Wealthy young people more likely to invest ethically – report

9 January 2015

The younger generation of millionaires is less concerned with just making profits when it comes to investing and is more likely to have ethical or social investments, according to research released today by the Charities Aid Foundation.

The report – 'Philanthropy: A gift or investment?' – shows 79% of wealthy under 40s have an element of their portfolio allocated to socially conscious investments, those with some degree of social impact, compared to 57% of the over 40s.

For those under 40, this splits down into an average of 35% socially conscious investments and 65% more traditional investments. Portfolios of those above 40 look quite different, with just under a fifth (19%) of investments being social and 81% traditional.

This suggests that as much as £233 billion could already be invested in the UK with the aim to achieve both social and financial returns.

In total, 1,005 wealthy people were surveyed online in September 2013 by Scorpio Partnership on behalf of Charities Aid Foundation (CAF).

Socially conscious investments range from investing in ethical or sustainable companies, to giving zero-interest or low interest-bearing loans to charities and social enterprises, to dedicated socially-responsible investment (SRI) funds.

Over 100 individuals support charities and social enterprises through Charities Aid Foundation's social investment funds, run by its social investment arm CAF Venturesome. These funds provide growing social purpose organisations with repayable finance so that they can expand their activities or increase their financial resilience.

When the charities repay, the money is loaned again and again, multiplying its social impact. Since 2002, CAF Venturesome has supported over 425 social organisations with £36m of social investment.

Amy Clarke, Head of Private Clients at Charities Aid Foundation, said: “It’s great to see younger wealthy generations looking for new ways to use their money to create lasting positive change.

“It’s clear that people are becoming less interested in simply achieving a financial return from their investments and are more focused on balancing this with creating a social impact.

“While this research highlights a growing appetite for balancing traditional giving with social investment, more can be done to grow this trend and wealth advisors have a crucial role to play in helping more clients start using their money for social good.”

Cath Tillotson, Managing Partner of Scorpio Partnership, said:  “Our research for CAF signals that we're likely to see the under 40s pushing the frontier of social investment in the future, exploring ways of incorporating this into their broader investment portfolio.

"Fulfilling this potential will require wealth managers to expand their capabilities, so that they are well equipped to advise and support their clients on how to reflect social and ethical values into their investment strategies".

Find out more and download a free copy of the report at www.cafonline.org/giveorinvest

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