Private Social Investment (PSI) is an attractive asset for both companies and philanthropists, providing a positive social impact return for communities. The ability to leverage private capital for causes allows for social and environmental transformations, directing private resources towards the common good, in initiatives that seek equity, social justice, and sustainable development.

It is important to highlight that the ISP does not replace the responsibility of public authorities , nor the legal commitments of companies, but complements their efforts. This collaboration creates synergies, with the ISP acting as a strategic reinforcement for public policies. While companies and philanthropists innovate and offer flexible and agile support, governments ensure scale and continuity. By joining forces, the collective impact is amplified.

With this context established, we move on to explore different ISP management models, with practical examples and guidance on how to choose the approach that best aligns with your social objectives.

Types of Private Social Investment

Now that we understand the strategic role of ISPs in amplifying social impact, let's evaluate the different management models that allow us to optimize these assets and maximize social return. Depending on the investor's profile, whether it's a company or an individual philanthropist, there are approaches that align better with short- and long-term objectives.

GIFE 's self-declared classification to identify the different types of social investors, which takes into account two main variables: the origin of financial resources and the organizational management and structure (legal and hierarchical) of the institution . In this analysis, we can divide social investors into four main categories:

• Companies : They make their social investment directly, through specific areas or departments of the company, without resorting to their own foundation or institute.
• Institutes, Foundations and Corporate Funds : organizations created and maintained by a company or corporate group, with governance linked to the corporation.
• Institutes, Foundations and Family Funds : organizations created and maintained by philanthropists or their families, generally with a focus on legacy and continuity.
• Institutes, Foundations and Independent Funds : organizations whose governance is not tied to a single major source of funding, ensuring greater financial and operational independence.

According to the GIFE Census 2022-2023 , Corporate Institutes and Foundations represent the largest group, with 50% of respondents. Next are Independents, with 21%, while Family Institutes and Foundations account for 18%, and Companies make up 11% of participants.

Private Social Investment Management Models

With this classification in mind, let's go through the main management models of Private Social Investment, highlighting practical examples for each:

1. Direct management

In direct management, the company or donor assumes full control of social projects . This model offers greater oversight of capital allocation and project execution, ensuring that resources are directly aligned with the organization's strategic mission.

• Example : Large companies like Natura directly manage their environmental programs, leveraging their internal structures to ensure close monitoring of results. The return is almost always linked to strengthening their institutional image.

2. Association/Support for a specialized organization

For those seeking to optimize investment efficiency, partnerships with organizations specializing in social impact management are a practical alternative. By delegating the selection of supported organizations and monitoring to experienced organizations, companies and philanthropists ensure that resources are applied effectively, relying on the endorsement of a specialist team and without needing to be directly involved in the operational management of the projects.

• Example : The Bem Maior Movement (MBM) is a specialized organization that offers strategic philanthropy . MBM bridges the gap between philanthropists and social organizations, helping to direct investments towards initiatives focused on social justice in Brazil. Furthermore, MBM handles all aspects of execution and impact measurement to ensure that its investments yield positive and measurable results.

3. Foundations and Institutes

Creating a foundation or institute offers a dedicated and formal structure for managing your long-term social investments . This model is suitable for companies or philanthropists who focus on robust, cause-driven governance, maintaining legacy continuity and alignment with investor values.

• Example: The Maria Cecilia Souto Vidigal Foundation is an example of a family foundation created to work directly in strengthening public policies focused on early childhood. Its dedicated governance allows for long-term action, with strong investment in research, advocacy, and social impact initiatives to improve the quality of life for children in Brazil.

4. Philanthropic Funds and Donor-Advised Funds (DAFs)

Philanthropic endowment funds and DAFs are flexible solutions for investors seeking to maximize social impact without the need to directly manage operations. The capital is managed by a financial institution or specialized organization, allowing the donor to choose the causes they wish to support over time.

• Example : The DAF model allows philanthropists, such as members of family offices, to make ongoing contributions to various causes. This offers efficient management and flexibility, yet is detached and without the operational costs of a traditional foundation, ensuring that the impact extends across generations.

How to choose the right model?

The choice of a private social investment management model depends on several strategic factors that directly influence the impact and efficiency of resource allocation. Here are some essential points to consider:

• Desired level of involvement : If you want to follow the day-to-day operations and engage directly with projects, direct management is a good option, but it requires expertise. If you don't have the time or team for the operation and prefer to delegate execution and monitoring, support from specialized organizations may be a more effective solution.
• Available resources : models such as foundations require more infrastructure and ongoing operating costs, while solutions such as DAFs offer greater flexibility and lower administrative requirements.
• Long-term objectives : Companies can integrate ISP as part of their social responsibility strategies, using it to strengthen their brand and institutional value. Philanthropists, in turn, can make ongoing donations to organizations or use endowment funds, aligning their legacy with lasting social impact.

Regardless of the choice, from the outset, it is essential to monitor how actions are being carried out and resources are being used to ensure transparency and allow for adjustments in allocation as needed.

Data from the GIFE 2022-2023 Census highlights that 41% of institutions use a hybrid model , combining the execution of their own projects with partnerships, indicating a trend towards diversification in ISP management models. This demonstrates the importance of flexibility and adaptation to the specific needs of each investor and project.

A strategic choice

Are you familiar with the Bem Maior Movement ? For those seeking reliable support, a vision for systemic change, and a commitment to leaving a lasting legacy in the field of philanthropy, MBM is a benchmark. With a strategic approach for individual philanthropists, we help align their causes with investments focused on social justice in Brazil.

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