Gender-lens Investing is Key to Next Generation Philanthropy
By Vidya Nair, Associate Vice President, Philanthropy and Jacqueline Ovens, Vice President, Investment Program
In what has been dubbed the ‘Great Wealth Transfer’, over the next 40 years, Generation X and millennials are set to inherit an estimated $41 trillion in assets from the so called Silent Generation and Baby Boomers. According to Boston College’s Center on Wealth and Philanthropy, this significant economic shift will move more money into the hands of women than ever before – a projected 70% of that $41 trillion in intergenerational wealth.
This developing trend has driven attention to differences between men and women with regards to how they handle wealth – and what this could mean for society at large. On the one hand, studies show that women tend to be more altruistic when it comes to donating their wealth, suggesting the Great Wealth Transfer could touch numerous lives beyond those directly inheriting the funds. Yet, the wealth management industry – which will have a significant role to play in guiding the next generation of investors and philanthropists – is still predominantly male and operating within a patriarchal system.
It would thus be unwise to bank on the generational wealth transfer ushering in a golden class of altruists and philanthropists. The current environment for philanthropy is challenging – economic instability, geopolitical uncertainty, and an abundance of competing crises and conflicts make it difficult to give boldly, especially for newer donors.
Moreover, younger generations are not fully satisfied with simply continuing legacies of altruism, with early indications that next generation donors are taking a more holistic, value-based approach to driving positive social and environmental change. This involves looking at their entire portfolio – not just their philanthropy, but their investments too – and seeking ways to, at a minimum, do no harm in those portfolios.
A dual approach to philanthropy and investment
With these factors in mind, our stewardship of the next generation needs to look at how philanthropy goes hand in hand with investment for positive change. Impact investing models are attractive to younger generations that are not only looking for ways to give, but also seeking coherence between their investment and philanthropy, and a values-aligned community to work alongside. When these two portfolios work together, positive contributions to society go further and last longer.
This approach is gaining traction, now adopted by some of the world’s most influential donors. Melinda French Gates is one philanthropist who is paving the way for a blended philanthropy and investment approach. Through her investment company, Pivotal Ventures, French Gates makes profitable, return-seeking investments in women-led funds and early-stage companies with an overarching view to accelerating the pace of social progress and moving the dial on gender issues. In tandem with this investment portfolio, she makes bold philanthropic grants, most recently announcing a $1 billion commitment to Pivotal Philanthropies Foundation to support women’s health and well-being in the US.
The Equality Fund – a global fund aiming to move $1 billion dollars into the hands of human rights movements by 2035 is another organization pioneering a dual approach to philanthropy and investment that meets the next generation where they are. Since 2019, the Equality Fund has moved $100 million dollars in support of over 1,000 feminist organizations working across 100 countries. That’s bold, flexible grants into the hands of local movements and changemakers that are driving real, meaningful change from the ground up.
But we don’t just pool funding, we shape, influence, and grow it. To reach our $1 billion dollar goal, we work with different forms of capital – both investment and philanthropic – building a dual offering to donors and investors and leveraging contributions from governments. We have been able to power our ambitious grant-making goals by strategically investing resources in our own genderlens investment portfolio, multiplyingmoney to multiply impact.
Gender lens investing (GLI) is a model that seeks to advance gender equality by taking a gender-informed view of the investment process. Financial decisions are made with an overarching viewto their impact on women, girls, and gender-expansive people. This could look like investing in businesses that promote gender equality or sell products and services that benefit women. It could also manifest as investing in women-led enterprises in order to promote gender equality in leadership positions.
Breaking down barriers for philanthropists and investors
The mission now is to mainstream and democratise this approach, so its impact can be scaled. When it comes to different forms of catalytic funding, there are barriers to entry for philanthropists and investors that must be anticipated and addressed.
Risk is one – investors want to be sure that the model works and they will see a return on their investments. As the Great Wealth Transfer sees new donors figuring out their own approach, accessibility is another important consideration.
This is where the ‘whole portfolio approach’ is key to making philanthropy and investment work together. A flexible structure of nimble philanthropic capital for the urgent, immediate work, alongside a longer-term investment strategy in various asset class products which allows resource holders to ‘grow the pie’ for future sustainability. Fundamental to the Equality Fund’s design is this balance between short-term urgent needs and the recognition that social change takes generations. Our investments have generated millions ($29 million as of October 2024) for our global grantmaking and we have ambitious goals to keep resourcing our grassroots gender movements through this investment strategy.
The dual approach to giving and investing builds a more accessible and open tent, inviting in a diverse but values-aligned community. When the conversation is about philanthropy and impact investing, there is a place for both forms of capital – no matter the size – and a role for every next generation resource holder, whether identifying as a philanthropist, investor or both.
A girl born today won’t see gender equality until she’s 97 years old. This stark projection highlights that progress on gender is being outpaced by a global anti-gender backlash. If we have any chance of turning the tide, innovative approaches to funding are essential.
The Great Wealth Transfer is underway, and with it comes an opportunity for the next generation of impact leaders to harness the power of philanthropy in partnership with investment. When it comes to driving progress on gender equality, gender-lens investing must be on the table for the next generation.
This article was written for and published in Philanthropy Impact Magazine Issue 31 Part 2. Find the original article here (https://www.philanthropy-impact.org/media/yoxaoeju/philanthropy-impact-magazine-issue-31-pt2.pdf).
