Women give differently. They invest differently. And now these two are joining forces.
If you pay attention to any sort of financial news, you have heard or read something about how women invest differently from men. They tend to take a more patient approach, don’t tend to make snap decisions, and they prefer to get professional advice before taking action. These are just some of the things we’ve heard.
A new trend is on the rise. Women are demanding more from their money. They want a competitive return on investment, but they also want their money to DO something meaningful. One of the ways they are achieving this goal is through what’s being called “Gender Lens Investing” – investing in companies that have a positive effect upon women. A recent Wharton School article lists some of the ways the companies accomplish this:
- Appointing a strong number of women to boards and to the C suite
- Adopting generous family leave policies
- Committing to equal pay for equal work
- Producing products or services that help to empower, educate, and improve lives of women.
Gender Lens investing goes beyond Socially-Responsible Investing. Socially-Responsible Investment portfolios avoid companies that gain profits from activities that are distasteful to the investor, such as gambling, tobacco, environmental hazards, etc. That is a more passive approach to using your money to make a difference and a statement. Gender lens investing takes a more active approach by offering their capital to companies doing good things for women.
The Chronicle of Philanthropy tells us that women also demand more from their charitable dollars and the charities they give to. They want more than just a tax-deductible financial transaction. They want a relationship. They want regular communication from charities and data on the impact of their giving. They also want to be engaged with the charitable work through activities and volunteer opportunities. The more they are engaged, the more likely they are to give more.
Fidelity Charitable published a recent study on the ways women approach philanthropy differently than men. Among the differences, the study revealed that women seek expert advice in their giving decisions, tax strategies and which giving vehicles to utilize.
Women are taking a very personal and strategic approach to their finances and to their giving. By doing so, they are demanding more of investment professionals and of charities. With that in mind, it will probably come as no surprise to you that philanthropy and Gender Lens Investing are teaming up. Can you say “Dynamic Duo”?
Individual investors aren’t the only ones getting in on Gender Lens investing. I recently attended a presentation given by a community foundation that has created a Donor Advised Fund (DAF) investment portfolio that invests with a gender lens. InFaith Community Foundation in Minneapolis, MN has created what they call “WomenInvest“. Donors now have the option to invest their donor advised fund dollars in this portfolio that, “invests in companies that do well when women do well”. This donor advised fund portfolio very well could be the first of its kind. It is advised by a wealth management firm named Veris Wealth Partners that specializes in this area.
By offering this new investment portfolio, donors don’t just recommend grants from their DAF to their favorite causes – which is the case for DAFs everywhere. The money that stays invested for growth in the DAF is furthering a mission. This is a cutting-edge, innovative approach to blending the power of philanthropy and investing with a purpose.
Gender Lens Investing is still very new. Portfolios like these started popping up around 2014. Since then those portfolios have grown to over $560 million, according to Veris Wealth Partners. That’s still small potatoes compared to other investment focus types, but it’s a quickly growing trend. More and more people are realizing that these types of companies tend to be well-run and show good returns.
This trend will undoubtedly be furthered by women and millennials – both of which are consistently putting their resources into action to further causes important to them. The Fidelity Charitable study shows this through their scientific study. The earlier mentioned Wharton School article reminds us that women are expected to control more than $72 trillion of global wealth by 2020 and that millennials and generation X-ers will control more than half of investable assets by 2020. Those are some powerful numbers and I’m really excited to see where this goes!