Wealthy families don’t think twice about putting their wealth to the planet’s service

How do wealthy families invest their capital? Fortunately, impact investing is an increasingly common choice. An anticipation of some of the most important findings.

Some in the international financial community are still hesitant about impact investing. Wealthy families, on the other hand, are showing their foresight. This is what emerges from the Investing for Global Impact report’s data, which analyses 256 foundations and family offices.

A golden decade for impact investing

Impact investing constitutes a veritable revolution, both with regards to the logics of philanthropy as well as traditional investments. From the former, in fact, it inherits the will to reach (and measure through concrete data) a positive social and environmental impact; from the latter, instead, it takes the goal of achieving financial gain.

Before facing this new approach, therefore, it is essential to spend some time assessing one’s surroundings, analysing the various options to understand what the best solution is. In the last decade wealthy families have managed to mature the necessary experience and move onto action. Between 2010 and 2016, 71 per cent of multi-family offices, 56 per cent of single-family offices and 57 per cent of foundations have undertaken their first impact investing operations.

Single-family offices lead the way

In particular, single-family offices, those firms that manage the assets of a single wealthy family (different from multi-family offices, which bring together more than one), have distinguished themselves in the world of impact investing. 45 per cent of those interviewed refer to impact investments as a fundamental component in their portfolio. A quarter of these subjects is uniquely focused on impact investing, without even taking philanthropy into account.

On the other hand, for 36 per cent of foundations and 40 per cent of multi-family offices impact investing is part of a sort of “satellite-portfolio” that includes philanthropy and operates in parallel with the traditional sector.

Family office finance
Family offices manage the capital of wealthy families

Have we overestimated millennials?

Normally, media attention is focused on millennials (young adults born between 1980 and 2000), which generally speaking are receptive towards sustainability. But research also shines a positive light on their predecessors: baby boomers (born between 1945 and 1964) and generation X (1965-1984). In a third of cases, in fact, they’re the ones who are giving impulse to impact investing in the family offices and foundations they work for. Of course, researchers underline that this statistic is to be taken with a pinch of salt as it is heavily influenced by the sample’s characteristics.

The role of external consultants working with family offices is very important. In around two cases out of ten it is they who suggest undertaking impact investment activities. A statistic that should make us think about the need to work on financial consultant’s training and awareness, a theme that often emerges in the context of fora dedicated to responsible finance.

millennials care about sustainability
Millennials care about sustainability, but previous generations are also entering the world or responsible finance

What is “Investing for Global Impact”

Investing for Global Impact is a report by the Financial Times in partnership with GIST (Global Impact Solutions Today), compiled with the support of the British bank Barclays. The study concentrates on two ample fields: impact investing and philanthropy. On the one hand, investments that want to obtain both financial return as well as a positive social and environmental impact; on the other, not for profit activities that promote welfare.

246 entities coming from 45 countries participated in the fourth edition, presented at the end of March in Paris. The research focuses on those who manage wealthy families’ capital: foundations and family offices, that is service companies that offer consultancy to one or more families, manage investments and follow administrative and accounting activities.

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