Giving Compass' Take:

• Kris Putnam- Walkerly discusses the importance of strategic philanthropic investments that go beyond traditional market investments and provide capital that is mutually beneficial.

• What are some critical philanthropic investment strategies that are currently working well for donors? Who dominates this space right now?

• Read about the private equity investment model for philanthropy. 

Socially conscious investors are after more than just financial returns. In addition to making money in the markets, we also want to make a difference. We want to leave a legacy of not just wealth but positive change. However, in our quest to be socially conscious change creators, we often overlook the power of one key asset: our philanthropy.

For most people, philanthropy is the money we give away when we’re finished investing and earning in other areas. It’s a separate category — not just on our tax returns or financial planning documents, but also in our heads. The idea that one makes money first, then gives it away is about as American as apple pie.

But smart investors realize that philanthropy is much more than charity. Philanthropy is an investment tool that can transform outcomes for ourselves and for the world.

Including philanthropic investments within an entire investment portfolio is what my friend and colleague Jed Emerson calls "investing for total return." One key to achieving total return is to think beyond the traditional market investments that are available and determine where mutually beneficial opportunities lie in the philanthropic arena.

A fashion designer with a passion for women’s issues might make a philanthropic investment in nonprofits that help train women entrepreneurs, some of whom might supply materials for future clothing lines. And a manufacturer with a passion for reforming the juvenile justice system might make philanthropic investments in nonprofits that help youth identify and follow paths into manufacturing-related careers — thus helping to ensure his own future qualified workforce.

As a rule, the return on philanthropic investment isn’t quantifiable in the same way as market returns. Our society doesn’t have a system for placing a dollar value on a life changed for the better. Perhaps that’s why philanthropy is so often forgotten as a part of one’s overall investment strategy.

Read the full article about philanthropic investment by Kris Putnam-Walkerly at LinkedIn.