For many Gen Y’ers (a/k/a Millennials, and generally understood to be people in their 20’s and 30’s today), philanthropy goes far beyond writing a check to one’s favorite public charity (or, even, texting a donation to the Red Cross following some natural disaster or another). Instead, philanthropy is now understood as a broader deployment of social capital with consideration of the Return on Investment (ROI) to be achieved through that deployment. Outright donations, in which the donor’s ROI is a good feeling and personal satisfaction for helping others, still dominate the market place. But, foundations and other larger donors are also looking to deploy funds through Program Related Investments (PRIs), which are generally understood as loans that will be repaid so that the capital can be redeployed but with an ROI of around zero, and Mission Related Investments, in which the donor is either providing a loan or taking an equity stake in a “social impact venture” from which the donor anticipates a market rate ROI. Individuals, well-heeled or otherwise, are also viewing investments in social impact enterprises as a form of philanthropy, whether that enterprise is being run as a for-profit or not-for-profit entity. One recent survey even found that many members of Gen Y and Gen Z view purchasing products from companies that provide a portion of their profits toward charity as a way of engaging in philanthropy (consider, for example, the success of Tom’s Shoes).
Those working in related fields, such as fiduciaries, foundation managers, venture capitalists, and investment managers, have taken notice of these trends and are adjusting their investment policy statements, fiduciary duty clauses in trusts and other entities, and potential investor pools accordingly. If you would like to explore new ways of deploying your own social capital or if you need to adjust your own way of doing business to account for that deployment, contact HMB or a qualified estate planning professional.