A Donor Advised Fund is a charitable giving account created by an individual, family or organization that offers an immediate tax benefit and allows you to make grants over time.Read more
It was the Great Recession that got philanthropist Karen Ansara thinking about Socially Responsible Investing (SRI). Frustrated that she and her husband Jim couldn’t have more impact because their charitable investments weren’t growing, she began to wonder how they could more fully utilize all of their resources. “I wanted the investments to be doing good in the world,” she says. “Even if they weren’t yielding high financial returns, they could still be producing high social and environmental returns.”
“I’ve been in Peru, where there are mining companies strip mining the Andean mountains and infusing the waterways with arsenic,” she says. “I don’t want to be investing in a company that conducts itself in that way. I want to be sure that a fund I’m investing in has environmental and social screens so I don’t end up with a company hidden in my mutual fund that’s doing these terrible things in the communities where I am making grants.”
That’s why the Ansaras have invested a portion of the assets in their Donor Advised Fund in the Boston Foundation’s SRI options, which screen companies based on environmental, social and governance practices such as whether they provide safe working conditions, act responsibly and make products that contribute to society.
“Our donors are people who have a great deal of interest in making the world a better place,” says George Wilson, the Foundation’s Chief Investment Officer, “and this is one of the levers they’re using.” The Foundation offers four SRI mutual funds as an investment option for its donors in addition to its professionally managed Fund for the 21st Century.
“We see a great deal of interest in this investment option from donors and potential donors, especially younger people,” says Kate R. Guedj, Vice President for Development and Donor Services. “And we want people to know that if socially responsible investing is important to their philanthropy, they can do it here.”
No need to give up performance
A common misconception about SRIs, experts say, is that they don’t make money. “There’s a body of research out there that suggests you don’t have to give up performance when you invest in SRIs,” says David Wood, Director of the Initiative for Responsible Investment at Harvard’s Hauser Institute for Civil Society. He is a former board member of US SIF, a membership association for individuals, firms and organizations engaged in sustainable and responsible investing.
A 2012 study by the US SIF Foundation found that $3.7 trillion – or one out of every nine dollars under professional management in the United States is invested according to sustainable and responsible investing strategies. The report found that the “SRI universe” grew 486 percent between 1995 and 2012, while assets under professional management grew 376 percent. Some of this was due to legislative mandates—state pension funds, for example, not investing in Sudan—and some was driven by high-profile issues such as climate change, according to Lisa Woll, CEO of US SIF.
Already this year, a group of private foundations with combined assets of more than $1.5 billion declared they would be divesting from fossil fuels and investing in climate solutions, according to a US SIF Foundation report released in January. And investors in the millennial generation, who were born between about 1980 and 2000, are demanding investments that consider environmental, social and governance issues.
Socially Responsible Investing is “about the relationship between your investments and the real world and maximizing the social outcomes associated with those investments,” says Mr. Wood.
Ian Brownell, a Boston-area video producer, opened a Donor Advised Fund (DAF) at the Boston Foundation in December, placing all of his assets in the SRI mutual funds. “I wanted to set up a fund that was local to the Boston area, where I felt I could be more connected and could be involved in choosing some of the charities my money supports,” he says. He chose the SRI option because “we vote with our dollars in a lot of ways, and investing is certainly one of those ways. There are a lot of good companies out there. It only takes a little extra effort to seek out the ones that are not only going to be profitable investments, but are also deserving of encouragement.”
To learn more about Socially Responsible Investing, see: