Why Values-Aligned Investing Matters

Picture this: You’re at a board meeting, passionately discussing the need for more environmental conservation efforts. You’ve rallied everyone around the idea, and spirits are high. Then, someone casually mentions that your organization’s endowment is heavily invested in fossil fuels. The room falls silent. You’ve just stumbled upon a harsh reality many non-profits face – the paradox of funding what you are fighting.

The Disconnect

It’s a common scenario. Non-profits dedicated to fighting for social justice, gender, and racial equity, human rights, and environmental issues may unknowingly fund counter-productive initiatives through their investment portfolios. Imagine a women’s rights organization inadvertently investing in companies with poor gender labor practices and no women leaders. The very essence of their mission is undermined by their financial decisions.

The Power of Awareness and Technology

Here’s the good news: new technology is here to save the day. We now have the tools to be acutely aware of what we own and how our investments align with our values. These resources provide transparency, allowing non-profits to easily align their portfolios with their missions. Gone are the days of blind investing; it’s time to take control and ensure every dollar supports your cause.

Performance and Values-Aligned Investing

But wait, you might think, won’t aligning our investments with our values hurt our returns? Research proves that the investment return of portfolios with a values-based focus does not decrease its historical or expected rate of return. 

According to industry leader Vanguard, ”We found no persistent link between the differences in risk and return between portfolios constructed using ESG ratings as selection criteria and the underlying market.” Similarly, Charles Schwab stated in 2023, “If the concept of socially responsible investing appeals to you, our research has found that you should not have to reduce your expectations when it comes to risk and return”. It’s a myth that investing ethically means sacrificing performance. You can have your cake and eat it too.

The Expectation of Transparency

Let’s talk about the future. Supporters and donors will soon expect transparency and mission alignment. The demand for ethical investing is growing, and being ahead of the curve can enhance trust and support. Your donors want to know that their contributions are not just making a difference in programs but are also ethically invested, thereby magnifying their positive influence. Being transparent and proactive in aligning investments with your values is not just good practice; it’s becoming a necessity. Our philanthropic community is built on trust, and once trust is broken it can be hard to rebuild. Donors, employees, volunteers, and community members trust an organization to use all the tools in your toolbelt to fight for your mission. 

Steps to Take for Non-Profits

So, how can you ensure your investments reflect your mission and values? Start by asking these questions to your CFO, treasurer, investment committee, and/or investment advisor:

• What are our current holdings, and how do they align with our mission?
• Are we invested in any companies or sectors that contradict our values?
• What tools and resources can we use to increase transparency in our investments?
• How can we transition to a values-aligned investment portfolio without compromising returns?

Next, consider conducting a Portfolio “Health Check” with Zenith Wealth Partners. We can help you review your investments and develop a plan to align them with your mission.

In a world where every dollar counts, it’s crucial to ensure that your investments support, rather than undermine, your mission. Values-aligned investing is not just a trend; it’s a powerful tool for creating a more just and equitable world. Don’t wait until your donors ask for transparency – get ahead of the curve and make sure you’re funding what you’re fighting for. Reach out to Zenith Wealth Partners today and take the first step towards aligning your investments with your values.

– Andrew Tudor, CAP, CFP®

All written content is for information purposes only. Opinions expressed herein are solely those of Zenith, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.