I approached this topic, first from a narrow lens – allocating company investment dollars to address community needs. Then with a broader view, I saw connections which may help clients, Hartz & Minds readers, and colleagues. Most companies donate money to nonprofit partnerships to impact both their own strategic goals and the communities they serve.
Leading companies and foundations are also placing investment dollars with charitable enterprises to yield a solid ROI and spur social change.
Many people consider spending money on executive coaching, lifelong learning, or civic leadership to impact their own careers and personal fulfillment. Corporate Hartz can widen the perspective of how precious dollars are invested for current and future benefit.
Socially Responsible Investment (SRI)
SRI is the term for financial investments made by taking into account, and giving heavy weighting to the inherent nature of the business mission, operations, employees, products, services, supply chain, and customers.
Financial Markets and Institutions
Most investment firms offer mutual funds and exchange-traded funds pre-vetted for adding value to society and environment AND ability to generate financial returns. For example:
- Shunning of “sin” products like alcohol, tobacco, and gambling; this is popular with those observing Islam’s Sharia laws as well as citizens who feel these activities harm social and economic development
- “Green funds” that avoid pollution, fracking, flora and fauna species endangerment, and embrace development of new technologies that decrease the use of fossil fuels worldwide
Community Investing
These monies go directly toward organizations that have a track record of social responsibility through helping the community and have been unable to garner funds from other sources, such as banks and financial institutions. The goal is to improve the quality of the community by reducing its dependency on government assistance such as welfare, which in turn has a positive impact on the community’s economy. For example:
- Micro-lending; affordable housing; credit counseling; scholarship funds
Positive Investing
Investments in activities and companies believed to have a positive social impact allows investors to express their values on corporate behavior issues such as social justice and the environment through stock selection – without sacrificing portfolio diversification or long-term performance. Positive screening pushes the idea of sustainability, in the sense of a company’s long-term potential to compete and succeed. For example:
- Renewable energy projects; green bonds; social bonds; and medical research
Impact Investment
In the past, increasing assets and affecting social change were considered divergent paths. Now, due to trends involving talent, technology, markets, and policy, that tradeoff no longer needs to exist. Corporate and Foundation investments that capitalize on the synergies of social and financial efforts are attractive in the current era of unpredictable markets, where the volume and availability of data is so very great. Wise investors question their own philosophies, partners, goals, and risk profiles; many are going back to basics.
Sustainable investments are part of a strategic approach to portfolio management. In the US there is currently $3,000,000,000,000 working in this way – for both investor and societal returns.
Josh Cohen, Managing Partner; New York based City Light Capital
Evolving Legal Tools
Our legal and accounting systems are catching up to the new demands for corporate flexibility and civic responsibility; the nonprofit sector need not serve alone.
Investors, stockholders, and entrepreneurs increasingly consider social and environmental issues in forming and operating businesses. Hybrid for-profit/nonprofit business models such as B (“beneficial”) corporations and Low-Profit Limited Liability Companies (L3Cs) are on the rise.
Cass Brewer, retired partner Morris Manning Martin LLP, currently Associate Professor at Georgia State University, School of Law
Both of these distinct concepts share a common purpose of providing a community benefit through the power of a traditional company. Currently, the IRS does not grant any type of special tax status to B-corporations or L3Cs, but if the federal law is changed to favor such types of businesses similar to nonprofits, the formation of these organizations undoubtedly will accelerate.
People Investment
The best-qualified professionals bring a spectrum of lenses, which are often gained from experiences outside of their own offices.
Joel Koblentz, Founding Partner, The Koblentz Group
Even in the current market, investing in your own and your team’s civic leadership is time and money well spent. This strategy raises the corporate profile, develops professional skills, empowers employees, and reduces training, turnover, team-building, and communications costs.