After a few years of letting my investments run on autopilot while I focused on some crazy stuff in my personal life (not a good idea, but hey, it happens), I wanted to look at ways to use my money a little more thoughtfully. That meant making more of an effort to buy locally and from small businesses, and taking a look at impact investing.
Impact investing is loosely defined as putting your money into companies or organizations that aim to produce a social good while generating financial returns. Though more people are talking about it than they did even a few years ago, there still aren't that many great options for average investors who want to get involved. Some of the better choices are reserved for accredited investors -- those with an income of more than $200,000 in the two most recent years.
But there are possibilities for those with less to invest. Here are three ways to use your investments -- or a portion of them -- to express your values and ideas.
1. Calvert Community Investment Note. It sounds a bit high-finance, but think of Calvert Foundation's Community Investment Note as similar to a CD (certificate of deposit). Instead of earning a fixed rate while some bank borrows your money for a few years, you'll earn as your money supports a portfolio of social impact organizations. Calvert's a leader in the field, and earlier this year the amount it has invested through Community Investment Notes hit $1 billion, according to its website. Through its Vested.org platform, you can invest as little as $20 in projects that include those for women's empowerment, affordable housing or small businesses creating jobs in cities like Denver and the Twin Cities. The note pays up to 3 percent -- generally below market rates -- depending on whether you invest for one, three, five, seven or 10 years. It's a safe and easy way to get started.
2. Socially Responsible Mutual Funds. Initially created as mutual funds that filtered out alcohol or tobacco companies, or those doing business in certain parts of the world or certain governments, socially responsible funds have evolved into those that actively choose companies based on an impact agenda such as sustainable energy or, as with the new Pax Ellevate Global Women's Index, investing in women and girls. A few points to consider: Many SRI funds have higher fees than similar funds, and because their managers have less leeway in choosing investments, some may offer lower returns. That said, many of the funds perform as well or better than market averages. Options with minimum investments of $1,500 for IRAs and $2,500 for non-retirement accounts include three funds from Domini, a pioneer in the field: The Domini Social Equity Fund, Domini International Social Equity Fund, and Domini Social Bond Fund. Calvert, Pax and several other companies have similar funds. SocialFunds has a useful list.
3. Crowdfunding. Folks from entrepreneurs to aspiring filmmakers have turned to crowdfunding to collect small investments from a lot of people. You won't, however, earn a financial return for your investment on Kickstarter, Indiegogo, Crowdrise or other such platforms. That may change, but for now, you'll earn some kind of reward, usually a product or gift. Scroll through projects to find ones that resonate with your values and interests. Even if all you get is a mug or a T-shirt, supporting people's ideas and dreams is a pretty good way to spend your money.