During the holiday season, consumers often look for ways to give back or make investments that benefit their communities or support ethical causes. The Los Angeles Times this week reported on some of the ways consumers can invest with a social conscience. The Credit Union National Association brought our attention to the article:
In a list of popular ways consumers can invest in “the social good,” or in other words, invest their money with a social conscience, the Los Angeles Times named credit unions as one of their best options.
“Joining a credit union is a simple way to invest in a community—either a geographic community or a community of people with similar interest,” wrote Tom Petruno for the Los Angeles Times (Dec. 7).
No matter the option on the list, which also includes socially conscious mutual funds and microlending organizations, Petruno said that the first rule in socially responsible investing is the same for any type of investment: Do your homework.
An ethical investment may not always be the most financially sound.
“You can pick a bad investment just as well in socially responsible investing as in mainstream investing,” Jed Emerson, chief impact officer at ImpactAssets, told the Los Angeles Times.
Petruno has a hard time finding flaws with investments into credit unions and their not-for-profit, member-owned structures, however.
“Because of their nonprofit status, credit unions often pay better rates on deposits and charge lower rates on loans than banks,” Petruno said.
Additional options for those interested in investing in the social good, as listed in the Los Angeles Times article:
• Mutual funds: Many funds are available that use screens to weed out amoral companies. Using environmental, social and governance standards, these funds can easily peel away tobacco, alcohol, gambling or weapons companies from their portfolios.
• Microlending: These types of organizations provide small loans to people in the developing world, which both provides access to funding these tiny businesses might not otherwise get from local institutions, and provides an economic boost to their local communities.
• Community investment notes: These types of notes allow investors to loan small amounts of money to specific causes, such as affordable housing and education. Not to be confused with simple donations, the notes have specific maturities and carry interest rates that are paid back to the investors.
• B corporations: Benefit or “B corporations” are those companies that have adopted a new business status that helps them achieve goals in serving their employees, communities and the environment, rather than simply maximizing earnings for shareholders.