The Neyland Report
Earning - Thriving - Giving Back

SENIORS: PHILANTHROPIC INVESTING

SENIORS: PHILANTHROPIC INVESTING

SENIORS: PHILANTHROPIC INVESTING

Have you ever wondered who is giving the most money to charitable causes? You may be surprised to learn that older Americans have the bulk of the money and they make the bulk of philanthropic investments. Families in which the head of the household is 65 to 74 years old have more than twice the median net worth of all American families combined—including these older age brackets, according to Benefactor, a non-profit consulting services company. Further, 70.2% of all Americans make charitable contributions.

Philanthropic investing involves directing money to both for-profit and non-profit entities that have a social impact mission. For some investors, knowing how their investments are performing is not enough. Some want to be involved the mission of the companies they choose. For others, simply making a charitable contribution to an organization is not as rewarding as actually becoming personally involved. For example, some investors want to find companies or organizations that are socially or environmentally responsible, and that run parallel with the investor’s own values and social causes.

Sometimes referred to as “impact investing,” this allows the investors not only to productively manage their wealth, but also to avoid companies, products or services with which they disagree. For example, an investor might decide to avoid investing in companies that produce alcohol, cigarettes or guns. However, more often this type of investing is more about supporting, rather than avoiding something. If an investor believes alternative forms of energy will positively affect the earth’s climate, he or she might choose to invest in solar power or to a non-profit with a mission that furthers the investor’s wish to “do good.”

This type of investing often runs parallel with socially responsible investing, a strategy that enables the investor to invest ethically, in a way that contributes something to the greater good in society.

As for philanthropic investing, some investment firms have actually taken the proactive step of developing social cause-focused funds that allow investors to simultaneously achieve their multiple goals of charitable giving, philanthropy and wealth management.

Philanthropic investing can have wide-reaching impact on solutions to global challenges, including conservation, financial inclusion and access to healthcare. Predictably, the numbers show that high net worth investors are the main drivers behind this type of wealth allocation, but even those in median income households have the option of doing some good and bolstering their bottom line at the same time.

Related Articles