Investors often focus on the financial returns of their investments while forgetting about some of the less visible cultural and social returns. Though of course you want investments that will bring you prosperity, what if an important ingredient of wealth was being left out?
Today, more and more businesses and individuals are learning the importance of philanthropy as part of an investment portfolio. Though giving back is usually understood as an act of paying gratitude, philanthropy is also an important investment that shouldn’t be overlooked by anyone.
By giving time and money back into the community, you can invest in the prosperity of the future, for yourself and the world.
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It Pays to Give
Companies know that philanthropy has the potential to draw business and profit. Many businesses participate in charity campaigns to boost their public image, attract new customers, and increase sales. This kind of philanthropy occurs, for example, when companies donate a percentage of certain purchases to charity. These campaigns can help both businesses and worthy causes boost funds.
Related: 3 Ways Investors Can Give Back to Their Communities (& the Larger World)
Charitable giving within an organization can also help boost morale for employees, which is essential to a company’s overall productivity. When workers see the good being done by their higher-ups, they’re more motivated to work hard and to continue with their careers.
Giving to boost customer engagement and worker morale is especially helpful for companies that don’t seem to supply things that are essential. The producers of the card game Cards Against Humanity, for example, receive buckets of attention annually for their coordination of charitable stunts, many of which are funded partly by fan donations.
Most of the largest companies today are clear on the fact that it pays—figuratively and financially—to give back to the community. But immediate financial rewards are not the only reasons it’s a good idea to give back.
Funding the Future
In addition to financial benefits, investors also reap long-term rewards when they give time and money to charity. It’s an oft-forgotten rule that money doesn’t grow on trees. By giving part of the wealth you earn back into the community, you ensure that—in some way, in some form—that value makes it back to you and the people and organizations you care about.
Here’s an example. An investor with large shares in tech companies has made a decent bit of money from their investments. They want tech to continue innovating, but they are worried about the number of fresh ideas entering the field. That investor might take some of their earnings and donate to an organization like Girls Who Code which encourages diverse, young people to pursue computer science.
Over time, the kids whose education they invest in go on to more successful, productive careers than they would have had without the opportunities philanthropic donations provided them. These kids may become great tech employees, innovators and entrepreneurs when they grow up, and their ideas will bring further returns to the generous investor.
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By putting money and efforts back into the community, investors ensure that the resources earning them money today will continue generating prosperity for future generations. Investing in education, clean energy, public health and infrastructure are all ways investors can promote the financial health of the societies they live in, and those investments benefit everyone.
Investors that Give
Giving back to the community can benefit individual investors as much as it can businesses. And luckily, there are a lot of ways to give that can maximize the benefit of your unique skills and resources.
Some people choose to donate resources to their local communities in order to ensure continued spending power and a healthy workforce. Common ways to do this include donating food to a food bank, giving clothing to those in need, and even allowing a nonprofit organization to use meeting space in a building. These donations directly influence the good of the community.
Other investors choose to donate money to charitable organizations that are known for working on causes related to their investment portfolios. For example, if you had stock in organic food companies, you might donate to organizations that work to promote sustainable farming practices. These donations indirectly benefit the well-being of the companies you’ve invested in.
Finally, some investors who can’t or don’t want to donate money or resources choose instead to donate their time. An investor’s skills can be highly valuable on nonprofit boards, and their help can be appreciated in smaller places as well, like soup kitchens. Giving time helps you build a trusted presence in your community and grows your connections. Time donations directly benefit the causes you care about.
The most important thing to remember when making charitable investments is to choose a cause that really means something to you. People could talk all day about how investing in the community will bring returns, but ultimately, you need to decide what issues in the world are most pressing to you and which you are most equipped to help manage.
Invest in Giving
Giving back to the community is an investment in the future. It can bring both instant and lasting rewards for businesses and individuals. But philanthropy is also important for investors simply because it’s a good thing to do. Giving back—whether you reap a reward or not—feels good. And knowing that it has the potential to bolster your financial portfolio is really just a bonus.
How do you and/or your business give back to your community? Which causes mean the most to you and why?
Weigh in with a comment!