Make Every Dollar Count: Is Your Cash Sleeping with the Right Partners?

Mar 14, 2019 9:35 AM ET

by Annie McShiras, Investment Associate, Self-Help Federal Credit Union 

Impact investing has emerged as a major force in philanthropy. Last year the Global Impact Investing Network conducted a survey showing that the estimated value of the impact investing sector doubled between 2017 and 2018, increasing from $114 Billion to $228 Billion in assets under management. The rise of impact investing signals a shift from a “do-no-harm” approach to a demand for investments that actively produce measurable positive social and environmental outcomes.

With the growing commitment to impact investing, investors are beginning to set a higher standard for all of their funds—including cash. Socially-conscious investors want every dollar to align with their mission and values. Who or what are their funds supporting when they aren’t directly deployed for projects or grants? What is the impact of their entire portfolio?

These aren’t easy questions. For individual investors, “looking under the hood” of investment vehicles can be confusing and time-consuming. Even for foundations and institutional investors, the challenge is daunting. Under federal law, foundations must distribute at least five percent of their endowments each year. For most, the bulk of their funds are “sleeping,” typically in Wall Street investments, bank accounts and other funds. That means, for example, that foundations could be directing their grant dollars toward fighting climate change while the majority of endowment funds — including their cash — are funneled to the worst polluters. 

The FB Heron Foundation, a private foundation that fights poverty, faced this kind of scenario head-on. A few years ago, Heron’s board members were dismayed when they discovered that, unknowingly, their investments were supporting a large corporation that runs private prisons — an industry notorious for abuses, and certainly not aligned with Heron’s mission.

Heron responded by conducting a meticulous screening of their entire portfolio to assess every dollar for mission alignment. As a result, they now have moved over $150 million of their funds to impact-screened investment products. 

Read Annie's full blog post that includes: How to Make More Impact with Mission-Aligned Partners, and Practical Ways to Take Action with Your Cash -all here- 



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