Private Social Investment (ISP) is an attractive asset for both companies and philanthropists, providing a return on positive social impact for communities. The ability to leverage private capital in favor of causes allows social and environmental transformations to be carried out, making the path for private resources to reach 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 the ISP 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 a company or an individual philanthropist, there are approaches that better align with short and long-term objectives.

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

• Companies : carry out their social investment directly, through specific areas or departments of the company, without resorting to their own foundation or institute.
• Institutes, Foundations and Business Funds : organizations created and maintained by a company or business group, with governance linked to the corporation.
• Institutes, Foundations and Family Funds : organizations created and maintained by philanthropists or their families, generally focusing on legacy and continuity.
• Independent Institutes, Foundations and Funds : organizations whose governance is not linked to a single majority source of resources, ensuring greater financial and operational independence.

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

Private Social Investment Management Models

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

1. Direct management

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

• Example : large companies like Natura directly manage their environmental programs, taking advantage of their internal structures to ensure close monitoring of results. The return is almost always linked to the reinforcement of the institutional image.

2. Membership/Support for specialized organization

For those looking to optimize investment efficiency, partnerships with organizations specialized in social impact management are a practical alternative. By delegating the choice of supported organizations and monitoring to experienced organizations, companies and philanthropists ensure that resources are applied effectively, with the support of a specialist team and without having to be directly involved in the operational management of projects.

• Example : Movimento Bem Maior (MBM) strategic philanthropy management . MBM bridges the gap between philanthropists and social organizations, helping to direct investments towards initiatives aimed at social justice in Brazil. Furthermore, MBM takes care of all execution and impact measurement so that your investments have a positive and measurable result.

3. Foundations and Institutes

Creating a foundation or institute provides a dedicated, formal structure to manage your long-term social investments. This model is suitable for companies or philanthropists that focus on robust governance focused on a specific cause, maintaining the continuity of the legacy and alignment with the investor's values.

• Example: the Maria Cecilia Souto Vidigal Foundation is an example of a family foundation created to act directly in strengthening public policies aimed at early childhood. Dedicated governance allows for long-term action, with strong investment in research, advocacy and social impact actions to improve the quality of life of children in Brazil.

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

Philanthropic endowments and DAFs are flexible solutions for investors looking 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 want to support over time.

• Example : The DAF model allows philanthropists, such as family office members, to make ongoing contributions to a variety of causes. This offers efficient management and flexibility, but at a distance, and without the operational cost of a traditional foundation, ensuring that the impact lasts for generations.

How to choose the suitable model?

The choice of 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 proximity : if you want to monitor day-to-day activities and engage directly with projects, direct management is a good option, but expertise is required. If you do not have time or staff for the operation and prefer to delegate execution and monitoring, support from specialized organizations may be a more effective solution.
• Available Resources : Models like foundations require more infrastructure and ongoing operational costs, while solutions like DAFs offer greater flexibility and lower administrative requirements.
• Long-term goals : 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 endowments, aligning their legacy with lasting social impact.

Regardless of the choice, from the beginning, one cannot give up monitoring how the actions are being carried out and the resources used to ensure transparency and allow adjustments in allocation, as necessary.

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

Do you already know the Greater Good Movement ? For those looking for reliable support, a vision of systemic change and a commitment to leaving a lasting legacy in the field of philanthropy, MBM is a reference. With a strategic approach to individual philanthropists, we help align their causes with investments aimed at social justice in Brazil.

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