You can express your values through many decisions. You care about the health and well-being of your family and planet, so you might decide to buy organic, ride the bike to work, avoid bottled water, recycle, and shop locally.
That’s a great start, but where does your money sleep at night?
“Impact investing” and “social finance” are shifting the dominant financial paradigm of opaque, anonymous, and indirect investments that is based only on quantification of gain. Three women who are working in this movement are featured here.
“Finance is the mother of all human systems. There is no system that humans have ever built that is faster, more global, or more powerful. Finance is our most effective instrument for catalyzing positive change for people and planet.” ~ Donna Morton, Change Finance
What are two key investment trends?
1. Demographics continue to shift in the financial markets.
In America, there is a massive wealth transfer from older white men into the hands of women, wives, and daughters, including millennials.
Yet the financial industry is dominated by men. Currently, only 2% of CEOs on Wall Street are women, and 78% of management teams on Wall Street are exclusively men. Only 3-10% of venture capital goes to women-led enterprises, although opportunities for women are rising as the power dynamics are shifting and as more girls are encouraged to envision entrepreneurial endeavor.
2. Interest is increasing in investment options that align with values, including environmental and social benefits.
Most significant is the divestment from fossil fuels—$5.5 trillion has already been divested from this sector. Impact investors are no longer okay with simply minimizing harm by screening out oil, guns, and other areas with negative externalities through socially responsible investing. Increasingly, investors are focused on ensuring that they are creating a positive social or environmental impact.
“Money and power are not what make us happy. Love, relationships, and connection is what brings joy.” ~ Deb Nelson, RSF Social Finance
This is not a Zero Sum Game
Initially, it can be painful to uncover the ethical messiness and tangible destruction in the wake of conventional investments. In this game there are winners and losers, more for me is less for you, and we compete for limited resources. It is not uncommon for an investor to discover that some of her money is invested in the production of bombs and bullets. Do not feel guilty or ashamed—transfer the investment and feel enlightened!
“What you can measure you can manage, yet not everything that matters can be measured.” ~ Amberjae Freeman, Swell Investing
In truth our security is interwoven: positive, productive connections and investments are the foundation of true wealth. When making a financial decision, assess the value of often unmeasured things, like relationships, environmental impact, and health. Money is not the only measure of value.
Amplify the influence of your money with impact investing.
Pioneers in this field are developing financial relationships that are direct, transparent, and personal. At RSF Social Finance, borrowers and grantees are a diverse group of entrepreneurs with one thing in common: a social mission that drives what they do and how they do it. Organizations that borrow from RSF are working toward social, economic, and ecological benefit. Most of their largest investors and donors are women, which has had a large impact on their integrated and collaborative approach.
“An integrated approach to dealing with money is the first step to transitioning from an extractive economy to a regenerative economy.” ~ Deb Nelson, RSF Social Finance
“Integrated capital” refers to the variety of support received, including money, mentors, and relationships. RSF collaboratives use philanthropic funds to provide integrated capital to projects that support purpose-driven entrepreneurs who also value things like fair trade, soil health, women’s leadership, biodynamics, and local food.
Deb describes how her work focuses on “creating financial relationships instead of conducting financial transactions.”
What are options for investing in alignment with your values?
Socially responsible investing (SRI) is predominantly about screening out “bad” companies who participate in business that you don’t morally agree with. Impact investing takes screening a step further by analyzing the impact of each company through environmental, social, and governance (ESG) factors. Evidence shows that ESG factors, when integrated into investment analysis and portfolio construction, offers investors long-term performance advantages. Money managers are rapidly expanding research and expertise of ESG factors as tools for analyzing risks and opportunities.
Donna Morton says, “We are a force that catalyzes financial activists to create this shift to move our money out of harm into healing. Use finance as an instrument for driving change. Where capital flows, momentum occurs. Our fund enables investors to drive impact, creating an economy in service to life through financial activism.”
Consider the following portals to improving the performance and impact of your investments:
- Swell offers thematic, active management that fully integrates ESG and impact concepts. That means you don’t have to do the research needed for buying individual stocks. Options include green technology, renewable energy, zero waste, clean water, disease eradication, and healthy living. Minimum investment is $50. Amberjae Freeman was interviewed here.
- RSF Social Finance is a non-profit, financial-services organization offering investing, lending, and philanthropic services to individuals and enterprises. RSF has over one thousand clients and over $200 million in consolidated assets. They have formed a growing community of motivated, values-driven investors, donors, and entrepreneurs. Each dollar that circulates through the relationships created by RSF Social Finance multiplies to create true wealth that is meaningful, because it effects positive change as it creates value. Minimum investment is $1,000. Deb Nelson was interviewed here.
- Change Finance is a majority women-owned and -managed financial company offering exchange traded funds (ETFs) that are truly fossil-free. Their methodology is informed by the United Nations Sustainable Development Goals (SDGs). Change Finance provides impact-focused, performance-oriented investments using the SDGs. Donna Morton was interviewed here.
Crystal Arnold is the founder of Money-Morphosis and the Money-Wise Women podcast. After graduating from Southern Oregon University in 2007 with a degree in international economics, she has designed and facilitated workshops, community events, and discussion panels about money. She has inspired thousands of people to have a healthier relationship with money. Her courses serve to financially empower participants. Her written work has appeared in journals, magazines, and in the book called Reinhabiting the Village. She is currently Director of Education at the Post Growth Institute, and coauthoring a book called “Offers and Needs Markets: A Process to Reveal and Mobilize Community Wealth.” She lives in Oregon with her husband and two children.