On the Ellevest Private Wealth Management team, we’re redefining the way we’re thinking about — and talking about — using your money to power positive change.
That’s because we’re over the dated notion that our only option to “do good” is saving our money so we can (hopefully) have enough of it that we can one day give the surplus away. That helping people is a privilege you can only reap through philanthropic donation.
And we want our clients to be over it, too. There’s a better way.
We believe that money can be used not only to grow wealth, but also to drive social and economic change in communities through our investments. By directing money into the hands of women and to organizations committed to addressing issues disproportionately affecting women, we can strengthen our communities and our economy … while we continue to benefit from the opportunity for financial return.
The power of investing in women
We’re doing this by relying on the power of women themselves — through investing for impact. And if you’ve been told that investing for impact is sure to cost you returns? We’ve been told that, too. And we fundamentally disagree. Here’s why:
When women are 18% more likely to pay back small business loans, compared to men with the very same credit rating — that’s a smart investment.
When companies with more women decision makers tend to have higher returns on capital, appear to manage risk better, and face a lower risk of insolvency — that’s opportunity, not opportunity cost.
Pretty compelling stuff. That’s why we believe that investing for impact can make your portfolio less risky, not more.
What impact investing can look like
In a taxable investment account
At Ellevest, we build impact portfolios for our Private Wealth clients from funds in renewable energy, public equities, small business loans, and private debt.
In fact, in 2018, Ellevest Private Wealth clients invested to support:
LEED-certified Section 8 affordable housing in Ohio
Small businesses owned by women, such as an eye care clinic in Georgia and a veterinary practice in New Mexico
An affordable assisted lifestyle community for seniors in Illinois
Sustainable multi-family housing in North Carolina, with units for women and families affected by substance abuse
In a donor-advised fund
A donor-advised fund (DAF) allows you to set aside assets that you plan to donate to charity, but invest them while you’re deciding between charities. (Here’s more information on DAFs and why you might use one.)
DAFs have been criticized in the past for not requiring annual distributions (aka donations), as private foundations do — which could, theoretically, allow the funds to remain invested indefinitely and never make their way to charity. We’d never argue for that — in fact, Ellevest works with Schwab Charitable, which does require an annual distribution from DAFs — but separating the act of designating that money to go to charity from the act of giving that money to charity can benefit everyone involved.
For example, you may be looking to make use of the tax benefits of giving today — perhaps you have an appreciated stock position, for instance — but you aren’t sure which charity you want to donate to just yet. Using a DAF allows you to take your time in deciding. And the charities you eventually give that money to could, of course, benefit from potential investing returns.
So why not invest those funds for impact and allow them to change the world … while they’re waiting to change the world?
If you’re passionate about making a difference in this world — and you’ve demonstrated that commitment by funding a philanthropic investment account — I encourage you to do more with your money. Build an impact portfolio within a DAF so that your money can make a difference to the eventual beneficiaries — but also make an impact while it’s invested.
You don’t have to choose between investing for impact and investing for returns — we believe you can invest for both. And you don’t have to choose whether you want to make change today or tomorrow. Do both! We can’t afford to let the old way of thinking get in our way.
Click here to contact an Ellevest financial advisor in your area.