The 5 Most Common Questions about NPT’s Impact Investments
A recent study estimates that the impact investing market has now reached over $1 trillion—a significant milestone for an increasingly popular investment strategy in both the private and public sectors. Impact investments offer philanthropists, like our donor-advised fund (DAF) donors, a way to align the investment of their charitable assets with their charitable goals.
NPT has been offering impact investments since 2015. Our newest impact investing menu addresses some of the most universal and pressing concerns in our society, like equitable economic opportunity, environmental protection and equal access to affordable healthcare.
Below we share some of the most commonly asked questions about our impact investments and information that may help you decide if impact investing is right for you.
What exactly are impact investments?
Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Typically, investors expect1 that their invested capital will be returned in addition to a financial return to compensate the investor—or, when using your NPT DAF, to grow the DAF assets available for grantmaking. When using a DAF, impact investments are different from grants in this way: grants are distributed directly to a charity with no expectation of principal return.
Can you give me a few examples of impact investments?
In general, investors can use public or private investments for impact investing—or both:
- Public investments may use negative screening to avoid investments in specific industries or publicly traded companies that the investor views as causing harm, such as fossil fuels or weapons; or use positive screening to select for those incorporating Environmental, Social and Governance (ESG) criteria into investment decision-making.
- Private investments may invest directly in companies and organizations with missions and business activities that drive solutions to social and environmental challenges; or invest in private funds with an investment thesis focused on companies improving the lives of people in their communities and beyond.
NPT donors can recommend public or private investments as impact investing strategies.
What are NPT’s impact investment options?
NPT offers two primary impact investment options. Both have been created in partnership with CapShift, industry leaders in impact investing.
Thematic Impact Investment Portfolios
Donors who choose this turnkey single-investment solution can select from our four thematic impact investment portfolios: Equity and Inclusion, Environmental Stewardship, Gender Lens and Broad Social Impact.
NPT offers a menu of pre-approved private impact investment options to donors interested in specific social, economic or environmental impacts. These include job creation for underserved businesses, international disaster relief and microfinancing for refugees, to name a few. Customized impact investments are currently available to donors with DAF account balances of $500,000 or more. You can read more about our pre-approved impact investment options on our Impact Fund Briefs page.
How do I choose which impact investing option is right for me?
There are a few things to keep in mind when recommending an impact investment strategy for your DAF.
- Impact goals: Consider what kind of positive social, economic or environmental impact you want your investment to generate. This may directly relate to your grantmaking history. For example, you may regularly recommend grants to women’s organizations in your community. Selecting NPT’s Gender Lens impact investing portfolio, which lends capital to women-led businesses and invests in companies closing the gender pay gap, would align your charitable asset investment strategy with your grantmaking values.
- Financial goals: Each of NPT’s impact investing options has different approaches to investment horizon, risk and liquidity. For example, NPT’s custom impact investments do not trade on public exchanges, which means they cannot be sold for immediate liquidity. It’s important to know how recommending impact investments may impact your DAF and grantmaking goals.
How do I get started?
Existing NPT donors can log in to NPT GivingPoint and click on the “Investments” page to recommend a reallocation into the thematic impact investment portfolios. New donors will make their investment election as part of the Donor Application.
If you’re interested in NPT’s customized impact investment options, please take a moment to review our options and contact us at (888) 878-7900 or npt@nptrust.org to get started with impact investing.
1 Expected financial returns depend on several factors including asset type, risk, targeted social and environmental outcomes, etc. As with any investment, there is a risk that capital will not be returned.
About the Author
Andrew Hastings is NPT’s Chief Enterprise Officer and has 30 years of experience in the philanthropic and nonprofit marketplace. Mr. Hastings is responsible for advancing NPT’s strategic vision, evaluating innovative solutions, amplifying NPT’s thought leadership, and positioning the organization for continued growth and service to our donors.
NPT does not provide legal or tax advice. This blog post is for informational purposes only and is not intended to be, and shall not be relied upon as, legal or tax advice. The applicability of information contained here may vary depending on individual circumstances.
