Joel Holsinger became convinced he needed to do more to raise money for charities during his first international trip in 2019 after joining the board of global health nonprofit PATH.
Now a partner and co-head of alternative credit at Ares Management Corporation, the investment manager has seen firsthand how tuberculosis prevention programs are helping. Residents of DharaviIndia’s largest slum. He also found that the main obstacle to expanding the program’s success was simply a lack of funding.
“I wanted to do something with purpose,” Holsinger told The Associated Press. “I wanted to tie philanthropy into what I was doing.”
Shortly after returning from India, Mr. Holsinger established a new investment fund in which Ares Management will donate at least 5% of appearance fees, also known as “promotions,” to charity. The first two of the resulting Pathfinder family of funds alone have attracted more than $10 billion in investments and committed more than $40 million to philanthropy as of June.
Holsinger wanted to expand the model further. On Wednesday, he announced a new initiative, Promote Giving, to encourage other investment managers to use the model, launched with funding from nine companies including Ares Management, Pantheon and Pretium. The foundations that are now part of Promote Giving have approximately $35 billion in total assets and have the potential to make up to $250 million in charitable giving over the next 10 years.
Unlike extensive models such as ESG investmentwhere environmental, social and governance factors are considered when making business decisions; or impact investingHolsinger said Promote Giving aims to maximize return on investment when investors seek social benefits as well as financial returns. Contributions are made only after investors have received their promised returns and are made solely through the manager’s fees.
“We haven’t done anything that takes into account lower returns,” Holsinger said. “It’s basically a dual mission: If we can drive profits for institutional investors, we also drive profits that go directly to charities.”
Charitable organizations, especially those with international activities, are having a difficult time raising funds. Dissolution of the United States Agency for International Development Significant cuts in foreign aid This year has affected nearly every nonprofit in some way. Nonprofits, which typically do not receive funding from the U.S. government, still face increased competition for grants from organizations whose funding has been cut.
Kamal Schneider, PATH’s chief global health program officer, said this year has shown how fragile public health systems are and reinforced the need for “nimble catalytic capital” that donation facilitation can provide.
“There is no substitute for U.S. government funding,” Schneider said, adding that the launch of the Donation Acceleration Program provides hope that new private donors may step in to provide solutions to specific public health problems. “I think we’re at a point now where we really need to look at the overall architecture of how we’re doing this and how we can do it better with less effort.”
Sal Khan, founder and CEO of Khan Academy, which provides free learning resources to teachers and students, said Promote Giving’s structure allows nonprofits to earn stable income over several years, allowing them to spend less time fundraising and more time on philanthropy.
“It’s been really difficult to raise the philanthropy that we need to make the biggest impact in the world,” Khan said. Khan Academy has a rapidly expanding knowledge base around the world and many countries have expressed interest, but the nonprofit organization lacks sufficient resources to carry out the costly work of software development, localization and infrastructure construction in each country, Khan said.
Khan hopes Promote Giving will grow into a major funder that can support these costs. “Once we build that infrastructure, we will literally be able to educate anyone in the world,” he says.
Holsinger also expects such growth. He imagines investment managers signing a “gift of the way,” in which billionaires pledge to give away half of their wealth. pledge of donation And we hope that other industries will develop their own systems to make charitable giving part of their business models.
Kate Stobbe, director of corporate insights at Chief Executives for Corporate Purpose, an organization that advises companies on sustainability and corporate responsibility issues, said their research shows that companies with mission statements that include a reason for existence beyond just profit generation achieve higher revenue growth and achieve higher returns on investment.
Having a common purpose improves employee engagement and productivity, while also helping companies with recruitment and retention, Stobbe said, adding that CECP will release a report later this week documenting these findings based on 20 years of data. “Aligning with a company’s purpose helps employees feel connected to something bigger,” she said. “It’s a big contributor to the bottom line.”
It’s this type of win-win relationship that Holsinger hopes to achieve with Promote Giving. He said many of the world’s problems are not without solutions. There is not enough capital to pay for the solution.
“We just need to put more money into these nonprofits and the charities that do great work every day,” he said. “We are trying to build a model of impact through philanthropy.”
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Associated Press coverage of philanthropy and nonprofits is supported through a partnership between The Associated Press and The Conversation US, with funding from Lilly Endowment Inc. AP is solely responsible for this content. For all of AP’s philanthropy coverage, visit: https://apnews.com/hub/philanthropy.
