Create Impact with Every Dollar: Align Your Assets With Your Values
Key Takeaways
- Every dollar you deposit or invest creates a real-world outcome, for better or worse.
- Your DAF balance may be sitting in a default fund that wasn't chosen for its impact.
- ImpactAssets designs its investment options to pursue positive social and environmental outcomes.
Every dollar you own is invested in something, whether you’ve thought about it or not. Think about where your money is right now:
- The cash in your bank account
- The assets your financial advisor manages on your behalf
- Even the contributions sitting in your donor advised fund
These funds each affect things in the real world, in a good way or a bad way. That's why it's critical to examine all your assets and where they’re invested.
What Does Your Bank Do with Your Deposits?
Start by examining the most overlooked place: your bank account.
You may think of your bank account as a place where your money “sits,” but it isn’t. The moment you make a deposit, your financial institution puts that money to work: making loans, financing projects and fueling economic activity. With roughly $19.7 trillion¹ in cash deposits at U.S. commercial banks, this enormous pool of capital powerfully shapes lives and communities every day.
The bank you choose isn’t just a place to store money. It’s a decision about what gets financed, who receives a loan, and which communities get access to capital.
Your financial institution can fill critical market gaps by financing affordable homes, education, healthcare, and small businesses. Or it can direct your capital elsewhere entirely, toward sectors that may not align with your values. Some institutions fund fossil fuel expansion and other extractive industries, but there are many other investments that can have unintended consequences for local communities and community development.
What Happens to DAF Assets Before They’re Granted?
Your DAF account is another place worth examining, and it’s easy to overlook it for a very different reason. Unlike your bank account, your DAF may feel like it’s already doing some good. You’ve made a charitable contribution, and the money is set aside for philanthropy.
But there’s an important question many DAF holders never ask: What is your DAF sponsor doing with that money before you grant it out?
The answer matters more than most people realize. Total assets held in U.S.-based donor advised funds reached $327.87 billion in fiscal year 2024², nearly double what they were just four years earlier. That’s an enormous, growing pool of capital, and most of it is allocated to whatever default strategies the sponsors chose.
If you haven’t examined your DAF’s investment strategy and made a proactive choice, your contributions may be sitting in a conventional money market fund, a pooled fixed-income vehicle or a broad index portfolio. These vehicles may focus on growth or principal protection, but not positive outcomes. They may even hold significant positions in sectors that run counter to your values.
Does Your Broader Portfolio Reflect Your Priorities?
Your portfolio may not reflect your wishes, even if it's well managed. The stocks and bonds your financial advisor or RIA manages for you are often built around conventional indices. Those track financial returns, not values. That means your portfolio can hold companies that conflict with your priorities. It's better to decide on purpose rather than by default.
DID YOU KNOW?
Traditional indices, such as the S&P 500, are weighted by market capitalization. This means portfolios focused on these indices invest more heavily in the largest companies within the index, regardless of sector. Unless you specifically choose otherwise, you may be invested in a broad spectrum of sectors, including fossil fuels, because the S&P 500 doesn't screen out companies based on values.
Three Questions to Ask About the Rest of Your Money
- Your bank: What does it lend to, and does it publish that?
- Your DAF sponsor: How is your balance invested before you grant it, and can you recommend a different strategy?
- Your advisor: Does your portfolio hold companies that conflict with your priorities, and what would changing that mean for risk and return?
How ImpactAssets Drives Positive Outcomes with Every Dollar
At ImpactAssets, we start from a simple premise: Every dollar of your assets has social and/or environmental impact, in addition to financial considerations.
Over the past 15 years, this understanding has shaped all areas of our work supporting more than 2,000 clients. It's why we've designed all of our investment strategies and products to work toward positive outcomes. For example, our default investment strategy for new DAF contributions has a significant cash allocation, deposited at a mission-driven commercial bank focused on economic empowerment for its customers and communities.
ImpactAssets Capital Partners: An Extension of Your Advisory Team
For family offices, corporations, and foundations who want to align their broader investment portfolios with their values, ImpactAssets Capital Partners (IA Capital) serves as an extension of your advisory team. They’re our SEC-registered investment advisor, bringing values-alignment to the full scope of your capital.
IA Capital specializes in private market impact investing. They offer bespoke strategies for clients who want their full financial picture to reflect their values, not just their philanthropic giving. Whether it's working with your internal team, outside advisors, or both, we also provide rigorous, institutional-quality due diligence that aligns your mission and investment priorities.
Every Dollar Is a Decision
As a values-conscious investor, you probably spend considerable time and energy selecting the right funds, vetting the right opportunities, and building portfolios that align with your values.
The assets outside your core impact investments matter too. If you'd like your DAF dollars working toward your values from the day you give them, open an ImpactAssets DAF or talk to our team.
Family offices, corporations, and foundations can also align their full portfolios through ImpactAssets Capital Partners.
Frequently Asked Questions
Can DAF assets be invested in line with your values before they're granted?
Yes, at sponsors that offer it. At ImpactAssets, a new DAF's default strategy already holds cash at a mission-driven bank, and you can update your investment allocations and recommend new impact investments at any time.
What can I decide about my DAF's investments?
The sponsor owns the assets and makes the final decision. You can recommend how they're invested and where the grants should go.
How can I tell whether my bank's lending matches my values?
Look for published lending data, community development commitments, and certifications such as CDFI status.
¹ https://fred.stlouisfed.org/series/DPSACBW027SBOG
² https://www.dafresearchcollaborative.org/research/annual-daf-report
LEGAL AND PROGRAM DISCLAIMER: This is not a solicitation to buy or sell securities, nor a private placement offering pursuant to any private placement memorandum that must be issued to qualified investors. It is an informational description of charitably oriented, social purpose investment options that have been approved by ImpactAssets only for use in its donor advised fund asset base. It is only for use by its donors. This does not constitute tax advice. Please note there are a number of factors to consider when assessing the tax implication of gifts to charity. Individuals should consult with a tax specialist before making any charitable donations.
ImpactAssets Capital Partners PB LLC (“IA Capital”) is an investment adviser registered with the SEC. The content of this website is not a solicitation or offer to sell investment advisory services, nor is it a solicitation or offer to sell securities. All content of this website is for informational purposes only and should not be relied upon as investment advice. Information is subject to change at any time, and IA Capital is under no obligation to provide updates or amendments. Investment in securities involves the risk of loss. Past performance is no guarantee of future returns.
