Amplifying Your Philanthropy Through Impact Investing

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At Invest for Better we seek to curate and share with our community the best, most accessible resources about impact investing that have been created by our colleagues in the field. But sometimes there is a gap and we step in to fill it.

Many of the women in the Invest for Better community are highly experienced philanthropic leaders, but new to using their investments as a force for social change. They have often deployed smart, focused philanthropic giving to support innovation and experimentation in their focus areas, to fill a gap in services that should be covered by public money, or to bring together stakeholders to learn and collaborate. But they may be frustrated by the limited ability of philanthropy to scale proven solutions. Or perhaps discouraged by the absence of sustainable funding for an essential program. They are intrigued by the idea of turning to the capital markets and their own investment capital to address these challenges, but don’t quite know how.

It is for these women that we created our workbook, Amplifying your Philanthropy through Impact Investing, with generous support from Fidelity Charitable. Aimed at helping the philanthropist who is a newbie impact investor develop plans for both learning and action, the workbook guides users through 6 questions to help identify possible ways to use investing (personal, retirement, foundation, or donor-advised fund capital) to increase their impact on the people, places, and issues they care about:

  1. What are your philanthropic goals?
  2. What source(s) of capital do you want to use for impact investing? How much capital do you want to start with?
  3. What are your financial goals for each capital source?
  4. What impact investment solutions or tools might help you achieve your philanthropic and financial goals?
  5. How will you decide which impact investments to pursue? What criteria and due diligence processes will you use?
  6. How will you measure the success of your investments?

The workbook includes a concise primer on impact investing along with numerous examples of impact investments. It is intended to serve as a starting point for developing an impact investing strategy to augment one’s philanthropy, and could be used in consultation with financial, philanthropic, and other advisors. (Stay tuned for an annotated version of the workbook that advisors can use with their clients.)

The fundamental purpose of Invest for Better is to help women bridge the activation gap between their avowed interest in purpose-driven investing and the reality that only half of the “persuaded” are activating their assets in alignment with their values. We believe that women philanthropists are poised to narrow that gap and only need to develop the knowledge, confidence and support for implementation. We invite interested women to join our growing movement of Invest for Better Circles and/or to use this new workbook as a jumping off point for discussions with their advisors

Research conducted by the Women’s Philanthropy Institute found that women are more likely to use impact investing to complement their charitable giving, while men are more likely to use impact investing in place of charitable giving. This is important information and points once again to the need to focus on growing the number of women impact investors. Philanthropy plays vital roles in our civil society that cannot or should not be replaced by the capital markets. And capital markets play an essential role in scaling and sustaining solutions. We need all types of capital – philanthropic, impact-first, frontier, and market rate – to tackle critical issues facing our planet, and an ecosystem of smart investors who know how to use all the tools in their toolbox. We hope this new workbook contributes to that vision.

Great books to support your gender lens investing journey

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The following article was written by Suzanne Biegel, former IFB Steering Committee member, and first published in May 2021. 

 

There is a suite of books and resources from leading thinkers in the investment community that either touch upon or more deeply examine gender-smart investing. This explosion of gender-smart literature speaks to both a growing interest in women’s financial empowerment, and a hunger amongst investors – men and women – more generally for information about moving their money is smart and in a way that aligns with their values.

These books all tackle gender-smart investing from different perspectives, and are great resources to share with your friends, colleagues, clients, to deepen your own thinking, or to start you on your gender-smart investment journey. Read on to learn more about these fantastic resources and their authors, and choose one – or more – to grace your bookshelf.

Financial Feminism by Jessica Robinson (released in February 2021)

Jessica is an active investor, based in Dubai, and so committed to getting women engaged around impact investing. Her book, Financial Feminism, is a response to the “investment gap” between men and women – aiming not just to get more women to start investing, but to inspire them to invest their money with intention. As Jessica put it in a recent interview with UAE’s National News, “Financial feminism represents the opportunity for women to use their financial power to build the kind of world that they want to live in.”

The Good Your Money Can Do by Eva Yahzari (released in March 2021)

Eva started her career in mainstream finance, before diving into impact investing many years ago with Beyond Capital Fund, a nonprofit gender lens fund investing in emerging markets. She now runs Beyond Capital Ventures, a for-profit fund with a similar remit, and co-hosts The Beyond Capital Podcast. The Good Your Money Can Do is targeted at the experienced traditional investor who is curious about investing their money in line with their values. A relentless field-builder and fellow Toniic investor for many years, Eva argues that “money is currency and currency is energy.”

Moving Money for Impact: A Guide to Gender Lens Investing by Tuti Scott with Lex Schroeder (released in March 2021)

Tuti has been a long-distance runner in philanthropy and the crossover to impact investing and gender lens investing. She was most recently chair of the board of Tides Foundation and then its acting Executive Director. Moving Money for Impact is a free guide that takes a practical look at the gender lens investing field, spotlighting innovative gender lens investors such as the Texas Women’s Foundation, Tara Health Foundation, and Adasina Social Capital, as well as deeper philosophical lessons about naming and shifting power.

Activate Your Money by Janine Firpo (released in April 2021)

Janine is another very active impact investor, a fellow member of Next Wave Impact, and a passionate field builder. She wrote this book in partnership with more than 150 people, with the goal of helping women “who have been left out of the financial conversation to take control of their money, to learn how to invest with confidence, and to give them the options they need to make investments in the things they care about.” The result is a real “how to” of impact and gender lens investing, with practical information on everything from choosing a bank, to bonds, public equities, private investments, pensions, financial advisors, and more. I was lucky enough to read a sneak preview and I love this guide.

Adventure Finance by Aunnie Patton Power (released June 2021)

Aunnie has been teaching impact investing for many, many years in Africa and the UK. She wrote Adventure Finance on the premise that although venture capital is the highest profile type of investment, it doesn’t work for 99% of startups and small businesses – which means we need alternatives, both for founders and for funders. The book helps to explain what some of these alternatives are, and walks the reader through real life examples of how founders and funders have put them to use. This is a deep dive on alternative, innovative, and blended finance models. I was lucky enough to get a sneak preview and I am counting on this as a real handbook for me and everyone I know on alternative investment models. While these tools and models can be useful for all investment, I find them particularly relevant for gender-smart investing.

Impact Investing Handbook by Rockefeller Philanthropy Advisors (released in 2020)

I carried around the original version of this for many years to share with impact investors and those who were moving from philanthropy to impact investing, and I was delighted to have the chance to write the section on gender lens investing for the updated version, released last year. Rockefeller’s guide is a practical publication featuring case studies and detailed guidance for individuals, families, foundations, and corporates. I love this book, and think it’s a key resource for any impact investor or someone who wants to learn about impact investing.

Global Handbook of Impact Investing co-edited by R. Paul Herman & Elsa de Morais Sarmenton (released in 2020)

The Global Handbook of Impact Investing offers an extensive recap of the best practices and thought leadership over a wide range of sustainability themes. I’ve been investing with Paul for many years via HIP Investor and I really respect his ability to address mainstream investing with an ESG lens, viewing gender as a core factor for so long. The book is unique for its global perspective, bringing together knowledge and case studies spanning five continents.

Catching Our Eye
July 19, 2023 Collection

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‘Catching Our Eye’ is a monthly collection of curated content from Invest for Better. This collection was featured in our July 19, 2023 e-newsletter.

JUST Capital lists the ‘The Top 10 Companies Leading on Environmental Impact’ (see list).

“Women CEOs Run 10.4% of Fortune 500 Companies” from Chief (see article). “At the beginning of the year, the Fortune 500 crossed a milestone with women running more than 10% of America’s largest public companies for the first time. Now five months later, women are still leading 10.4% of Fortune 500 firms, proving that more boards and companies are understanding the power of diverse leadership at the top.”

The Conversation, a nonprofit independent news organization, recently published “Want to support companies that support women? Look at your investments through a ‘gender lens’ – here’s how”.  Read article here.

Abortion access is so critical to the economy that economists are basically unanimous on the topic, writes Ellevest in “The Economic Case(s) for Abortion Access” (see article).

From Time Magazine “9 Women From American History You Should Know, According to Historians” (see article).

Impact Entrepreneur hosts “How Financial Advisors Advance an Impact Economy” on July 20th. This webinar and Q&A features the Co-Founders of ValuesAdvisor, an online non-profit platform of impact financial advisors, and two financial advisors who have deep impact expertise. Presenters will discuss how people can play a critical role in building a new impact economy by choosing the right financial advisor. View event here.

The Philanthropic Initiative (TPI) and NEID Global are thrilled to announce that registration is officially open for the third Innovations in International Philanthropy Symposium, happening September 7-8. View more information here.

Investors prioritize social responsibility: According to a USC Center for Public Relations survey, a strong majority of consumers, employees, and investors expect companies to “have a mission and social purpose and to help address societal problems.” See article here.

From Bloomberg, the share of women aged 25 to 54 in the US workforce hit a record high of 77.5% recently, reversing the pandemic-induced decline in women’s employment. See article.

From the Case Foundation: Although 7.1% of US adults identify as LGBTQ+, founders in this group still receive less than 1% of venture capital funding. PitchBook recently released a list of 47 LGBTQ+ founders and investors, a small fraction of the trailblazing pros who are at work in the capital markets, creating space for themselves and others. See list.

From Melinda French Gates, Founder of Pivotal Ventures, “Why I’m investing in efforts to elect more women to public office” (read article) – “We need more women in positions of power—making decisions, controlling resources, and shaping the policies that affect us all.”

Female Innovators Lab is the largest early stage fintech fund for women founders (read article). With funding from Barclays, Aviva, Visa, and BMO among other strategic investors, Anthemis Group has raised $50 million to invest in women-led startups delivering tech-driven financial services across North America, UK and Europe.

Top sectors for impact investing: Pitchbook’s latest Sustainable Investing Survey offers a peek into how global investors and service providers are thinking about ESG risk factors and impact investing today. View article.

Build Your Financial Foundation

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In order to be a smart, confident investor, you need some baseline knowledge and tools to make sound investments. That is true whether those investments are values-aligned or not. Since our society has not done a great job of educating women about basic investment concepts, investing can be intimidating or overwhelming for a lot of us.

Knowledge about a few key investment concepts can go a very long way toward empowering individuals in making wise and informed investment decisions. This is true for all types of investors, such as recent graduates new to saving and investing, midterm careerists, newly single, recipients of new wealth, and women entering retirement.

  • Your income comfortably covers your ongoing expenses
  • You have manageable debt, which means you can avoid high-interest debt and comfortably afford your monthly debt repayments
  • You have at least three to six months of readily available (e.g., “liquid”) funds to cover needed expenses in case of an emergency or other unexpected even

If you’re not quite there yet, don’t worry or be ashamed. Whether you are young or old, you’re not alone. A study by Charles Schwab found that only 28% of Americans have a written financial plan. Those who do, however, feel more financially stable and demonstrate better saving and investing behavior.

Know what you own

It’s going to be impossible for you to invest your money wisely if you don’t know how much money you have and where it is. You’d be surprised by how few of us actually know where all our money is being held and what it’s invested in. So, the first thing to do, if you haven’t done so already, is to take inventory. To help you do this, you can download the What You Have Worksheet and watch the 5-minute demo that explains how to use the worksheet.

Understand why diversification is a key to success

One of the keys to successful investing is diversifying your assets across several different types of investments to mitigate risk. This Nerdwallet article does a great job of explaining what diversification is, why it is important, and how to do it. The post includes a table that shows how different asset classes performed relative to each other year-over-year and contains a neat little tool that shows you what basic, intermediate, and advanced allocations of cash, fixed income, and stock could look like.

When you know what you own and how your money is diversified, it is much easier to determine whether your investments are aligned with your values or undermining them. You can look at your investments asset class by asset class, starting with your cash, which you will learn about in the next resource.

Why I Co-Led an IFB Circle & Why You Should Too!

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I am the founder and host of OUR MONEY POWER – a podcast for women who are ready to stand in their money power and invest with their values. I started the podcast last year, for many of the same reasons that I got involved with Invest for Better. I had my own “financial awakening” just a few years back when I realized I could no longer sit on the sidelines of my own money power, as so many of us are socialized to do. Women don’t tend to talk about money or investments with each other, as men do – and that keeps us playing small. It certainly doesn’t help us build wealth or have agency around our money.

Women tend be better investors than men, we just don’t believe that about ourselves. Research also shows that women are much more likely to move their money in community or within circles of other women – which is why the Invest for Better model is so powerful!

IFB welcomes women exactly where they are on their investment journey – whether total beginners or more experienced investors who want to deepen their knowledge about gender-lens and impact investing. As a mission-driven person, the concept of investing with my values really resonated with me. I loved the idea of peer-to-peer learning circles too. Having recently co-led two IFB circles, I have experienced the impact of this model first-hand, for participants and co-leaders alike. My learning circles ended up being great for accountability too – as we would share our “money moving” wins at the end of each session.

 

 

My first money move in my IFB circle was to look at my retirement accounts – and for the first time examine what I was actually invested in – as I’d never paid attention before. It was very exciting to learn that I could move some of my investments in my Roth IRA to funds more supportive of women’s leadership – without any tax consequences. Looking at my investments through the lens of what I valued most, made investing so much more interesting! I learned that I could grow my money  — AND support what I valued. I got so inspired that I wanted to bring other women along.

This curiosity was my starting point for joining the incredibly welcoming Invest for Better women’s community. I knew I wanted to join a circle – though I was very hesitant and nervous to lead one because I didn’t have a background in the financial services sector and believed I was at the beginning of my own investment journey. Fortunately, IFB co-founder, Ellen Remmer, encouraged me to lead a circle anyway – and then matched me with a co-lead who had a professional financial services background. I had such a positive experience co-leading my first circle, that I eagerly decided to co-lead a second group (and intend to co-lead a third soon). If you are all considering being a co-lead, I cannot recommend it enough – as there is so much built-in support for new leaders.

One of the roles of the leaders is to invite women into the circle. As a white LGBTQ+ identifying woman, I was especially mindful to invite a diverse circle of women. One of my IFB circles was composed of mostly BIPOC women leaders at large philanthropic institutions. They were moving significant amounts of other people’s money all day long, but didn’t feel much agency related to their own personal investments and family finances. IFB gave them the confidence they needed to consider their own money.

IFB provides the community, support and structure for welcoming women wherever they are at on their investment learning journey. If you are ready to step into your own money power, the IFB community is a great way to start – and co-leading a circle is an especially powerful invitation to bring along your friends and other women to stand in their money power too!

ABOUT KRISTIN HAYDEN

Kristin Hayden is an acclaimed social entrepreneur and executive leader with 25 years of global experience. She has spent her career developing, empowering, and investing in underrepresented youth and women leaders. Ms. Hayden was recognized as an Ashoka Fellow after founding OneWorld Now!, a global leadership program for underrepresented youth. In addition to serving as Chief Partnership Officer at IGNITE, Ms. Hayden recently served as the Interim CEO of ReflectUS, a coalition of leading nonpartisan women’s political organizations. She is a high-energy public speaker and champion of vision, diversity and inclusion, women’s leadership, political representation, and financial inclusion. She is the founder and host of Our Money Power, a podcast for women who are ready to stand in their money power and invest with their values.

 

 

 

What If All Women Invested for Better?

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Here’s a radical idea. (Or maybe not.)

What if women around the country, of all ages, ethnicities, and income levels, demanded that their assets be invested in a way that didn’t disrespect people, the planet, or their own values?

What if women en masse decided to seize the power they already hold in their savings accounts, retirement accounts, and investment portfolios and use it to make the world better by supporting companies that promote diversity in management, set rigorous sustainability benchmarks, or create products that have positive global impact?

What if women — whose voices have rocked the world through their truth-telling, marching, and advocating — activated their financial resources purposefully? What would be possible?

When women can define how their hard-earned capital is used, entrenched financial systems can change. Say goodbye to our current reality, where fewer women run big companies than men named John. When we choose what we invest in, our funds don’t have to include investments in fossil fuel producers or handgun manufacturers.

Most of us have intermediaries who control how our money gets invested, whether it’s our employer’s 401(k) provider, our own financial advisor, or even our own partners or spouses.

It can be hard to talk to your financial advisor about the integrity of your investments. The traditional financial advisor ecosystem isn’t geared toward women’s interest in values-based goal setting. Did you know that 70% of widows fire their long-time financial advisors because they want to work with someone who listens to them and who understands their goals? Whoa.

Right now, only 13% of women control household investment choices. Women tend to be less confident in their investment knowledge than men, and spend less time on investing activities than men do. That means it can sometimes be tough to bring up money matters at home, too.

If you’re having two-way, meaningful conversations about your investments with your partner and your advisor, excellent! If not, take a look at this fact sheet and arm yourself with talking points to fend off pushback and make your case.

But despite all that, I’m optimistic we will overcome obstacles like these. Women control more wealth than ever before, and I think a sea change is on the horizon. According to the Boston Consulting Group, between 2010 and 2015, private wealth held by women globally grew from $34 trillion to $51 trillion. By 2020, we are expected to hold $72 trillion, 32% of the total. And most of the private wealth that changes hands in the coming decades is likely to go to women.

So if enough women decide to invest with purpose, we have a shot at actually transforming the capital markets. At accelerating the movement to a financial system based increasingly on long-term global sustainability rather than a single-minded focus on short-term shareholder profit. At pivoting markets to not only do less harm, but also to address tough local and global challenges, like equity, sustainability, and human rights. And those women would inspire their partners, their children, and their friends.

What if all women invested for better? What if you invested for better?

This article first appeared in Ellevest Magazine.