Impact Investing through NPT’s Thematic Portfolios
In October 2019, NPT partnered with CapShift to help donors generate a greater impact with their donor-advised funds. CapShift’s impact investing platform and suite of solutions empower financial and philanthropic institutions and their clients to invest in their vision for a better tomorrow, so we were well equipped to work with NPT toward this goal. Together, we launched four public impact investing portfolios with the themes of environmental stewardship, gender lens, equity & inclusion, and broad social impact. These portfolios empower donors to align their donor-advised fund investments with their charitable goals using a single investment solution. The portfolios are a powerful impact investing tool and we’re excited to share a behind-the-scenes look at our process constructing the portfolios and an update on their results.
How are the Portfolios Constructed?
To design the Thematic Impact Portfolios with NPT, our first order of business was to determine the impact goal for each of the four portfolios. Impact goals serve to guide the portfolio’s overall strategy. In essence, impact goals tell us what we are trying to influence with our investment approach. The collaboration between NPT and CapShift resulted in the following impact goals for each portfolio:
|Environmental Stewardship||Manage climate change risks and protect and conserve natural resources|
|Gender Lens||Support the advancement of women in the workplace and beyond|
|Equity & Inclusion||Narrow inequalities in society by creating economic opportunity that advances equity and inclusion|
|Broad Social Impact||Advance solutions to global challenges, including financial inclusion, climate change, conservation, access to healthcare, equity and inclusion, and proper corporate governance|
With the impact goals in place, we then focused on the financial portfolio design parameters. We looked at the portfolios’ goals related to geographic diversification, risk, and liquidity to help us determine an appropriate asset allocation for the portfolios. The sum of this work resulted in the following parameters, which were created when we implemented the portfolio in October of 2019 and still guide the portfolio today:
|Geographic Diversification||70% US, 30% International|
|Risk||Moderate, with an emphasis on matching the financial risk and return profile of NPT’s conventional moderate risk profile portfolios|
|Asset Allocation||65% Public Equity, 20-30% Fixed Income, 0-10% Alternative Investments, 5% Cash|
With impact goals, financial parameters, and asset allocation in place, we went to work on the final piece of the design process: investment selection.
The result of this work is what NPT offers today: four unique portfolios that provide exposure to impact investments across the asset classes of public equity, fixed income, and alternatives. Each portfolio has a designated set of impact-oriented core holdings that provide diversified impact options in the liquid investment space. Each portfolio also has a select number of thematic satellite investments. These investments provide exposure to solutions-oriented businesses, sectors, and strategies helping to achieve the impact goals outlined for each portfolio.
What have been the results?
Looking back on managing these portfolios for over three years, we are energized by their growth and impact. In terms of total assets, these portfolios have grown to over $15 million since inception date of October 18, 2019, as over 100 donors have invested portions of their donor-advised fund assets into the portfolios. Additionally, we believe that the performance of these impact portfolios has been competitive with traditional market investments.1
Though growing assets and competitive performance are important indicators of success, measuring impact is critical to assessing how these portfolios are performing against their stated goals. Each year, CapShift creates impact reports that provide an assessment of negative exposure to traditional Environmental Social and Governance (ESG) risks and positive exposure to impact solutions. Impact reporting helps us to evaluate a fund’s relative performance through the lens of impact key performance indicators. For example, our 2022 impact reporting tells us that the NPT’s Environmental Stewardship Portfolio has 50% less than its benchmark in industrial greenhouse gas emissions2 and has 62% greater exposure to clean energy companies.3 These results are exciting as they indicate that the portfolio is meeting its goal of managing climate risks and investing in future technology that seeks to help protect our planet. For more of these impact insights, check out the impact reports for all four portfolios here.
Each impact investment portfolio provides donors with a single investment vehicle for pursuing solutions that align with their values and philanthropic goals. Learn more about the thematic impact investment portfolios and how you can invest in them here.
 Source: “Investment Descriptions and Performance Impact Portfolios” National Philanthropic Trust. December 31, 2022. https://www.nptrust.org/wp-content/uploads/2023/03/Investment-Descriptions-and-Performance-NPT.pdf
 Source: YourStake data as of 12/31/2022 compared to Portfolio Specific Benchmark. Greenhouse gas emissions, in Carbon Dioxide Equivalents, from facilities as reported to North American and E.U. Pollutant Release and Transfer Registers. Facilities that emit at least 25,000 metric tons of GHG emissions are required to report in the USA, and facilities that emit at least 100,000 metric tons of CO2 or at least 100 metric tons of Methane are required to report in the E.U.
 Source: YourStake Data as of 12/31/22 compared to compared to Portfolio Specific Benchmark. The Portfolio Specific Benchmark is created by weighting each underlying funds’ benchmark in accordance with that fund’s weighting in the portfolio. Top 200 companies by clean energy economy revenue, including energy efficiency and finance of low-carbon solutions, and companies with business models and revenue sources fully in support of the clean energy economy.
CapShift’s impact investing platform and suite of solutions empower financial and philanthropic institutions, and their clients, to invest in their vision for a better tomorrow. We do this by providing rigorously researched, easy to access, and cost-effective impact investing and recoverable grant opportunities to donor advised fund holders, family offices, advisors, and foundations. Visit capshift.com to learn more about us and the capital that we have mobilized for purpose to date.
This information does not constitute an offer to sell or a solicitation of an offer to purchase any security. Any such offer or solicitation would only be made pursuant to an offering memorandum or prospectus. All investments entail a high degree of risk and no assurance can be given that the investment objective will be achieved or that investors will receive a return of their capital. Information presented is for illustrative purposes only. Opportunities may not be suitable for all investors due to differences in risk tolerance, investor status, and investment time horizons, amongst other factors. Additionally, investments may not achieve stated social, environmental, or similar objectives. The statements expressed here represent the author’s opinion at the time of publication and may change without notice. Further, the information in the document has been printed on the basis of publicly available information; internal data and other sources believed to be true and are for general guidance only but which may have not been verified independently. While every effort is made to ensure the accuracy and completeness of information contained, the company takes no responsibility and assumes no liability for any error/ omission or accuracy of the information. Recipients of this material should rely on their own judgments and conclusions from relevant sources before making any investment.
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The views and opinions expressed in this guest blog are solely attributable to Capshift.