NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, August 17, 2015

Ellen Remmer had wanted to align her investments with her values for years, seeking to put her money into stocks and bonds that would have an impact beyond the returns. For her, this meant investing in organizations that either improved the lot of women and girls or helped the environment.

Doing so took longer than she expected. Even though it was her money, it was held in trust. She said it wasn’t easy to persuade the trusts’ advisers to change their investment policies.

“I kept bringing it up, but I really got just no good response,” said Ms. Remmer, a managing partner of the Philanthropic Initiative, a philanthropy advisory service. “They were doing the classic, ‘We invest for the highest financial return.’ They subscribed to what I think of as a myth, that you’re going to have a lower return if you do impact investing.”

Three years ago, she finally took a third of her money and invested it as she wanted.

Ms. Remmer’s experience typifies the struggle of many wealthy people who want to make impact investments in a particular area but fear their money will not earn as much as traditional investments. Worse, they worry that family, friends, even hired financial advisers will dismiss what they’re doing.

After all, impact investments are complicated. They fall under the do-no-harm mantra of socially responsible investing. But they also aim to bring about positive social change as well as a financial return.