Santa Barbara Wealth Management - Helping Families Give Well and Invest with Impact

By Premier Professionals on Dec 08, 2014 at 11:12 AM in Santa Barbara Professional Services
Amy MacLeod Wealth Manager at Manchester Capital
Amy MacLeod
Wealth Manager

article by Amy MacLeod, Wealth Manager for Manchaster Capital

Team Approach to Philanthropic Gifting

One of the most rewarding aspects of being a wealth manager is helping families achieve their philanthropic goals. We assist families with everything from basic tasks, such as mailing checks and letters to recipient non-profit organizations and researching donation recipients, to providing guidance about more complex administrative matters, such as helping ensure our family foundation clients are in compliance with applicable federal and state laws. We also work closely with other advisors such as accountants or auditors to help alleviate the burden on the foundations with which we work.

Providing Guidance and Advice

While we do extensive work with foundations, Manchester also assists families with the less cut-and-dry matters of being philanthropists. We provide guidance about how best to integrate younger generations into family foundation meetings and what it means to act as a fiduciary of dollars set aside for charitable purposes. We provide advice about what conflicts of interest, discretionary grants, and other foundation policies should incorporate, and we recommend how best to set expectations with donation recipients.

Philanthropic Gifting

As family assets have grown with positive investment returns the last several years, so has philanthropic gifting. Issues important to our clients include reducing greenhouse gas emissions, preserving natural habitats, improving medical research, reducing poverty and homelessness, increasing access to clean water and medical supplies, supporting job creation, urban revitalization and affordable housing, promoting social and economic justice, funding education, helping individuals become financially independent, supporting indigenous peoples and cultures, ending discrimination, fighting for humane treatment of animals, supporting the arts, helping victims of natural disasters, and much more. 
Financial capital is not the only thing our families give. We are continually impressed with the intellectual and human capital our clients devote to philanthropy. Several Manchester clients volunteer their time as board members of non-profit organizations or volunteer directly with those in need by building homes, working at warming shelters, maintaining hiking trails, delivering meals, educating peers about issues, and serving as foster families.

Responsible and Sustainable Investing

Related to philanthropic activity is investing in a manner that furthers values and non-financial goals. Manchester has assisted several clients with investing in responsible, sustainable and positively impactful ways. For families who have an interest in impact or mission-related investing, we work with them to understand their goals and the issues most important to them. We then recommend managers or investments that we believe will best promote, or at the least not offend, their values. For example, we work with several managers who select public equities and bonds only after a careful evaluation of how companies rate based on various environmental, social and governance criteria. Some managers actively engage with company management and help our clients engage in shareholder activism and letter-writing campaigns.

For clients for whom private equity or private debt investments are appropriate, we have conducted due diligence on loan funds and companies that invest in clean energy, sustainable agricultural practices, affordable housing, and more. We have also evaluated community development financial institutions, microfinance loan programs, and loan guarantor programs. Our due diligence process ensures a comprehensive understanding of risks involved, including the risk that a particular investment may not perform as well financially as a relevant benchmark of other investments.

Family Foundation Case Study

We recently worked closely with a family foundation client and consultant to evaluate all of the foundation’s investments and draft a new investment policy for the foundation. We learned that the foundation’s directors wanted to understand more about each investment held in the portfolio, and we discovered that some of the mission-related investments, held from a predecessor foundation, were not creating the type of impact the foundation’s directors wanted, which enabled them to deploy assets elsewhere. Knowing the foundation’s primary financial goal was to generate at least a 5% annual return after fees to meet its annual expenses, including grants for charitable purposes, we worked with the directors and foundation’s staff to understand the foundation’s impact investment goals and develop a plan for achieving those goals. 
This review process resulted in several changes for the foundation. The first was the formation of a foundation committee devoted to approving and monitoring impact investments. Secondly, the foundation’s endowment was divided into two portfolios with different objectives based upon investment return and impact. Thirdly, the foundation adopted a new investment policy. Public equities, screened with a list of exclusions agreed upon by the foundation’s directors, or selected for their positive environmental, social and governance characteristics, will comprise the majority of the foundation’s “core” portfolio. This will generate an expected return sufficient to meet the foundation’s annual expenses. The remainder of the foundation’s endowment will be invested in an “impact” portfolio, which will hold investments expected to further the social and environmental change the directors want to make and have measurable and reported impact. The foundation’s directors accept that these investments may not generate a market rate of return, or a return comparable to other investments in a particular asset class, but will be evaluated upon their alignment with the impact objectives of the foundation. The impact portfolio will consist of investments in socially responsible investment funds as well as direct investments in companies including social entrepreneurs. We expect that some of these investments will qualify for treatment as a foundation “program related investment” as defined in the Internal Revenue Code.

The ways in which Manchester’s families make an impact with donations and investments continues to evolve, and we are excited to work with such thoughtful people. We strive to keep on the forefront of family philanthropy and impact investing and are in awe of our clients as they come to us with ever increasing generosity and commitment to causes.

Jan 07, 2016 Arrow1 Down Reply
William Krebs

Please give me a call on my cell at 805-886-5664..

I have clients who could use your input.