Environmental, Social and Governance (ESG) Investing takes socially responsible investing to the next level. ESG looks beyond simply social issues: it looks deeply into the environmental, social and the governance imprints of a company. It involves evaluating each company on: their environmental impact; how they treat their employees; the quality of their relationships with local communities, customers and their supply chain; and corporate governance policies and practices, including diversity and equality.

Why should we take ESG investing into consideration? The real question is: why shouldn’t we? The myth that investing in ESG companies may forfeit returns is simply false. A study conducted by Market Watch in the first quarter of 2020 showed that 10 out of 12 ESG focused index funds outperformed the S&P 500 while 11 out of 11 non-US ESG focused funds outperformed their respective international benchmarks. The Harvard Law School Forum on Corporate Governance recently observed that “improved governance can enhance long-term share-holder returns.” Additionally, a recent study by Arabesque found that S&P 500 stocks ranking in the top quartile for ESG attributes outperformed those ranking the bottom quartile by 25% in the five years running from 2014-2018.

As employees, we need to insist that more of our 401(k), 403(b) and other retirement and pension savings plans provide ESG investment choices. The U.S. is currently moving in the opposite direction to the U.K. and EU, who are promoting ESG investing. Fitch Ratings, a firm that rates the debt and equity offerings of companies worldwide, stated that “While these differing approaches are not expected to immediately affect investment managers, pension plans and/or the institutions sponsoring these plans, we anticipate that they will translate into differing investment considerations, risk and potential returns over the long term.” However, in June 2020, the U.S. Department of Labor proposed that all retirement plans governed by ERISA prohibit the use of those assets for furthering ESG objectives. And in August 2020, a second proposal was made that required plans to cast shareholder votes only on issues that have a direct economic effect on the retirement plans. Since retirement and pension plans contain the majority of the investing dollars in the market, the DOL’s proposals work against the goals to have a safer and healthier environment in which we live. In contrast to the DOL’s approach, “regulations in the U.K. and EU promotes the integration of sustainability and ESG concepts into financial decision-making, which has become a more common and/or formalized consideration for pension and retirement fund managers.”, according to Fitch. 

With more than $15 billion being moved into ESG funds in the first half of 2020, we need to speak louder and have the right to invest our money in the manner in which we choose.

In these times of financial hardships, placing your money in companies that promote these values is an important statement. It says that we support those companies that work toward the world we want to leave for future generations. While donating to causes is one way to create impact in these times, ESG Investing gives us another way to put our money to work in service of our values.  It is truly something to reflect on when evaluation who and what actions we are supporting with our investment dollars.

A local group of female financial planners, the Goddesses of Financial Planning, announced a $25,000 donation to the Center for Financial Planning initiative in honor of the group’s 25th anniversary. The funding will support the initiative’s work to promote women and diversity in the financial planning industry.

Founded in 1995, the Goddesses of Financial Planning is a group of more than a dozen women financial advisory firm owners in Minnesota, including Lauri Salverda of Castle Rock. The group meets regularly to share strategic advice and best practices to support each other in the financial planning industry. In addition to the Goddesses of Financial Planning, each member also belongs to the Financial Planning Association of Minnesota (FPA MN), a nonprofit organization of more than 900 financial planning professionals.

“Finding true community in our industry—both through the Goddesses of Financial Planning and the FPA MN—has been invaluable as my business evolves,” said Lauri. “With our donation to the Center for Financial Planning, our group hopes we can help aspiring planners find the same support as they begin their careers.”

Approximately 23% of certified financial planners in the U.S. are women and less than 3.5% are black or Latino. The Certified Financial Planner Board of Standards (CFP Board)’s Center for Financial Planning initiative is working to attract, onboard and train women and people from diverse communities to become the next generation of financial planners.

In times like these, people tend to wonder, “What would happen if I were to pass away?” “Will my family, my pets and my possessions be taken care of in the way that I want?” These are questions that need to be considered carefully so that children are cared for thoughtfully, your pets don’t end up at The Humane Society, and treasured possessions aren’t sold en masse in a garage sale. With the impacts of coronavirus, state planning attorneys are busier than ever, trying to get estate plans together while loved ones are isolated in ICU units.

No matter how good the attorneys are, when things are rushed and a loved one cannot give their input, mistakes are made. I recently heard a probate judge speak to errors in documents she has recently come across. One that stuck with me was a widow who died of the coronavirus. Her will defined her survivors as her 4 children and her husband’s 2 children as “my children.” Her will stated that half of her estate be given to “my children” and the other half be given to her husband’s children. I am not sure she meant to split half of her estate among all 6 children and the other half between just her husband’s 2 children—however, that was how the will was drafted.

This is a great time to talk through what you would like to see happen when you pass and choose who is the most appropriate to handle your estate. If there are younger children or a large estate, perhaps it is appropriate to have trusts set up. Who would you like to handle your household finances should you be unable to pay bills? Who do you want to make end of life health care choices for you, and will they be capable of making the choices you desire?

The next step is to take the time to have the documents drafted by a qualified Minnesota estate planning attorney. They will know how to incorporate Minnesota law into your documents to make sure your wishes will be carried out. If you change states, make sure that you have an attorney in your new state check through the documents to determine is your will is valid in your new home state. You should at the minimum have a will, health care directive, and a durable power of attorney for finance.
Your estate planning documents should be reviewed every 3 to 4 years to determine if goals have changed. Children grow up, friends change, wishes change, and relationships evolve. Make sure your documents stay current with your life.

We have several helpful tips on our resources page to assist you in making sure you take control over your end of life and make it easier for loved ones to understand what your wishes are and make it easier to carry out your wishes. Visit our resources page to get your copy of our Personal & Financial Inventory and What to Do When a Loved One Dies.

Thanks to review specialist Expertise for ranking Castle Rock as one of the Best Financial Advisors in St. Paul for the second year in a row! Expertise reviewed more than 80 financial advisors serving the St. Paul area. Castle Rock is thrilled to have made the shortlist of the Top 16 Financial Advisors in St. Paul! Thanks to the team at Expertise for their research, focus on quality, and commitment to ensuring all consumers can make confident decisions in the experts they select.

Making an investment in a charity or nonprofit, no matter the size, can feel daunting. There are so many organizations doing worthy work—how can you know where your donation will have the most impact? On top of that, nonprofits and charities occasionally run into the same issues as any other sector—mismanagement, fraud, and poor judgement. How can you be sure your dollars are doing what you intend?

Luckily, the growth of the digital age means a huge amount of information on charities and nonprofits is available online. With a few common sense guidelines and a few technical tools, you can do your due diligence easily and quickly.

Before we jump in, let’s take a minute to define some of the most common types of nonprofits and see how they relate to each other.

Nonprofit: A blanket term, “nonprofit” is a type of corporate designation, which indicates that the corporation’s net profit won’t go to benefit an individual, but will benefit the organization as a whole. This blanket covers dozens of organization types.

Charity: Charities are nonprofits whose purpose benefits the general public. So, not all nonprofits are charities, but all charities are nonprofits. Some people use the term “charitable organization” or “charitable nonprofit”—they’re all interchangeable with charity. These organizations tend to rely heavily on individual gifts to operate.

Foundation: A type of nonprofit corporation that makes grants to other organizations, institutions, or individuals for charitable purposes. While many do accept individual gifts, more often they have a large endowment that provides the bulk of their funds.

Now that who and what we’re talking about is a bit clearer, here are three easy tips to make the most of your charitable donations.

KNOW WHAT TO ASK

When you’re thinking about donating to a charity, there’s no one right answer. But you can prepare to do some thinking about how the charity meets your goals by keeping in mind a few key questions.

TRANSPARENCY: Is the organization open about its finances and financial health, with easy access to annual reports, statements and forms? Look for a copy of the organization’s annual report and/or 990 on its website. Check out the information they’ve chosen to disclose on Candid or Charity Navigator. Call their offices and ask for a copy of their audit or financial review. A nonprofit’s practices and willingness to share information about their finances will tell you just as much, if not more, than the actual content. It should never be hard to get a nonprofit’s basic financials. Be wary of any organization that hesitates to share them.

MISSION FIT: Does the charity on programs that fulfill the work you care about? This one is highly subjective, but arguably the most important—does the charity’s work matter to you? Annual reports, blog posts, and communications can tell you what kind of programming nonprofits are doing and how it relates to your passions.

TYPE OF NONPROFIT: Are donations to the organization tax-deductible? Not all types of nonprofits qualify for the tax-deduction status. You can check the Internal Revenue Service to find out. Generally, 501c3 donations will be tax deductible.

IN CASE OF EMERGENCY, LOOK BEFORE LEAPING

It’s tempting when there’s an emergency to donate to the first charitable organization that contacts you.  It is more important to give money where needed than to who asks first.

If you are donating in an emergency, the Federal Trade Commission has a handy checklist that will help you avoid scams as you’re searching on the internet, responding to phone solicitations, or following up on a friend’s charity recommendation.

CHECK THEIR ACCREDITATIONS

Websites like Guidestar by Candid invite nonprofits to increase their transparency through self-reporting. Check if your charitable nonprofit has a seal of transparency, or other similar accreditation.

Here in Minnesota, charitable nonprofits can undergo an even more in-depth self-reporting process with the Charities Review Council. Nonprofits can elect to start the process by reporting on more than 90 benchmarks that involve best practices and policies around governance, fundraising, financials, and more. Charities Review Council then reviews the information to ensure the organization adheres to best practices for the nonprofit sector. The Charities Review Council website lists organizations that have successfully completed the process, undergone review, and received accreditation.

Being confident in your personal philanthropy doesn’t have to be complicated. By keeping these resources handy, you can start growing your impact—whether you’ve got a nonprofit already in mind, or you’re reacting to a disaster. Thanks to the wealth of resources online, it’s easier than ever to start investing in changing the world.