Tag Archives: Philanthropy

Impact Investing: Make Money While Doing Good

Slow Money

Image via Wikipedia

How would you like to help a fair trade farmer in Costa Rica, or build affordable housing in Chicago, or provide venture capital to a solar lamp company in India, all while growing your money?  In the emerging field of impact investing, you can make a difference in the world while making money at the same time.

Impact Investing is a cross between philanthropy and investing.  You’re putting your money with businesses and organizations that not only seek to make a profit (or at least be self-sustaining in the case of a non-profit) but also do some social or environmental good.  It’s a way to harness private enterprise and private money in meeting some of the world’s toughest challenges.

With impact investing, your money generates not only financial returns but also social/environmental returns.  For instance, by supporting microenterprise, small farmers, or renewlable energy, you can help alleviate poverty, promote healthy agriculture and food systems, and reduce green house gas emissions.

It sounds great but before jumping in with both feet, you need to consider a few things:

  • Risk – these investment products are not insured or guaranteed in any way.  There’s a chance you can lose all your principle or make a lot of money.  It’s your responsibility to assess the risks involved and decide if it’s suitable for you.
  • Return – financial returns on these investments vary greatly, from very small (i.e. almost nothing) to hitting the jack pot.  As with all investments, the higher the risk, the higher the potential return is.  But in general, people are not in impact investments to make a huge profit.  It’s the triple bottom line of people, planet, and profits that matters.
  • Impact – how do you know your money is really making a difference?  This nascent field is still honing industry wide standards, ratings, and reporting tools to measure social and environmental results.  Regardless, every legitimate investment will provide regular documentation of its financial and social/environmental performance.  You should scrutinize these reports to see if the investment is measuring up to your standards.

With all that in mind, if you want to investigate further, your options depend on how much money you have.

At the level of the average middle class investor, the way to participate in impact investing is primarily through lending.  You lend money to an organization that provides funding for various purposes such as community development (affordable housing, small business start up, etc.) and international development (often microenterprise).  In return, you earn interest comparable to CDs.  From what I’ve seen recently, rates range from 0%-3%, depending on the terms of the loan.  But remember that unlike CDs, these loans are not insured but the risk of default is fairly low.

Here are a few resources if you’re interested in investigating further: Microplace allows you to invest as little as $25 to help fight poverty and promote fair trade and environmental initiatives in developing countries.  To make investments in the U.S., Slow Money (yes it’s related to the Slow Food movement) has a good list of possible investments for various income ranges.

If you’re a very wealthy and sophisticated investor, there are more options available to you.  As an accredited investor, you can invest directly in private equity, debt, and real estate.  Their social focus range widely, from land conservation to charter schools to clean technology.  Here the financial risk and return can be high.  It’s not uncommon to see required minimum investments of $100,000 that need to stay invested for 5+ years.

If you qualify as an accredited investor, get started by looking into Investor’s Circle, a membership organization of individuals and institutions focused on funding triple bottom line businesses.  Impact Assets has a list of 50 funds that focus on impact investing – another good place to start researching.

Now impact investing is not a replacement for charitable giving.  Philanthropy is important and necessary.  It’s probably the most appropriate way to combat problems that don’t lend themselves to market solutions such as domestic violence and disaster relief.  But philanthropy alone is not enough.

In 2010, total charitable giving in the U.S. was estimated to be $290.89 billion – this includes individual, foundation, and corporate giving.  In the same year, investable assets of U.S. households alone was $30.2 trillion.  This doesn’t include the funds of institutional investors such as endownments, pensions, and foundations.  If individual investors in the U.S. put just 1% of their money into impact investments, that’s an additional $300.2 billion that can be channeled towards positive change in the world.

So consider if impact investments have a place in your investment portfolio, both for your benefit and for the greater good.

Support Good People Doing Good Things

Cambodia Event (c) WWFMoeun Morn Joining Hand...

Image by Earth Hour Global (Cambodia) via Flickr

I came back from Cambodia a few days ago.  It was a lovely trip, full of ancient temples, tasty food, and friendly people.  Of course I also encountered some of the problems still facing Cambodian society.  Seeing victims of landmines with missing limbs as well as warnings about criminal penalties for having sex with children are stark reminders that serious problems persist.

Last week I wrote about giving to charity without opening your wallet.  But if you do have the ability, consider giving some money to organizations that address significant issues at home or abroad.

We all know that the world is rife with challenges, from pollution to violence to poverty.  Many good organizations exist to meet these challenges.  A blog post I once read said, “instead of complaining about bad people doing bad things, support good people doing good things.”  That’s precisely what your financial donation to sound charities can do.

I’ve been a long time supporter of the Global Fund for Women and the Environmental Defense Fund.  I’m not a big donor who gives thousands every year.  But I give what is appropriate for me and trust that my support contributes to the betterment of the world.

If you are unsure about what organizations to give to, ask yourself what causes you feel most strongly about and then find good non-profits that work in those areas.  Charity Navigator is a great site to help you find and evaluate charities.  See their video on how to choose a charity.

In addition, here are a couple of good articles from the New York Times:  Giving Where It Works highlights some great organizations that really have an impact in the U.S. or abroad.  Crowd Funding is about smaller scale giving, often directly to people in need, that provide you with more involvement and effectiveness for your funds.

You can make an impact with your financial resources, no matter the amount.  Lend a helping hand and together, we can make the world a better place.

Give to Charity Without Opening Your Wallet

The Giving Tree

Image via Wikipedia

“We make a living by what we get, but we make a life by what we give.” – Winston Churchill

‘Tis the season of giving but in tough economic times, many of us find ourselves strapped for cash.  If donating money is difficult right now, don’t fret, you can still contribute to the greater good.  There are plenty of ways to give that doesn’t involve money directly.  Below are 5 ideas.

  1. Donate your stuff.  Declutter and give items in good condition to a non profit that can use them.  Some organizations such as a homeless shelter can use clothes or housewares directly but others such as Goodwill sell your donations to fund their programs.  Either way, call the non-profit first to find out what they need and what they cannot accept before you bring your things.
  1. Click on a website.  These site have sponsors that will give a penny or two to a good cause for each time you click on a button which leads to some ads.  Sure, it’s not a lot of money but it really adds up when lots of people click everyday.  Care2 has different causes you can click on along with informative articles about affecting change in the world.  For a more comprehensive listing of different click to donate sites, see One Click at a Time.
  1. Give a part of you.  Consider donating blood or register to be a bone marrow donor.   You can literally give someone a second chance at life.  The bone marrow registry is in particular need for people of non-European ancestry as patients have the best chance of a match from someone of their own ethic background.  If you’re squeamish about needles like I am but have long hair, consider giving your hair.   It can be made into wigs for women and children who’ve lost their hair from cancer treatments or other medical conditions.
  1. Donate miles.  If you find frequent flyer miles to be difficult to use like I do, why not donate them to a charity instead of letting them expire?  Many major airlines have donation programs that allow you to give miles to charities they partner with such as Doctors without Borders.  If your airline is not mentioned in the above link, go to the airline’s site and log into your frequent flyer account.  Look for “donate miles” as an option or search for the term.  Be aware that some airlines specify a minimum donation, such as 1,000 miles.
  1. Volunteer.  Your time and energy may be worth even more than your money.  Whether you have 10 minutes, half a day, or a whole weekend to spare, there’s a way to help.  Enter your interest and your city in Volunteer Match and the site will give you a list of opportunities.  If you’re super busy, try micro-volunteering online through Sparked.com.  You can help without even leaving your computer!

Several years ago I did a winter coat drive at work which netted lots of warm clothing and it cost me only a little time and a little gas money to deliver the goods.  Giving to charity comes in so many forms.  It’s limited only by your imagination, not what’s in your wallet.  Pick what works for you and know that no matter what your financial circumstances, you can make a contribution to others.

Happy Holidays!