Philanthropy, Now Yielding Financial Returns

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Philanthropy, Now Yielding Financial Returns

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.@BrownFlynn blog: philanthropic dollars to achieve both a return on #investment and a social return. #philanthropy
Monday, November 7, 2011 - 8:05am


Recently, a Forbes article shared that in the past philanthropic giving and financial investments have been two separate fiscal activities. But today there is a growing trend of devoting philanthropic dollars to achieve both a return on investment and a social return.

In the past, the wealthiest of individuals, families, and most profitable companies have supported causes by donating to nonprofit organizations and charities. This was in hopes of seeing a social impact that bolstered society’s ability to operate such as feeding the hungry and giving shelter to the homeless.
However, investment strategies such as socially responsible investing (SRI) and impact investing have been created to allow donors to simultaneously yield market-based returns while achieving a social impact. Socially responsible investing refers to investment decision-making that takes into account a company’s environmental, social and governance (ESG) policies and records. These strategies show precisely how those assets are utilized and give the donor or investor the ability to trace them to their final destination and see how the return is generated.
The most common SRI strategy practiced by the investment professionals is screening. When using “negative screening,” managers create a list of unacceptable products, services or corporate governance practices and uses it to omit companies or industries such as tobacco, alcohol, mining, forestry, and weapons from their portfolios.