How DAFs Can Help You Align Investment With Impact

Impact investing is on the rise. Socially responsible investing has been practiced for decades, but not on the same scale as today. Allied Market Research reports that the global impact investing market was valued at $2.5 trillion in 2021, and is projected to reach $6 trillion by 2031, growing at a compound annual growth rate (CAGR) of 9.5% from 2022 to 2031.

Impact investments are designed to generate measurable positive social and/or environmental impact in addition to financial return, making it an attractive strategy for those seeking innovative and long-term ways to benefit society while generating a profit.

This strategy allows investors to align their resources with their personal values and interests, whether that’s helping reduce carbon emissions, improving access to affordable housing or the provision of quality healthcare and education.

Global families play a prominent role in driving the impact investing trend, equipped with both the funds and flexibility to pursue innovative models. As your clients plan their family’s wealth transfer, allocating philanthropic capital for sustainable and impact investments might encourage the socially conscious next generation of philanthropists to get involved in purpose driven investment right away.

Donor-advised funds can help facilitate this. DAF donors may recommend that DAF assets be invested in social impact investment opportunities, potentially creating additional value over time and allowing donated assets to grow tax-free. Since this capital has already been set aside for charitable giving, DAFs create an opportunity where donors can afford to take on higher risk investment strategies in their pursuit of impactful philanthropy.

At NPT UK, we are committed to helping donors make greater use of DAFs for socially responsible investing. There are two ways to make impact investments with an NPT UK DAF:

1. Pre-approved investment options: Once your clients have opened a DAF with NPT UK, they may choose to recommend investments from a range of sustainable and impact investment ETFs in our third-party investment options.

2. Bespoke investment options: A separate bespoke investment account option is available for your clients with DAF accounts greater than £500,000. Your clients may recommend investments into specific sustainable and impact investment funds, or that assets be managed by specific impact managers.

For further information about impact investments with NPT UK please contact us.

About the Author

Natalie Pinon is Executive Director, Development at NPT UK. She has over 15 years of experience working with philanthropists and impact investors to manage their giving.