Vienna, July 16, 2018 - In an attempt to define the role of women in impact investing, let's first look at some characteristics that distinguish impact investors in general from other types of investors. Here, research points to a trend that shows impact investors tend to be younger, have a higher degree of education as well as higher professional positions and, as a consequence, earn more. Interestingly, those same groups are also more likely to replace charitable donations with impact investing.
Women Invest Differently
A study conducted by the Women's Philanthropy Institute seems to indicate that men are more likely to replace charitable giving with impact investing. While women are more interested in learning about impact investing (a finding which is also corroborated by other studies), they tend to engage in impact investing in addition to their philanthropic activities, rather than replace one with the other. This might indicate prevalence of a generally more risk-averse and conservative attitude towards financial decision-making among women than can be found among their male counterparts. Regarding overall motivations for philanthropic activities, the study identified a greater tendency towards empathy and altruism prevailing in women, as opposed to men, who are more likely to make their financial decisions based on self-interest. Finally, women tend to be interested in giving or investing through a “gender lens” - trying to ensure their financial donations or investments benefit women and girls in particular.
Gap between Interest and Action
What then are some of the factors that prevent women from engaging in impact investing on a larger scale than they have done so far? Studies have found that, while a large percentage of women are interested in socially responsible or impact investing (between 59 and 79 %, compared to between 28 and 62 % of men, depending on the study), this interest so far does not translate into immediate action. While a number of reasons that come into play here, a major impediment with regard to female impact investing commitments appears to be that women tend to be less confident and spend less time on investment decisions. Also, they have so far proven to be more cautious and avoid risk. Their curiosity and willingness to invest with social and/or environmental impact may be high, but they are frequently unsure where to start. In addition, they have a greater desire to know and learn more about the impact investing field before committing to investment decisions.
Here, the traditional financial advisor system is found to hinder rather than help – too much emphasis is currently still placed on pushing investments rather than giving potential investors the opportunity and the time to learn and inform themselves in depth about suitable projects. Also, many investment opportunities that are on the market are not tailored to the different needs and interests of women investors. After all, for a long time, investing was very much a man's world.
Women’s Future in Impact Investing
This will change as more and younger women will move into the impact investment market. Currently, women already control 30 % of the world’s wealth and 51% of personal wealth in the U.S., according to a study by The Philanthropic Initiative. This trend is expected to continue as the percentage of women who will inherit transferrable wealth increases. At the same time, Generation X and Millennial women take a more holistic approach towards investing, wanting to use their money to support their values as well as for financial return.
It Takes Women to Help Women
Building networks, especially for the purpose of information-seeking and exchange, as well as for learning more about the field of impact investing, is definitely high on the list of many women investors with impact-oriented interests and preferences. Studies have shown that, while getting financial information through research, online forums and events are popular ways to learn more about impact investing, there are also efforts under way to promote women empowerment in impact investing one step further by creating female investment and business angel networks.
Moxie Future and Next Wave U.S Impact Fund are two examples of such networks. Moxie Future is an education, insight and community platform that encourages and enables female investors to increase their wealth through responsible and impact investing in order to create a more sustainable world. Next Wave U.S. Impact Fund is an early-stage investing fund founded with the idea of bringing more women into the field of angel investing – notably with a focus on social innovation and impact investing. After all, as founder Alicia Robb points out, entrepreneurship is still a goal that is especially difficult to attain for women and racial minorities due to the fact that those groups are struggling with the problem of getting sufficient venture capital and angel financing for their business projects. However, Alicia Robb is confident that her fund, which has 99 women investors, 25 of which have a minority background as well, will help close the gender and racial minority gap in entrepreneurship and impact investing.
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