Impact investing finds itself at a tipping point, with nearly three-quarters of affluent millennial and Gen-X donors engaged in some form of it, a report from Fidelity Charitable finds.
Based on a survey of four hundred and seventy-five individuals with investable assets of at least $100,000 who itemized charitable donations on their tax returns or gave at least $10,000 to charity, the report, Impact Investing: A Tipping Point? (11 pages, PDF), found that 77 percent of millennial respondents and 72 percent of Gen-X respondents said they had made an impact investment, compared with 30 percent of boomer and older respondents. According to the report, respondents were most interested in investing in public companies with good environmental or social practices, either by investing directly (58 percent) or through exchange-traded funds or mutual funds (56 percent), followed by investing in small businesses or startups with strong social or environmental practices (48 percent), venture capital or private funds focused on good environmental or social practices (45 percent), and making loans to charities (42 percent).
The survey also found that 79 percent of respondents who rated charitable giving as "very important" to them engaged in impact investing, as did 63 percent of those who have a financial advisor, 77 percent of very experienced investors, and 71 percent of those with at least $3 million in investable assets. But while 69 percent of men and 51 percent of women surveyed had made an impact investment, many of those individuals were unaware of the distinction, with only 46 percent of men and 29 percent of women saying they were familiar with the term.
In addition, respondents cited guidance from financial advisors (44 percent), more information about impact investing (42 percent), and access to investments with a track record of strong financial as well as social or environmental returns (42 percent) as factors that would encourage them to make an impact investment. According to Fidelity Charitable, donor-advised fund assets invested for impact by its account holders totaled $856 million at the end of the first quarter of 2018, up 110 percent from the previous year.
"Our donors are increasingly interested in impact investing and the ability to align their investments with their broad philanthropic goals," said Fidelity Charitable president Pam Norley. "We strive to grow philanthropy by providing programs that make charitable giving accessible, simple, and effective. In meeting that mission, we empower our donors to maximize the impact throughout the journey of their charitable support — from the moment they consider making a gift, through its investment and, finally, when it is granted out to a nonprofit."