For years, wealthy donors who wanted to make change in the world had pretty much one option: donate to charity. That’s changed with the rise of impact investing, which offers people the chance to back social ventures and potentially receive a financial return.
But not all “high-net-worth donors” use the two options equally. A new report has found while women typically think about change-making in transformational terms, men are often more transactional. “The motivations for women to engage in philanthropy are more altruistic versus men who see engagement as somehow helping themselves as well,” says Debra Mesch, the director of the Women’s Philanthropy Institute at the Indiana University School of Philanthropy.
In this case, that means the survey found that men are far more likely to make impact investments at the exclusion of traditional charitable giving, while women seem to seek a balance between the two. That’s a problem, because best way to make holistic change in any field is to spread out how you’re delivering aid. Take any major problem, from hunger to poverty or poor public health: If you want to solve the problem with a minimal amount of continued suffering, some charities and nonprofits may be good and delivering immediate relief efforts, while some impact investments might help curb long-term contributing factors.
These findings come from a new report by the WPI, which found that among a representative sample of wealthy donors (people with an annual household income of at least $200,000, or net worth, without including their house, of at least $1 million) nearly one-third were practicing impact investing. Overall, single men were nearly twice as likely as single women to choose the financially-incentivized way of making a difference over just donating to a nonprofit: 19% of them are already practicing that way, compared to 11% of women. A similar trend happens in households where men make the philanthropic decisions, with 15% of male-led households embracing that logic compared to 11% of women-led ones.
The report examines what causes might be most affected by this “replacement” mentality. Most of the practitioners appear to often back religious, health, and animal causes. While the report doesn’t list exact numbers, it shares that overall the rise of impact investing seems to have grown the total dollar flow to causes, rather than cannibalize the broader sector.
As WPI’s analysis makes clear, impact investing has been surging in popularity in recent years, with at least $115 billion reported in assets under management, and the market expanding at a rate 18% or so annually. People concerned with some of the world’s broadest challenges, from climate change to human rights, and race relations appear to be the most likely to invest. Mesch adds that whenever women are charitably involved, they’re increasingly using their “gender lens” to cover change from multiple angles. That means both backing groups or initiatives aimed at making change and pushing to ensure things like that the leadership behind that represents gender balance and equity.