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Creating a Portfolio of Charities

Creating a Portfolio of Charities

The principles of investing can be applied when your financial management conversations turn toward philanthropy. 


Strategic philanthropy looks at your social vision and how you would measure success, and then aligns that vision with organizations that will achieve your vision. At the end of the day it’s creating a portfolio of charities. A diversified portfolio of charities provides you with the opportunities for greater impact on your community thereby seeing a stronger return on your philanthropic investment. In addition to organizations that align with your vision, Strategic Philanthropy also integrates policies around the assets in your foundation or Donor Advised Fund. Thereby insuring that money that is generated within your charitable fund is balanced with the charitable purposes of your foundation.


The mutual fund of approach to charities means identifying a grouping of organizations that, when combined, will achieve as specific social outcome. This social outcome has specific benchmarks that the organizations are measured against, and they can be both qualitative and quantitative.


For example, you have an interest in international development, specifically on access to medicine and other treatments. You could give to just one charity that is addressing the issue, or you could give a combination gift that addresses key aspects of the medical issue.


The purpose behind creating a charitable mutual fund is to leverage your single donation to generate greater impact. Your one donation can be "deepened" by the complimentary agencies that you also support.


In the case of the International Development Mutual Fund a combination of an advocacy organization, a front-line service provider and a general funding body would be powerful combination.


A mutual fund of charities attacks the issue from several angles enabling you to diversify your approach, provide you with the data to measure impact in the long run through comparison of multiple variables. Just as you would diversify your investment portfolio to manage risk, you can diversify your charity portfolio to direct your social vision. The beauty of a mutual fund approach to philanthropy is that it can be applied to any area: education (scholarships, classroom materials, teacher quality, access to technology, access to external opportunities, etc.), with the arts (scholarships for art students, festivals showcasing a type of work, etc.), homelessness (shelters, job-placement, mental health, immigration support, re-training, veteran supports, etc.). My guess is that you will see that what you think is a solution to your social vision is also a solution to another social issue.


Where you invest your money that will be used for charity is just as important as where you donate your investments. The stocks/mutual funds/property that your charity dollars grows in, can have a similar impact on the communities that you are supporting. When speaking to your broker or wealth manager, you should also ask about the process for selecting the funds that have been selected. If you have invested in tobacco, donating those shares to the Heart & Stroke foundation won't be so easy. In fact, some charities have stipulations that they won't accept donations of stocks that come from companies that do not align with their mandate. When you are in discussions with a charity about donating stock make sure you ask about exclusions like this.


What would a diversified portfolio look like if one of its objectives is to generate social capital?


Of course there would have to be charitable investments – ideally ones that not only resonate with the individual, but also have greater impact on society. How do other businesses play into this portfolio?


Here are my thoughts - a social capital generating portfolio would include general revenue generating funds/shares/stocks. Some people feel that change can happen from the inside, so by holding a piece of a company's assets you are providing them with the means to make change. Fair enough. Others feel that social capital can only truly be generated by investing in companies that have society's interests at heart (i.e. green energy). That's fine too. Whatever the motivation, there should be some source of revenue generation in the portfolio.


The second piece would be investing in a social enterprise. I see social enterprises as companies that have social interests at the core of their business model. They are for-profit enterprises and can be in any industry.


For example, I once spoke with a woman who wanted to open a restaurant that sourced its food from local farmers. Her approach to seeking investors has been the traditional business model (except that she is only asking those who align with her personal values). Of course, as many of us know, investing in the restaurant business is high risk and therefore difficult to attract investors. We talked about her changing her message from restaurant investment to a community enterprise investment. By buying a share of her company you will not only be bringing a new eatery to her city, but you will be supporting other local businesses. Most specifically, your investment will provide a foundation for local farmers to continue to strengthen their own farms in the shadow of the major agri-businesses that are cropping up around North America.


Of course, this positioning only works with those who already have a social bend. But if you are reading this blog my guess is you have already given some thought to the idea.


The final piece of the social generating portfolio is charity (as mentioned above). Charitable investments do not have to be to a specific sector or organization to have meaningful impact. The most important thing about your charitable investments (aside from the fact that they align with your values) is that you know where your money is going and how you can best get it there.



This article originally appeared on the Dexterity Consulting website in three blog posts:



Gena Rotstein is the CEO of Dexterity Ventures Inc., which creates technology solutions and tools to help advisors talk to clients about their philanthropy and social capital questions. Follow her on Twitter @DexterityCon.