Putting your money where your values are.
As individuals look to take action to address the climate crisis, social and racial reckoning, and global demand for gender equality, they are scrutinizing the social impact of their dollars.
Across economic backgrounds, individuals are looking to support ethical products and invest in companies whose values align with their own. Younger generations are particularly at the forefront of this trend.
Millennials are increasingly critical of the costs of their investments to people, communities, and the environment. In fact, 86% of Millennials are interested in sustainable investing and are twice as likely as the average investor to invest in companies that prioritize social or environmental objectives, per Morgan Stanley’s Institute for Sustainable Investing. Nearly 90% of Millennials say they want sustainable investing options within their 401(k) plans.
No matter what you call it–sustainable investing; socially responsible investing (SRI); environmental, social and governance (ESG) investing–people around the world are changing the way they manage their money to positively impact on the world.
Sustainable investing, in short, is investing in companies or funds that generate market-rate financial returns while pursuing positive and ethical impact on communities and the world. Central to the trend are the pillars of ESG: the ethics and outcomes of a company’s environmental, social, and corporate governance practices. This includes the sustainability of material sourcing and ethics of labor standards.
A single dollar can make a world of difference.
Did you know that $1 out of every $3 of professionally managed assets is invested in sustainable pools?
As of 2020, ESG investments held $17.1 trillion in U.S. assets under management, which marked 42% in two-growth.
Advisors are taking note of clients’ desire to align financial returns with impact on the world, as many firms already offer socially-conscious investing options based on ESG criteria. Similarly, many firms offer philanthropic services to meet clients’ charitable impact goals. However, few firms have the tools to effectively align them.
People want to invest their hard-earned dollars in alignment with their ethics and values.
But what if there was a way to make the impact of each dollar go one step farther?
Philanthropic offerings can now intersect with investment horizons, allowing financial advisors to better serve the unique needs, interests, and values of altruistic clients. All this while maximizing the impact each person has on the world, creating a virtuous “double good” effect.
Some philanthropic offerings, such as donor-advised funds, allow for the investment of assets that are earmarked for non-profit organizations. After contributing to a charitable savings account, altruistic clients can grow charitable contributions by investing in sustainable pools, thereby compounding the impact of each dollar.
As firms integrate ESG into their philanthropic services, clients can double the good with each dollar invested in a charitable savings account.
Make every dollar mean something.
By creating a direct alignment based on values, donors of any size are able to stretch the impact of each dollar. For example, a donor who cares deeply about advancing opportunity for women and girls may invest contributions to their DAF account in pools that focus on gender diversity in company leadership. Companies run by female and non-binary leaders are supported by increased capital, and these investment returns grow until they are later granted to non-profit organizations that support the rights of women and girls.
Similarly, a client who wants to address environmental justice and the climate crisis may invest in funds that center on sustainability practices. This person simultaneously contributes to the advancements of the renewable energy sector while funding projects run by grassroots non-profits.
The possibilities for impact are limitless as each donor is driven by unique interests and values. The invested funds grow over time, which means that the recipients of grants will receive more in dollar amount than if only the initial contribution was granted.
Charting a new course for impact.
Philanthropic tech solutions, such as DAF 2.0 by Amicus.io, streamline the administration of charitable and sustainable investing solutions to make the two far more aligned and efficient.
No matter how much wealth a client has, they have the power to make every dollar mean something.
Advisors can align the way clients save, donate, and invest wealth by incorporating their unique values and managing their finances with intentionality.
Interested in learning more about how your firm can align clients’ investments and donations to maximize impact? Download this use case.