Many of us like to feel as though we're making a positive impact in the world. Could a social finance approach help you help others — while making money?
For many people (myself included), making a difference is an important part of life. I hope to live with passion and purpose, and that means giving to the community. I volunteer, and I give to charity.
But what if I could structure my finances in a way that would help others? The social finances approach helps you make a difference while making money. My charitable giving is automated, and I give to causes I believe in, but my money isn't being managed in a way that helps people every day.
If you're looking for a way to give others a boost while making money yourself, here are three ways to get involved in social finance:
1. Bank locally
Consider banking locally with a community bank or a credit union. Many local financial institutions make it a point to donate to local charities. I know that one of the credit unions in my state actively looks for local projects to support, as does a local community bank.
One thing I love about these institutions is that they donate to folks who need help in the community. They might donate to a food basket or a women's shelter. They might also help with emergency housing for families. You can actually see the results in the community, rather than trust that something will happen thousands of miles away.
In some cases, you might be able to direct a portion of a credit union's funds toward a national or local charity. Depending on the board's makeup, and whether you're sitting on it, you could influence how some of the money is spent.
Look around for a local bank that offers you the chance to really do good in your community, and you might be surprised at what you find and the difference you can make in your own corner of the world.
2. Get involved with mutual aid
Mutual aid networks can help you bring finances close to your community. These networks focus on providing resources locally. In some cases, you collect funds to help community members in need. For example, the mutual aid network I'm involved with has helped a single mother pay a behind electric bill, helped an LGBTQIA+ youth pay a deposit on an apartment so they could move out of their abusive home, and many other items.
While giving to charity can help in some cases, these organizations often have many restrictions. Mutual aid addresses immediate needs without the burden and hassle of paperwork.
Mutual aid also includes using your skills and abilities to help others. I've housed trans community members in crisis, and members of our mutual aid network regularly help others move. We also have swaps, a barter network, and local sewers that contribute to a pop-up closet.
3. Invest in social impact funds
You can also build your own portfolio by investing in social impact funds. These funds are designed to invest in ways that reflect your personal values. After all, that's what the social finance movement is all about.
As you can see, the idea behind social finance isn't just about values investing; you can even help society work toward specific goals by investing in companies and funds that make a difference in areas you care about.
Should you make decisions based on social finance principles?
Whether or not you make decisions based on social finance principles comes down to you and how you feel about what your money is doing. Sometimes social impact funds, while offering a decent return, still don't perform as well as the S&P 500 or other benchmarks.
So, the question becomes this: Do you think the returns from a social impact fund will be enough to help you accomplish your short-term and long-term goals? I don't necessarily need a fund to beat the market; I just need it to provide solid returns over time so I can meet my goals.
You might also want to make choices based on where your money goes. Instead of focusing on social impact investing, you might like the idea of supporting a cause or charity through your banking habits.
I'm still trying to work out how I feel about a lot of the social finance choices out there.
Companies adding social finance initiatives
I was excited when the startup I worked at for two years offered a charity match. When I donated to charity, they matched my donation to that same charity, and they pledged 1% of their profits to charity, and I was on the committee that decided where that money should go. Dealing with companies that have taken the 1% pledge can be one way to support socially conscious efforts. However, the reality is that even supporting these big businesses might be antithetical to long-term positive systemic change.
No matter how you feel about your bank account or your investing choices, look around. Is there a way to do good? Is there a way for you to support local businesses in their efforts to make a positive difference in the community? Even if you aren't into social finance, you can still make your little corner of the world a bit better.
