Social or financial gains? Impact investments offer both

Eileen Hesiman, CEO, National Philanthropic Trust

Philanthropists are continually looking for innovative ways to make a positive impact with their charitable gifts, and many are increasingly turning to impact investments. Although the concept has been around for nearly 40 years, the term “impact investing” didn’t exist until more recently.

The double bottom-line benefit of impact investments means philanthropists can generate both a social and financial return. Investors can use impact investments as part of their personal financial portfolios or through giving vehicles such as donor-advised funds (DAFs). For example, a DAF donor can recommend an investment in a company that prioritizes sustainable energy and lower carbon emissions or an organization that offers international microfinance and community development. Any financial returns these investments generate will be re-invested in the donor’s DAF as charitable dollars that can be granted to qualified nonprofit organizations.
Individuals, foundations or companies can be impact investors. The structure of impact investments is varied, and the possibilities are virtually limitless—investors can support agri-business, housing projects, clean air innovation, medical technology or literacy programs in any corner of the world. The challenge can be finding the right investors for the right projects at the right time. Financial and philanthropic advisors can help donors choose the options that work best for their goals and values.
To work with donors who want to increase their charitable impact, National Philanthropic Trust (NPT) added six new impact investments exchange-traded funds to its investment menu. These investment options are built around positive societal impact and demonstrate NPT’s dedication to supporting its donors’ philanthropic values at every level of cha
ritable giving.
Eileen Heisman is the CEO of National Philanthropic Trust, the largest, national, independent donor advised fund sponsor.