What's Happening?
Ares Management Corp., led by partner Joel Holsinger, has introduced a new initiative called Promote Giving, aimed at increasing charitable donations through investment funds. This model involves donating a portion of the performance fees from investment funds to
charities, with the first two funds already raising over $10 billion and pledging more than $40 million to charity. Promote Giving launches with funds from nine firms, including Ares Management, Pantheon, and Pretium, representing about $35 billion in assets. This initiative seeks to maximize investment returns while simultaneously driving charitable contributions, differentiating itself from ESG and impact investing by focusing solely on the manager's fees for donations.
Why It's Important?
Promote Giving addresses the challenging funding landscape faced by charities, especially those involved in international work, due to cuts in U.S. foreign aid. By providing a stable income stream, this model allows nonprofits to focus more on their missions rather than fundraising. Organizations like PATH and Khan Academy see potential in this initiative to support public health and educational infrastructure globally. The model could inspire other industries to integrate charitable giving into their business practices, potentially leading to increased employee engagement and productivity, as well as higher revenue growth for companies.
What's Next?
Joel Holsinger envisions Promote Giving growing similarly to the Giving Pledge, with more investment managers adopting the model. This could lead to significant capital being directed towards nonprofits, addressing global challenges that lack funding rather than solutions. The initiative may also encourage other sectors to develop similar mechanisms, fostering a culture of corporate responsibility and purpose-driven business models.
Beyond the Headlines
Promote Giving highlights the potential for investment strategies to contribute to social good without compromising financial returns. It underscores the importance of innovative funding models in sustaining nonprofit work amid reduced government support. The initiative could catalyze a shift in how businesses perceive their role in societal development, promoting a balance between profit and purpose.
