Lately, many family foundation members have asked me about the best way to get started in impact investing.
An easy, no-risk way to start is to park your investable cash (up to $250,000 is federally insured) in a “do good” bank. Be careful though, some banks claim to do good, but they don’t.
You need to find an “It’s a Wonderful Life” bank, the kind that accepts deposits and invests the money in the local community. Avoid a bank that functions as a huge vacuum cleaner, sucking up community members’ assets and sending the money to Wall Street.
If you’re not sure if your local bank qualifies as a “do good” bank, contact the National Community Investment Fund (NCIF) to see how your bank rates.
Or, try one of the 11 Minnesota banks that meet NCIF social-impact standards. For example, the locally owned and operated Sunrise Community Banks is a B-corp and community development financial institution (CDFI) that caters to diverse urban customers and lends to them as well. This video says it all.
Full disclosure, I’m such a fan that I serve on the Sunrise Community Advisory Board. Sunrise Banks is also an MCF member.
The tide is turning: more people are thinking about their moral, social and environmental values when they shop, play, and invest. Impact investing is going mainstream with more robust and consistent impact measurement and monitoring happening every day. The blowback on ESG (Environmental, Social, Governance) makes true impact investing (which requires impact measurement) all the more relevant. Will changing how people view money change the world? Well, it isn’t a panacea for all that afflicts us but as they say, “follow the money”. Investors have power. Use yours wisely.