4 Benefits of creating a Philanthropic Fund

Despite being, for a long time, related to charity, today philanthropy has gained a new, more structured and organized meaning. It has become an activity of individuals and organizations, who dedicate their time and resources to complement the State's actions with regard to the development of society.

According to Confluentes, the main objective of philanthropy is to offer new models and proposals for the good functioning of society, in the most diverse areas, such as health, education, environment, among others.

And, to guarantee its effectiveness in these fields, along with its structuring, some mechanisms have emerged to facilitate and increase the scope of positive impact on society. An example of this is the Philanthropic Fund, a financial mechanism that centralizes resources, which can come from different fundraising sources, and will be allocated to causes with a positive impact.

In this way, it is possible to allocate financial resources to social and environmental causes in a flexible way. If management is done correctly, with high levels of compliance, security and transparency, the destination of capital will be more efficient. 

But the advantages don't stop there! Discover 4 benefits of creating a Philanthropic Fund:

1 – Combat an urgent problem in our country:

A Philanthropic Fund can be created to promote improvements that, in the medium and long term, can reduce inequalities and seek positive transformations in society. In this case, it is possible that a Fund is intended to raise recurring resources to promote actions and projects that contribute to racial equity in our country or the visibility and permanence of original peoples, for example.

2 – Support in urgent moments:

A very striking example was the outbreak of Covid-19, which gave a significant boost to resources allocated to philanthropic projects in Brazil. In this way, the Fund has punctual and emergency action, in which donations are intended to save lives in times of crisis.

3 – Align with the ESG agenda:

When a company or organization decides to create a Philanthropic Fund, using part of its budget to engage in some cause aligned with your values, your ESG journey is accelerated, an increasingly fundamental criterion for citizens when consuming a product or service. Furthermore, depending on the state, there may be tax incentives for carrying it out.

4 – No need to deal with operationalization and management:

When creating a Philanthropic Fund, an individual or organization can carry it out without necessarily having sufficient means and expertise for its management. This is because this mechanism allows the hiring of an organization specialized in Fund management to manage resources and compliance processes. This way, it is possible to concentrate efforts solely on carrying out activities associated with the cause, without worrying about financial and administrative procedures. 

As you can see, there are many benefits, for both individuals and organizations, in the creation of a Philanthropic Fund. But, in the end, the one who benefits most from this is society. In the search for a more fair and egalitarian country, these mechanisms join so many others to help us achieve our purposes.

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