What’s In Your Investment Portfolio? Tax Time Is An Excellent Time to Take Stock and Make Your Money Match Your Values

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Jennifer Montone
The Philanthropic Initiative jmontone@tpi.org
617.338.5880

FOR IMMEDIATE RELEASE

What’s In Your Investment Portfolio? Tax Time Is An Excellent Time to Take Stock and Make Your Money Match Your Values

Boston, MA, March 19, 2019—April 15 is approaching fast, which means many Americans have their financial information close at hand. People with investment assets or 401Ks will be more organized and familiar with their money at this time of year and know whether they had financial gains or losses. But have we considered other measures of the success and failure of our investment portfolios? Would any of the companies or vehicles we’re invested in shock or upset us, or clash with our value systems?

Impact investing allows investors to purchase assets or investment vehicles that contribute positive social or environmental value in addition to market returns.

“Tax time is a great time to learn what you own and decide whether to re-allocate any investments to better match your values,” says Ellen Remmer, Senior Partner at The Philanthropic Initiative (TPI), and creator of Invest for Better (janinef1.sg-host.com), a nonprofit impact investing education campaign specifically geared towards women. “The good news is you do not have to sacrifice financial returns for a more prosocial portfolio. For example, you may choose to move mutual funds out of a portfolio that invests in fossil fuel producers. You can ask your financial advisor to help align your portfolios with a goal towards sustainability or gender equity. You can support businesses in underserved communities or innovative startups that solve global problems. There are so many ways to become an impact investor. The key is knowing what your goals are and having a plan to get started.”

Here are seven key steps from Invest for Better that can help anyone use tax time as motivation to make their money work for better.

1. Know What You Own

Take a critical look at your existing capital: your retirement fund, mutual funds, stocks, bonds, and any other investments you may own. Where is your money actually invested? The stocks and bonds you own may not be listed on your statements, so we suggest using the SEC’s Edgar database and asking your banker or fund manager to send you more information.

When you consider the companies and funds you’re invested in, ask yourself: Do I agree with their missions and the impact their products or services have on the world? Do they have strong environmental records and labor practices? A variety of organizations offer services that rate both companies’ and funds’ environmental and social performance. If there is a mismatch between your goals and your investment ratings, it’s time to start thinking about what changes you want to make.

2. Define Your Values and Goals

What do you want your investments to accomplish? Is it enough to ensure your investments cause no harm, or would you like them to support specific causes and places that you’re passionate about? Do you need to earn a market rate return on all of your investments, or are you willing to accept a lower financial return or take greater risks in order to achieve desired social and environmental outcomes?

You may also want to consult the Global Goals, a set of 17 sustainable development principles developed by the United Nations. Many multinational companies you may be invested in already are aligning governance policies around specific goals. Consumer goods giant Unilever, for example, is aligning its supply chain with several of the goals around sustainable consumption and poverty reduction.

3. Understand Your Risk Tolerance and Appetite for Engagement

Learn the different vehicles and strategies that constitute impact investing. Some are passive, and some more active. Once you understand the risks inherent in different types of investing, you’ll be better able to determine what sorts of impact investing you’d like to do. It can be helpful to think of your money as buckets, each with a different purpose. Are you willing to take more risk with certain buckets in an effort to deepen impact? Why or why not?

4. Create an Impact Investment Policy

Your impact investment statement can be a formal policy or merely a set of guidelines and guard rails. Investment Policy Statements are standard practice in traditional investing and provide a formal framework for planning, managing, and assessing a successful, diversified portfolio. If you already have an investment policy, consider how to integrate your impact goals within that policy. If you are carving out a percentage of your investments for impact, you can create a policy just for those assets.

5. Talk to Your Financial Advisor

While some financial advisors understand and can easily support an impact investing strategy, others are still learning how. Talk to your advisor about why impact investing is important to you, and work together to refine your impact investing policy, review your current portfolio, and make changes. Some advisors may try and dissuade you from impact investing, citing fiduciary duty to secure the highest return possible. Don’t be afraid to advocate for yourself and your goals, using some of these talking points for making your case. If your advisor is resistant, it may be time to consider working with a different advisor.

6. Talk to Your Partner

Impact investing can be a rewarding project for couples to undertake together, but it requires open, honest, and sometimes messy conversations about money. It can get complicated, especially when partners have different levels of understanding and experience managing investments, and when they have different goals.

7. Think About What Other Money You Can Influence

As you consider your tax package, think of other places you spend your money or time, such as a nonprofit or religious institution. Impact investing doesn’t just have to be done with personal investments—it can be done using institutional investments, too.

 


About Invest for Better

Women are controlling more and more of the world’s wealth, and express strong intention to invest their money in prosocial vehicles. But there is a disconnect between women’s interest in impact investing and the actions they currently take with their investments.

Invest for Better aims to close the gap. The campaign provides concrete steps any woman can pursue to become an impact investor—everything from investing in a community development financial institution to buying a green bond to becoming an angel investor—and invites women to pledge to take action. You can find us on LinkedIn and Twitter @InvestforBetter.

The Philanthropic Initiative (TPI)

Invest for Better is a project of The Philanthropic Initiative (TPI). If you’d like to learn more about the campaign, please contact Jennifer Montone at jmontone@tpi.org. Women who may be interested in taking impact investing to the next level can also contact Ellen Remmer directly at eremmer@tpi.org.

The Philanthropic Initiative (TPI) is a global philanthropic consulting practice that helps individuals, families, foundations, and corporations develop and execute customized strategies to increase the impact of their giving and achieve philanthropy that is more strategic, effective, and fulfilling. For 30 years, TPI has served as consultant and thought partner to ambitious donors and funders who embrace innovative thinking in their efforts to find local, national, and global levers of change. TPI is committed to actively promoting and advancing strategic philanthropy by conducting cutting-edge research, publishing donor education resources, and training individuals, organizations, and advisors in best practices. TPI merged with the Boston Foundation in 2012, and continues to operate nationally and globally. For more information, visit www.tpi.org or check out our blog Deep Social Impact. We’re also on LinkedIn and Twitter @TPIPhilanthropy.