Philanthropist Carole Crist, the founder of CLC Global Advisors, is an experienced philanthropic investor and investment advisor and today she’s sharing a few things that you should know about charitable investing.
Philanthropist Carole Crist Explains Charitable Investing
Before we get started, perhaps it’s best to talk about exactly what we mean when we refer to charitable investing. Essentially, charitable investing is the same concept as impact investing. That is, an investment that is made in a for-profit company that is dedicated to making the world a better place, for example, investing in a company that specializes in new technology designed to improve agricultural irrigation. This company is bettering the world by decreasing wastewater production and limiting the amount of water needed for crops to thrive. This means less water wasted and it also means improved crop production and more water conservation for countries with less water accessibility.
Charitable Investing Versus Charitable Donations
Why not make a charitable donation rather than make a charitable investment? The big difference between these two options is profit. When you make a charitable donation you are taking your money and giving it to a charity to use at their discretion for funding their mission. In return, you get to know that you did something great and, of course, you get the tax benefits from making that donation.
When you make a charitable investment, however, you are taking your money and investing it in a for-profit company with a specific product, service, or goal that is designed to improve social health, the environment, and/or global health. This company then uses your money to fund their operation. Charitable investments are usually sought during the younger stages of a company’s creation when funding is needed for product or service development and this generally gives you the best opportunity for return on investment. Young companies know that they are less of a certainty for investors until they have established themselves so you receive a better return on your investment.
The Three Types of Charitable Investments
There are three types of charitable investments – financial first, impact first, and blended value investment.
With financial first charitable investments, the focus of the investment for the investor is to maximize their investment while also having a social or environmental impact that is measurable. With impact first charitable investments, the priority focus of the investment is on impact first and financial return second. Blended value investments, however, are a blend of both impact and return on investment so the investor can maximize their return and promote change.
The Returns on a Charitable Investment
When considering a financial first charitable investment the financial return is likely going to be on par with traditional investment returns. The difference is, however, that the return is accompanied by the knowledge that you contributed to change and you can also benefit from your association with that company in the longterm.
The Growth of Impact Investing
The world of impact investing is only set to expand over the next decade with an increasing number of sectors taking an interest in affecting global change, which means increased diversity in investment opportunities.
Why is interest in impactful business on the rise? The biggest driving factor is the Millennial generation. An enviro-centric and eco-conscious generation who sees the impact of our actions on the world and who wants to force change before it’s too late, the Millenials are building opportunities at a swift pace. It’s not the Millenials alone though. More businesses are seeing the favor for eco-conscious businesses by the newer generations and they know that they must keep up the pace if they want to attract investors and attention.
The Future of Charitable Investing
As we face some of the biggest global crises in the world today, it’s no surprise that impact investing is of continued interest to investors as well as to new businesses. If you or your business aren’t taking part in this newest investment revolution, then it’s time that you were because the sooner you get on this bandwagon, the sooner you can begin changing the world and making a profit at the same time!
Interested in More Charitable Investing Advice From Philanthropist Carole Crist?
If you’re interested in more charitable investing advice from philanthropist Carole Crist contact CLC Global Advisors today at 305-467-3432. Carole and CLC Global Advisors specialize in impact investing advising and whether you’re a first-time investor or an investing veteran interested in philanthropic investing for the first time, we’re here for you.