beyond mere profit generation often experience higher revenue growth and return on investment. Kate Stobbe, Director of Corporate Insights at Chief Executives for Corporate Purpose (CECP), notes that a common purpose enhances worker engagement, productivity, recruitment, and retention, ultimately contributing to the bottom line. This win-win scenario is at the heart of Promote Giving: driving both financial success and crucial social impact.
The core philosophy driving this new model is simple: many of the world’s problems have known solutions but lack sufficient capital. By building models like Promote Giving that efficiently channel capital to effective nonprofits, the philanthropic sector can empower organizations to focus more on their impactful work and less on the perennial challenge of securing funds, ultimately driving positive change on a global scale.
