From “The Social Justice Investor: Advance Your Values While Building Wealth, Whether a Few Dollars or Millions” by Andrea Longton, CFA
When assessing the impact of their financial interventions, people should consider the two major differences between investments and other financial interventions for social justice.
Reason #1: Investment finance sustained action
While donations fund a point-in-time emergency response, investments offer a reliable stream of funding for organizations that know how to transform your dollars into authentic change.
Philanthropic organizations use your dollars to defend against further erosion or rights, power, and quality of life. Like Nicole in our earlier example of severe flooding in New York City, financial donations respond to a problem that has already become an emergency.
On the other hand, when Nicole expanded her actions from donations to investments, she combatted housing injustice at its source – creating safe, affordable housing. In the aftermath of terrible flooding, Nicole was able to not only donate to people who were already in a housing emergency, but also invest in long-term solutions that would hopefully prevent these emergencies from reoccurring in the future.
Reason #2: Investments let you recycle your money over and over again
Unlike other financial interventions, the money you contribute via investments is expected to return to you. It usually comes back with more money than you put in.
This structural design is different than donations, where there is no expectation or obligation that your donation will be returned to you. No one expects a mother to repay the Red Cross for the blanket that covered her newborn son after she gave birth in a makeshift hospital. The airline will not be returning the cost of your ticket to the march in Washington, DC. Those costs are expenses that will not be recouped. You likely budgeted for those costs, but you also know resources are not infinite. Investments offer an opportunity to not only recoup your costs, but actually build financial wealth while supporting the social justice causes you care about.
When you donate, the money is gone forever, but when you invest, you can give and give and give using the financial earnings from precious investments.
Five more reason to invest in social justice
Investments work on your behalf even when you’re sleeping.
Investments finance work that continues even when public attention fades.
Investments fund boots-on-the-ground professionals who know how to transform your dollars into social change.
Investments build your financial wealth.
Investments are an effective tool to convert your intention into long-lasting impact.