Young Investors Are Driving The Demand For Charitable Investments

This article originally appeared in Private Asset Management and is an excerpt from Mark’s eBook, “Charitable Investments: How To Grow Your Portfolio While Making a Difference.”

The country is currently experiencing a shift toward more sustainable living. In addition to the wide array of whole food markets and hybrid cars available to today’s consumer, many people also want their investments working for the greater good. Although these investments have been around for more than a decade, the past few years have seen substantial growth in the areas of charitable investments, sustainable 401ks, and green bonds. No matter your passion, your financial portfolio can make a difference in the world, while still generating profit for you.

Charitable investments, also known as impact or sustainable investments, are those made in companies, organizations or funds with the intent to generate a measurable, beneficial impact on society. Rather than yielding exclusively financial returns, they seek to boost a positive social agenda, an environmental or medical cause, or back socially responsible companies.

The landscape of charitable investments has been growing steadily for the past few years. According to a recent study conducted by the Morgan Stanley Institute for Sustainable Investing, the total volume of these investments has nearly doubled over the past two years, growing from $3.5 trillion in 2012 to nearly $6.6 trillion in 2014.

The same study found that more than 70 percent of investors are interested in finding more charitable options and expect to see growth in the area over the next five years. 

Financial Institutions. Some of the nation’s largest banking institutions have moved toward investing more assets in charitable causes. In 2013 when Morgan Stanley formed the Institute for Sustainable Investing, it did so with the goal of having $10 billion in client assets invested for social and environmental causes within the first five years. Chief Executive Audrey Choi said, “We fundamentally believe that considering the sustainability and impact of your investments is a business opportunity for us and our clients. We also think it’s a fundamentally strong value proposition to integrate thinking about large global issues in your investing decisions.”

Corporations. Many businesses are also beginning to see the benefits of focusing on sustainability and providing ethical investment options. Smart investing, good publicity, and a positive reputation will eventually lead to profit, but companies are also seeing improvement off the books. A charitable giving program can improve employee engagement and company morale. When employees are pleased with their corporate culture it drives them to perform better.

Some companies have taken responsible financing one step further from simply running their businesses and choosing their investments more responsibly, and begun helping their employees invest responsibly as well. The industry is beginning to see a trend in companies choosing their employee 401k programs based on sustainability ratings. These plans rate the sustainability of its participants’ holdings to ensure each dollar invested is done so ethically.

Millennials. While the nation’s banking institutions and business are shifting their priorities and providing the capital behind the charitable investing trend, the real driving force behind the growth is the millennial generation. While young adults may not be contributing large sums to charities each year, studies show that the majority of the generation has made donations, solicited donations and/or volunteered, and even more have the intention to do so in the future.

Bradford Bernstein, Senior Vice President of Wealth Management with UBS in Philadelphia thinks that experienced investors could actually learn something from the younger generation. “Millennials are the biggest force behind this trend of socially responsible investing,” he said. “[They] are interested in making a difference, and they choose to invest and buy from companies that are making a social statement.”

It is this generation that will be running the banks and businesses in a few years. When their drive to make a difference meets the ability to put the capital behind it, the market with undoubtedly see even more exponential growth in this area.

Mark Tan is a Chicago-based financial advisor with Thrivent Financial, a financial services organization that helps Christians be wise with money and live generously. This article is an excerpt from his eBook “Charitable Investments: How to Grow Your Portfolio While Making a Difference.” Learn more about Mark and download the full eBook at

Photo Gallery