“Promote Giving” Initiative Launched to Channel Millions to Nonprofits
NEW YORK — A groundbreaking philanthropic initiative, “Promote Giving,” was unveiled Wednesday by investment manager Joel Holsinger, a partner and co-head of alternative credit at Ares Management Corp. The model encourages investment firms to donate a portion of their performance fees directly to charitable causes, with initial commitments from nine firms poised to channel up to $250 million to nonprofits over the next decade.
The Inspiration Behind a New Philanthropic Model
The inspiration for this innovative approach struck Holsinger during a pivotal foreign trip in 2019. Serving on the board of directors for the global health nonprofit PATH, he witnessed firsthand the impactful tuberculosis prevention program in Dharavi, India, one of the world’s largest slums. It became starkly clear to him that the primary barrier to expanding such vital programs was not a lack of effective solutions, but a critical shortage of funding. “I wanted to do something that has purpose,” Holsinger told The Associated Press, adding, “I wanted a charitable tie-in to whatever I do.”
From “Pathfinder” to “Promote Giving”: A Proven Concept
Upon his return, Holsinger acted on this conviction by establishing a new family of investment funds within Ares Management, dubbed “Pathfinder.” These funds committed to donating at least 5% of their performance fee – often referred to as the “promote” – to various charities. The initial success was significant: the first two Pathfinder funds alone have collectively attracted more than $10 billion in investments, culminating in pledges exceeding $40 million to charities as of June.
Building on this success, Promote Giving expands this model to a wider array of investment managers. The initiative launches with funds representing approximately $35 billion in assets from nine participating firms, including Ares Management, Pantheon, and Pretium. This collective commitment is projected to generate up to a quarter of a billion dollars in charitable donations over the next ten years, offering a new, sustainable funding stream for organizations tackling pressing global issues.
A Distinct Approach: Maximizing Returns for Dual Impact
Holsinger emphasizes a crucial distinction of Promote Giving from other socially conscious investment strategies like ESG (environmental, social, and governance) or impact investing, which often integrate social returns into their financial objectives. Promote Giving is designed to maximize traditional financial returns for investors first. The charitable donation is then made *only* from the manager’s performance fees, and *after* investors have received their promised returns. “We’re not doing anything that looks at lower returns,” Holsinger clarified. “It’s basically just a dual mandate: If we do good on returns for our institutional investors, we will also drive returns that go directly to charity.”
Addressing a Fragile Funding Landscape for Global Charities
This new model arrives at a particularly challenging time for international charities. The recent dismantling of the U.S. Agency for International Development and substantial cuts to foreign aid have created a “fragile” funding landscape, as described by Kammerle Schneider, PATH’s chief global health programs officer. Many nonprofits, even those not directly funded by the U.S. government, now face intensified competition for grants. Schneider views Promote Giving as a beacon of hope, offering “agile catalytic capital” and prompting a reevaluation of current philanthropic architectures to achieve more with less.
Beneficiaries Envision Transformative Potential
Beneficiaries like Sal Khan, founder and CEO of Khan Academy, foresee transformative potential. Khan notes that stable, multi-year funding, as envisioned by Promote Giving, could liberate nonprofits from incessant fundraising, allowing them to focus more on their core mission. Khan Academy, which offers free learning resources globally, has struggled to secure enough philanthropic capital to expand its software development, localization efforts, and infrastructure in numerous interested countries. “It’s actually been hard for us to raise the philanthropy needed for us to have the maximum impact globally,” Khan stated, hoping Promote Giving could enable the nonprofit to “literally educate anyone in the world.”
A Vision for Industry-Wide Charitable Integration
Holsinger envisions Promote Giving growing into a widely adopted standard, akin to the “Giving Pledge” where billionaires commit to donating significant portions of their wealth. He also hopes to inspire other industries to develop similar mechanisms that integrate charitable giving directly into their business operations. This vision is supported by research from Chief Executives for Corporate Purpose (CECP), a coalition advising on corporate responsibility. Kate Stobbe, CECP’s director of corporate insights, highlights that companies with mission statements extending beyond profit generation demonstrate higher revenue growth, greater return on investment, and improved employee engagement and retention. A forthcoming CECP report, based on two decades of data, will further underscore these findings.
Ultimately, Holsinger believes many of the world’s most pressing issues already have solutions; what they often lack is the necessary capital. “We just need to drive more capital to these nonprofits and to these charities that are doing amazing work every day,” he affirmed. “We’re trying to build that model that drives impact through charitable dollars.”
