Rethink Giving: Newer Ways to Make an Impact

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Go beyond conventional giving methods to make a meaningful impact.

New and innovative giving strategies are changing the face of philanthropy. These strategies are enabling individuals and families to more fully leverage charitable assets and resources to create social benefit. Whether you are just beginning to explore your philanthropic identity or carrying out a family tradition, it helps to consider all of your available options. To assist you, we have summarized six charitable giving and investment solutions that have grown in popularity in recent years.

Impact Investing

Impact investing is an umbrella term used to describe investments that create positive social impact beyond financial return or an investment strategy that intentionally aligns the investments held by an organization, or in its portfolio, with the mission of that organization.1 Impact investments include most traditional asset classes, such as cash deposits, fixed income, loans, and loan guarantees among others, and are in a period of transition between being an emerging asset class versus an integrated investment strategy. Sustainability, responsible ownership and explicit diligence on a company’s impact on stakeholders are becoming a standard investment process.2

Impact investing has gained traction in recent years due to millennials’ strong commitment to social or sustainable investing and belief that it is possible to invest in for-profit companies that have a positive social or economic impact while also achieving healthy financial returns.

Example:

A family foundation with a mission to protect the environment makes a direct investment in a private start-up company that develops clean-fuel technologies for automobiles.

Microfinance

Microfinance is an integrated package of financial services (micro-loans, savings and checking accounts, insurance funds and other basic financial services) for impoverished and low-income individuals who seek to develop small businesses (microenterprises) and self-employment opportunities. These financial services are essential to impoverished individuals, who often lack access to traditional banking products and institutions because they cannot provide the requisite collateral, meet minimum deposit requirements, have no credit histories or are not granted access to banks due to their minority or gender status. Microfinance organizations help poor and financially marginalized individuals move out of poverty, increase their income, become economically self-sufficient and improve their standard of living.

Online microfinance sites allow donors to “choose a borrower” by allowing the donor to read about different entrepreneurs’ stories and learn about their business ideas.

Example:

Kiva and Opportunity International are examples of microfinance organizations that allow you to learn more about micro-investments and ways you may want to be involved.

Giving Circles

A giving circle is a group of individuals who agree to pool resources earmarked for charitable giving and decide together which communities or nonprofit organizations will receive their pooled holdings. Giving circles provide an entry point for donors with lower income levels and opportunities for participants to meet others who are also interested in giving.3 Ranging in size from a handful of members to several hundred, giving circles have become a popular way for younger donors to combine philanthropic resources and essentially “give together” with a network of their peers.

Example:

Loose Networks are a type of giving circle and typically consist of a core group of people who organize, plan and make grant decisions on behalf of the group. Womenade Washington is an example of a loose network created in Washington, D.C. by a group of women who work in the public sector. Their meetings are organized around potluck dinners and their first potluck was attended by nearly 100 women. The hosts had asked attendees to donate $35 to fund financial assistance for individuals living in homeless shelters and public clinics in the area. The network raised $3,000 that helped pay for prescriptions, utility bills and rent.

Crowdfunding

Crowdfunding is a form of peer-to-peer fundraising that harnesses the power of social networks to fund a project or cause. Crowdfunding websites allow donors to search profiles and connect with causes of interest to them. The largest crowdfunding effort in the United States, as of August 2018, raised $41.6 million to assist people affected by Hurricane Harvey.4 Many crowdfunding donors value their personal connection to the projects they support and the ability to highlight causes that might not get as much attention from established charities.5

Example:

CrowdRise is the leading online fundraising platform dedicated exclusively to charitable giving. It is a part of GoFundMe® which allows individuals, nonprofit organizations and companies to set up fundraising websites in a matter of seconds.

Nonprofit Creation

There are numerous nonprofit organizations doing great work, but many feel more inspired to start a new organization to help serve their community. Starting and sustaining a nonprofit organization – while not an easy task – is a noble commitment and often spurs innovative solutions to social problems.6

Example:

Healthy Active Positive Purposeful Youth (HAPPY) is an example of a new nonprofit organization started by millennials and Gen Zers. Founded by Haile Thomas at just 12 years old, HAPPY seeks to redefine youth education and empowerment through wellness – helping to unlock, activate and harness the energy and power of the next generation. Haile, a now 18-year-old activist, health coach, vegan chef and CEO was inspired by witnessing her father fight off Type 2 diabetes with healthy eating and exercise. HAPPY provides peer-to-peer learning experiences for youth through nutrition/culinary summer camps and school visits. The organization has reached more than 15,000 children through programs in elementary and middle school from New York to Dubai.

Activism

Taking action to affect social change can occur in a variety of ways and can take on many forms. While not new, activism has increased in recent years in the midst of a widening economic and political divide, as millions of Americans are organizing in their communities, workplaces and voting booths to have their voices heard and their values upheld. Younger people from across the country are building movements and organizing around causes such as the environment, gun control, sexual harassment and women’s rights.


To learn more about how you can prepare for your philanthropic future, see Engaging the Next Generation in Philanthropy or visit northerntrust.com.

  1. Marguerite Griffin, “Impact Investing: A Guide for Philanthropists and Social Investors,” October 2013.
  2. https://www.forbes.com/sites/christopherskroupa/2017/11/07/impact-investing-first-mover-on-today-and-tomorrows-megatrends/#20371bf435d8
  3. https://www.philanthropy.com/article/Giving-Circles-Popular-With/150525
  4. https://www.councilofnonprofits.org/tools-resources/crowdfunding-nonprofits
  5. https://www.pewinternet.org/2016/05/19/collaborative-crowdfunding-platforms/
  6. https://www.classy.org/blog/7-new-nonprofit-organizations-watch-2016/

Disclosures

This information is not intended to be and should not be treated as legal, investment, accounting or tax advice and is for informational purposes only. Readers, including professionals, should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal, accounting or tax advice from their own counsel. All information discussed herein is current only as of the date appearing in this material and is subject to change at any time without notice.