News Flash: It is expensive to live in the Bay Area. For most families with young children, every dollar is needed to live the life you want to live. There are the basic needs, and then add on childcare, home improvement, taking a vacation, saving for retirement and maybe putting aside something for college. What’s left at the end of the day for charitable giving and making financial commitments to causes that matter to you? Not much.
At least that is what you might tell yourself. I’m guilty too, but if you really want to make financial activism a priority you can find a way. This does not just include donating money to charity or political causes, it’s also being more responsible with your investments (if that matters to you).
As a financial planner I see a lot of family’s financial situations. Charitable giving is rarely one of the larger spending categories. Utah takes the lead in charitable giving as a percentage of income (~6.6% in 2015), which makes sense given the Mormon Church. Californians come in at 2.6% of income; while low income cities like Compton and Inglewood are higher at 4%.
The top 1% still give the most at around 79% of charitable giving by individuals, but as a percentage of income those of us in the middle tend to give less.
Most people want to give more or be more socially responsible with their money but don’t know where to start.
Micro-lending
Not ready to create an endowment?! You can start small with micro-lending to those looking to invest in their education or a business. Organizations like Kiva enable you to lend on you phone at very small dollar amounts. As the micro-loans get repaid, you can either re-lend the money or take your money back. You can log in via Facebook, load the app on your phone and filter by the needs to interest you most.
My goal this year was to take $20 every time I want a Blue Barn salad and put that money in Kiva instead. So far, I have lent $200 to women seeking education and starting businesses instead of eating an overpriced (and delicious) salad.
Auto-pilot
Inertia is a strong force that is hard to overcome. By putting donations on auto-pilot, you can systematically give to your causes without feeling the financial pinch or having to make any decisions. Pick a couple of causes that matter to you and set up a monthly contribution. It can be as little as $5 for some organizations.
Social Responsible Investing
Some of the top tier asset managers that focus on Social Responsible Investing (ESG- Environmental, Social and Governance) have minimums of $5million and charge upwards of 2% per year. However, there are companies like Swell that enable you to invest with impact for much less. The minimum amount is $50 and they charge 0.75% per year. You can choose an area of focus like Green Tech, Zero Waste or Clean Water, and invest your money with relatively low fees. And if you have cash that you don’t need right now but want to earn better returns than a savings account, check out C Note. C Note gives you access to investing in people, not products, through community development projects. The stated return is around 2.5% with no fees. This company is run by women and based in the Bay Area, but invests throughout the US.
Financial activism is at your fingertips, but you have to take the first step. That first step could be as little as logging into Facebook and opening a Kiva account, or checking out Swell or My C Note. If we want the world to change, we have to take action. Take that first step today.
