If you are a philanthropist with a DAF, here are four key questions to help guide you in making sure your charitable dollars have the impact you want:
1. Are my current investments aligned with my values? Before recommending new investments, examine the investments your DAF currently holds to make sure that they aren’t working against your charitable goals and values.
2. What impact investments does my DAF sponsor offer? To increase your impact, you may want to move beyond excluding companies with values you don’t share to including those that are making a difference. Most DAF sponsors offer at least one or two investment options that specifically screen for companies that have positive overall ESG characteristics, and some sponsors may offer investments that are curated around a specific cause.
3. How can I evaluate impact investments? Besides Morningstar’s Sustainability Rating, there are a number of useful tools you can use to evaluate impact investments. US SIF provides a list of its members’ funds on its website, where you can view their performance and get details about their strategies for addressing climate issues, labor relations, animal welfare, and other issue areas.
4. Do I have the right team in place to help me? Effective philanthropy requires collaboration. Besides looking for a DAF sponsor that can work with you in offering guidance and choice, you may want an advisor with experience in impact investing. The College of Financial Planning, in collaboration with the US SIF, offers a professional designation for advisors who demonstrate expertise in socially responsible investing. Having the right professional manager is especially useful for donors with independently managed DAFs that can recommend investment options beyond the offerings on the DAF sponsor’s investment platform.
Read the full article about questions DAF holders should ask by René Paradis at The Center for Effective Philanthropy.