• If clients have been engaged in philanthropy that is more formal for some time, advisors may want to encourage them to do a full assessment of their grantee portfolio to see if some portion may benefit from a complementary “impact investment.”
Not only will this approach and these key questions resonate with high-net-worth and ultra-high-net-worth clients who are charitably inclined, but the responses will also provide a baseline of data for creating an impact investment portfolio that is both meaningful and measurable.
Once the due diligence of suitable impact investments is done, then it is important to develop or modify an investment policy statement and ensure that it is approved to codify commitments and performance expectations. There will need to be explicit reporting for impact statements, scored to the investment policy statement, just like there are at traditional annual investment review meetings. These performance discussions will be different from typical investment reviews and will require more engagement with the client (or the client’s board) and with the advisors or staff to the client on the philanthropy side to ensure that grant-making and impact investing are indeed working together toward the client’s charitable goals.
The intentional weaving of philanthropy into an impact investment plan can help the investments actually achieve their intended goal, with more dollars going to solutions and more communities globally benefiting. And all of this can be done without impairing return (assuming these expectations have been set). Stepping up your game and adding a conversant philanthropic thread to your engagement with clients is where they want you to go and who they want you to be … their trusted, knowledgeable advisor who is first committed to their success. After all, deploying capital in service of both social and financial returns is a great deal—for anyone and everyone.
Betsy Brill, an internationally recognized expert in philanthropy, is president and co-founder of Strategic Philanthropy, Ltd., in Chicago. She will be speaking at FA’s Invest In Women conference in April.