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Become a Climate-Focused Donor Capitalist

Innovative strategies for investing donated capital

Did you know that your donated funds and assets can be invested in for-profit ventures that allow society to mitigate and adapt to the effects of the climate crisis and produce a return on investment? Your donations could be invested in:

  • A compelling climate tech company
  • A LEED-certified community center building project
  • A solar panel installation project for your house of worship or child’s school
  • A new film that helps raise awareness about the climate crisis (potentially earning you a producer’s credit!)
  • And countless other investments

While traditional venture capitalists may be constrained by their sole focus on financial returns or might turn down some of the most potentially impactful green investments because of their perceived risk, “donor capitalists” can invest risk-free with tax deductible donated capital in what we at LOHAS refer to as “Tax-Advantaged Impact Investing”.

A new wave of interest in impact investing has resulted in innovative ways of using donated capital to generate real impact. For example, donors are investing in for-profit green technology companies, equity funds, and social impact entertainment (SIE) ventures that align with their environmental values. We are increasingly seeing donors use financial vehicles like Donor-Advised Funds (DAFs) to make these investments, which receive an immediate tax deduction and — to the donor’s delight — can also accrue returns to grow their charitable account.

For example, one of our DAF holders wanted to address issues of climate justice by investing in ventures that address the disproportionate effect of climate change on the underserved and was thrilled to invest their DAF funds into RE-volv and BlocPower. RE-volv facilitates solar panel projects for nonprofits, while BlocPower replaces fossil fuel-burning appliances with all-electric heating, cooling, and hot water systems for buildings in select communities. Our donors also like to invest in areas of the climate crisis that they feel might not receive the attention it deserves, like for example SeaAhead Ventures, which invests in blue technologies including sustainable aquaculture, fisheries management, coastal resilience, and the future of ports and shipping.

Your donated funds and assets can be invested in for-profit ventures that allow society to mitigate and adapt to the effects of the climate crisis and produce a return on investment.

For all of these exciting investments, returns that are generated will flow back into the donor’s DAF account, which then allows them to re-invest for additional impact in a manner that can become a virtuous cycle. Our donor’s get to unlock the fun of investing in impactful ventures and, most importantly, it allows them to make a real, meaningful difference to these wonderful organizations and the social and environmental benefits they generate.

Don't Look Up (2021) - Directed by: Adam McKay

Don’t Look Up (2021) – Directed by: Adam McKay

We also see a particular interest from our donors at the intersection of the entertainment industry and climate activism. For example, LOHAS enables donors to invest their DAF funds with the Footprint Coalition, founded by Robert Downey Jr., which raises awareness for and invests in scalable green technologies. Additionally, LOHAS has written previously about opportunities for donors to invest in social impact entertainment (SIE) ventures that raise awareness of climate issues or call attention to promising solutions, and can earn them a producer’s credit in the process. The impact of SIE films, plays, video games, etc. can be dramatic. For example, the 2021 film Don’t Look Up highlighted the growing gravity of the climate crisis and satirized societal inaction on the issue. This film partnered with Netflix, climate scientists, and an online platform called “Count Us In” to embolden over 500,000 people to take action on climate change and estimates that the impact of these actions will avoid over 170 million kilograms of CO2 pollution.

The American Psychological Association estimates that although 70% of U.S. adults wish that they could do more to combat climate change, the majority of them don’t know where to start. DAFs offer a valuable pathway for individuals to act on the climate crisis and become financiers of green ventures that could help reshape our future. DAFs allow individuals to invest their donated capital in the private sector where they may find the most innovative solutions to address climate change.

DAFs unlock the fun of investing in impactful ventures and, most importantly, allow donors to make a real difference.

Unfortunately, most large DAF sponsors don’t allow private sector investment at all, or offer very limited “menus” of investments. In doing so, they prohibit donors from investing in the impact investment opportunities that they are most passionate about – climate-related or otherwise. This is an unfortunate missed opportunity, because society could benefit significantly from harnessing the full potential of DAFs to fund initiatives and technologies that can help mitigate and adapt to climate change. If making this kind of impact interests you, leverage the power of human innovation, creativity, and compassion in the green sector today, and turn your DAF into a green investment portfolio by becoming a donor capitalist and working to build sustainable solutions to climate change.

Jared Gonsky is a Partner at LOHAS where he bridges the gap between investors and donors that want to make a meaningful impact, and the innovative social enterprises, accelerators and venture funds that address today’s most pressing challenges. He is an expert in impact investing and leads the firm’s operations ... Read more

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