Philanthropic
Investing: Giving Back While Gaining
Philanthropy is something that people and companies explore when they feel
the need to give back to their community and the world around them. In the
past, the idea of donating to charitable organizations or setting up a
foundation to educate inner city children was seen as a financial loss. The
costs could be written off as donations, but the only gain was the results of
the good work that was done. These days, philanthropy is not only benefitting
the needy, but it is also bringing financial rewards to the investor as well.Investing In Future Employees
Image via Flickr by Seattle Municipal Archives
Not every financial return from philanthropic works is felt immediately. Some companies are investing in work training programs for underprivileged people because the result is a readily available workforce for the company. The need for qualified employees is something that plagues companies every day. When a corporation develops a work training program and then benefits by having qualified employees, the return on investment is perpetual.
Social Impact Bonds
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Social impact bonds help the government to promote investment while still meeting the needs of the public. Let's say that the government wants to start a children's reading foundation. The government will contract with a private organization to operate the program and then the government pays the organization money based on how well program goals ar achieved. To raise funds for the program, the private organization will sell social impact bonds. Investors provide cash for the program and then they are rewarded if the program achieves its goals. The downside is that no one gets paid if the program fails.
Infrastructure Bonds
Image via Flickr by Gane
The infrastructure of the United States is in dire need of repair, but the process can be expensive. To help raise private funds to make infrastructure repairs, the government will issue infrastructure bonds to raise funds and then pay investors back a dividend once the project is completed. It is an easier way for governments to get the money they need to make necessary repairs and it also allows private investors to get involved in the stability of their community's road, water lines and other essential services.
Negative Screening
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If you have ever looked at your retirement portfolio, you may notice that you are investing in tobacco, firearms and alcohol companies. Mutual fund administrators have started to take a look at their responsibilities to investors and society in general, and they have developed a process known as negative screening. If you invest in a mutual fund that was subject to negative screening, then you are buying shares in a portfolio that specifically avoids investing in companies that are deemed to be counter-productive to society. Your portfolio would invest in book publishers and software developers instead of tobacco companies.
Philanthropy has become popular among people with means and large corporations. In order to inspire others to start taking responsibility for the world around them, the idea of philanthropic investing has been created. Now any investor can look up the contact information for Fisher Investments to get involved in programs that are not only socially responsible, but they are profitable as well.
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