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The rise of passive investing, and index investing, in particular, is a dominant trend in for-profit investing. Are the core benefits and concepts of different types of passive investing worth thinking about for philanthropy?
The prototypical active investor researches individual companies, macroeconomic conditions, and other factors to make individual investment decisions on the basis of his own research and analysis. The basic idea is that the active investor seeks to make better than average investments through knowledge and skill. The active investor seeks to beat the average investment over some set of possible investments in companies or “index.”
As a result, many smart people, including Warren Buffet, advise smaller investors to invest passively instead. Passive investing is a spectrum that can range from choosing a set of criteria and then investing in all stocks that meet the criteria; to investing in mutual funds that are similarly structured; to choosing an allocation for investments but not individual stocks; or, to simply choosing an index or set of indexes to invest in.
Read the full article by Alexander MacGillivray about passive philanthropy on Medium