Social Finance: Responsibility and Profit

peacePlease enjoy this post from staff writer, Mitchell Pauly.  Mitchell blogs over at SnarkFinance.com.

Social finance is charity for capitalists.  If your uncomfortable giving directly to charity or don’t have the time to volunteer—or you’re an asshole—social finance may be a way for your to feel good about yourself while you bath in virgin’s tears.  There are a multitude of outlets for participating in social finance:

  • Microfinance: small, “micro” loans to individuals or businesses that lack the access to capital markets.  So far, microfinance has played a large role in improving the standard of living in poor countries, but has also allowed people like Zach Braff to indulge their egos and make super pretentious movies.  Not all Social Finance is perfect.
  • Socially Responsible Investing: a broad category of investing that upholds the core values of improving social and environmental outcomes.  My wife tries to get me to do this every day by buying our groceries locally, which I do by going to our local Walmart.  Does that count?
  • Green or Sustainable Business: businesses that seek to minimize their impact on the environment and are probably located in Portland, Oregon or Vermont.
  • Venture philanthropy: like venture capitalism, but for philanthropic organizations. This is mostly for rich people trying to make up for all the rainforests they cut down.

There are other forms of Social Finance, but these are the major players. Based on the fact that you are reading this article instead of attending a soiree at the White House, not all Social Finance avenues are available to you.  Chin up though, kid.  There are still plenty of ways for you to participate in Social Finance.

How to Participate in Social Finance

  1. Try microlending sites such as Prosper.com which allow you to loan money in a way that benefits individuals and society.
  2. Donate to non-profits that work to solve social and environment issues, or contact them to volunteer. I don’t do this personally, so consider this an opportunity to be better than me.
  3. Invest in the equities of socially responsible companies.  Begin by writing off your list any company Dick Cheney was ever involved in.
  4. Buy shares of a community investment fund.  There are investment funds that provide capital to social enterprises in exchange for equity.  Shares will rise and fall with the fortunes of the companies the fund invest in, just like any other fund.

The Best Form of Social Finance: Your Skills

This might be as obvious as a sweatpants boner, but social finance is not something I personally participate much in.  In fact, I don’t donate to charity.  I prefer to lend my skills and services as a financial professional, businessman and writer to companies that couldn’t otherwise afford professionals like me.  I believe this is the best thing you can do for a socially minded venture, and is the best form of social finance.  I gain skills, experience and contacts while the organization gains services they normally wouldn’t have access to—like I said: charity for capitalists.

How do you feel about participating in social finance?  Do you give to charity?  Or, do you give in other ways?

 
About Mitchell Pauly

Mitchell Pauly is the main writer at Snarkfinance and a staff writer for Club Thrifty. He is a successful professional investor and financial analyst for Fortune 500 companies and enjoys nothing more than a cringe worthy joke. You can follow him on Twitter @snarkfinance.

Comments

  1. Haha oh my gosh! “Begin by writing off your list any company Dick Cheney was ever involved in.” I don’t microlend but I’ve been intrigued by it. I don’t have a whole lot of time because I manage my blog on top of my full-time job so I usually stick to donating money. I have donated time in the past but you need to be very careful about not burning out. It’s very easy to over-commit.
    DC @ Young Adult Money recently posted..10 Money Mistakes You Can Easily AvoidMy Profile

  2. You’re totally right on the best way to donate to charity is your time and effort! Money is great but what nonprofits usually need are experts in certain fields!
    Michelle @fitisthenewpoor recently posted..Why I TeachMy Profile

  3. Ha! I never thought about how obvious a sweatpants boner could be, thanks for the new visual. :-) I am not a big social finance participant in the “traditional” methods you reference, but I do spend a great deal of my time working with young people and helping them with their personal finances and I feel that is the “greater good” I am contributing to the world.
    Shannon @ Financially Blonde recently posted..7 Tips to Raising a Financially Fit KidMy Profile

  4. I’ve done some work with the Greater Contribution which is about micro loans. They are a very small grassroots organization and i’ve seen how their charity has benefits women in Africa. Pretty cool!
    Tonya@Budget and the Beach recently posted..My Frugal Year…My Profile

  5. I haven’t bought into socially responsible investing yet. The funds usually carry high expenses and there aren’t really a set of rules that makes one socially responsible and another not. It’s more subjective.
    Michael Solari recently posted..Technology is Changing the GameMy Profile

  6. I like giving my time more than my money too. Honestly, I can’t give enough money to make a big difference to most things and by giving time I can usually directly help an individual, which is great for both them and me (since I’m more connected to it). I like the idea of microlending in poorer countries but I’ve never gotten into it.

  7. I like the idea of microlending… ever since I saw it on the Simpsons. But to be honest, I had no real idea where to get into it. The more and more I read about it (and places like propser) the more I think I’ll eventually turn to it. But right now I work in the non profit industry, so I can count that, kind of, right?
    Ryan @ Impersonal Finance recently posted..you vs. the economyMy Profile

  8. I would like the top part of this article to be recorded by Jack Donaghy. I was reading it in his voice.

    I agree with lending skills/time to charities. Right now I’m actually in the process of becoming a foster “parent” for dogs from the ASPCA! I get a “free” dog for a while and they get to free up space at their shelter. Win-win.
    Broke Millennial recently posted..Roommates: A (possible) Financial NightmareMy Profile

  9. I am seller financing the loan for the person who bought my practice. Does that count? Years ago I owned a socially responsible index fund, but the returns were terrible. Dick Cheney owned corps do much better financially.
    Kim@Eyesonthedollar recently posted..Minimum Wage Workers Always Get The ShaftMy Profile

  10. I don’t really have much to donate or invest, but I do my best to buy the things I truly need from small, socially conscious businesses. I worked in Vermont this summer and it was awesome getting to visit all the family owned shops!
    Stefanie @ The Broke and Beautiful Life recently posted..The Price of Being LastMy Profile

  11. I love your writing style! I was recently reading about how you can invest in a person now – like, you can go to some website, join it and rich people will bankroll your education and lifestyle based on the idea that 10 years from now, you’ll be making millions and for 10 or 20 or 30 years, you have to give them like 2% of your income… whatever the terms of the agreement were.

    All I could think was “who the heck is going to do this???” But I guess it’s just a rich people version of Lending Club.
    Mel @ brokeGIRLrich recently posted..How Non-Theater People Can Make Money in TheaterMy Profile

  12. I listened to a really interesting TED Talk by the woman who started Kiva, which is like Prosper only for people in developing countries who are trying to get very small businesses off the ground. The talk definitely gave me something to think about, as far as charitable giving vs. social finance (or, charitable lending).
    Daisy @ Prairie Eco Thrifter recently posted..No Matter Your Career, You are a BrandMy Profile

  13. I’m a social worker so I give to charity everyday. I jokingly tell people that I’m a nun without the religion and just the vow of poverty. Sometimes when homeless people ask me to “help the homeless” on the street I tell them, “been there done that, today!” (just kidding-but sometimes I want to).
    KK @ Student Debt Survivor recently posted..The Best $200 I Ever SpentMy Profile

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