*By Letícia dos Santos, project analyst at IDIS

The effort to create a more culturally, socially, and institutionally favorable and fertile environment for philanthropy involves creating structures and mechanisms that can channel philanthropic capital, answering to the motivations and objectives of social investors, while strengthening causes and organizations of public interest.

This is the case of philanthropic funds, instruments created for raising and distributing resources which have increasingly become an alternative for companies, civil society and public institutions that seek to act quickly and robustly to minimize damage in emergency situations, unite efforts and enable social agendas, or ensure the sustainability of institutions and causes in a long-lasting way.

Philanthropic funds are created to receive donations, which may come from different sources and which are destined to provide sustainability to causes or to specific organizations. The basic foundation of philanthropic funds is to, on one hand, ensure reliability in the management and resource allocation process and, on the other hand, create, strengthen or diversify the source of resources for socio-environmental ends. Despite this general basis, they can take on different shapes and functions depending on its goals, which may hinder the understanding of what is a philanthropic fund and its different types.

In this article, we propose the classification of philanthropic funds based on their timeframe, dividing them into three types: temporary funds, permanent or continuous funds and endowment funds.

Temporary funds

In general, temporary funds are created to respond to urgent socio-environmental situations. They are designed to act during a determined time frame, aim to answer emergency demands and normally operate as wide fundraising mechanisms as a way to provide an immediate and significant response. The creators of these types of funds don’t always have a direct connection with the supported cause or institution but possess strong leadership and great mobilization capacity. 

Examples of temporary funds are those created during the COVID-19 pandemic, such as the Health Emergency Fund. Created by IDIS, Movimento Bem Maior and BSocial, in 2020, the initiative aimed to strengthen the public health sector’s ability to fight the coronavirus. In seven months, the fund raised BRL 40,4 million (equivalent to about USD 8 million in that year) which were designated to the purchasing of hospital equipment, Personal Protective Equipment (PPE) for health professionals, medications and COVID-19 tests. (To know more, check out the Health Emergency Fund report and how to create an Emergency Fund, available only in Portuguese). 

Temporary funds have also been used to minimize negative impacts caused by climate emergencies. The examples include funds created to support and reconstruct the communities impacted by the floods that hit Rio Grande do Sul – a Brazilian state – in May of 2024, leaving 497 municipalities impacted and 150,000 people displaced. One of them, called RegeneraRS, created by Instituto Helda Gerdau in partnership with Din4mo Lab, despite its temporary nature, aims to support the development of long-term solutions to strengthen the local communities. 

Another example is Together for Health, an initiative of the National Bank for Economic and Social Development (BNDES), managed by IDIS, with the prospect of raising and distributing BRL 200 million until 2026 (approximately, USD$ 32,9 million). The fund acts to expand access to healthcare in the north and northeast regions of Brazil through notices and structured promotion. To that end, it operates through a matchfunding system, in which for every BRL donated by a supporter, BNDES will donate another BRL to the fund.

Permanent or continuous funds

The second type of funds are the permanent ones which aim to enable and strengthen a cause or institution continuously. Creators of these types of funds are usually closer related or aligned with the cause in question. Although these causes may be just as complex as those that are supported by temporary funds, they are seen as less urgent. Examples include matters such as equity or equality, democracy and environmental preservation. 

These funds are instrumental in mobilizing a large number of grantmakers or organizations (them being formally recognized legally or not, such as social movements) around the promotion of causes. When it comes to permanent funds, ELAS+, Agbara Fund and Pacto pela Democracia are examples of those funds created by civil society initiatives and which are dedicated to social justice. 

As for corporate social investment initiatives, the Fundo de Investimento Social Privado pelo Fim das Violências Contra Mulheres e Meninas from Avon Institute in collaboration with Accor, represents the transition from a fund initially conceived as a temporary one during the COVID-19 pandemic – when domestic violence against girls and women increased – and which became permanent afterward. It became a strategic instrument for the Institute due to its promotion of the defense of women’s fundamental rights. 

Not only in temporary but also permanent funds, the resources that compose them are totally distributed to their own philanthropic purposes. This occurs through a continuous flow of financial and programmatic management, with the aim of ensuring the total allocation of the funds raised.

Endowment funds 

Endowment funds are destined to promote long-term financial sustainability for causes and institutions supported. Unlike temporary and permanent philanthropic funds, its operations are not supported by the use of the funds raised, but instead by the management of these resources to generate earnings which will then be put towards the philanthropic activities of the fund. The goal is to ensure the preservation of the retained wealth to allow periodic withdrawals to support the public interest causes or institutions. 

In Brazil, this mechanism gained strength especially since 2019, with the enactment of the Endowment Fund Law (Law 13,800/2019), which, as well as creating an institutional and safe environment for its operation, brought visibility for the matter and its importance. In addition, the law also regulated the partnership between the endowment managing organizations and the supported institutions who may be private or public entities. 

Major Brazilian endowment funds were founded before the creation of the law, such as the ones from Bradesco Foundation and Fundação Maria Cecilia Souto Vidigal. These funds, created with the goal of building the private social investor’s legacy, are more than 50 years old. 

Among other reasons to create an endowment fund are also the promotion of more independence and operational stability for organizations in the long-term, which is the case with the Promoting Philanthropy Endowment, created by IDIS to expand the impact of strategic philanthropy and so, promoting more positive social transformations. 

When it comes to public institutions, many of the biggest state and federal Brazilian universities have been building their own endowment funds with the goal to promote even greater academic excellence through university extension projects, support for students sustainability in classes and other initiatives, such as the USP Endowment Fund. 

Although philanthropic endowment funds can be divided into different types, in reality, many organizations use a combination of permanent and long-lasting funds for their projects and operations, meanwhile, temporary funds can, eventually, transform into permanent or long-lasting ones. 

Therefore, the first thing to be determined when structuring a fund is its purpose: what is the goal for the mobilized resources? From this definition, one is able to outline the possible management and allocation of these resources to achieve the established philanthropic goal, comprehending the origins of those resources and the stakeholders involved in this arrangement.