Perhaps more than any year in recent memory, 2021 was a year when Americans strove their hardest to align wealth with values. A powerful combination of reactions to COVID epidemic lockdowns; the post-George Floyd racial justice reckoning; and several warning flares about climate change seem to have motivated investors and charitable donors alike to move money in a direction that would create not only profit, but also impact. At Worth, we have aligned our coverage and emphasis in 2021 (and beyond) to try and capture this historic shift, most notably by replacing our longstanding Power 100 list with the Worthy 100, which celebrates entrepreneurs who are succeeding both in their businesses and in achieving social goals.
Jacqueline Novogratz, one of the entrepreneurs on the Worthy 100 and the founder of one of the first impact investing firms, Acumen, told Worth: “There is such a great sense of need, and a great urgency, in this moment that we don’t really have a choice. And so, what felt like a conversation at the edges 20 years ago has moved to a conversation at the center.”
The signs were everywhere in 2021. For starters, the rapid rush into environmental, sustainable and governance (ESG) investing continued with astonishing energy. In the first quarter of 2021, for example, a record $21.5 billion flowed into sustainable funds. The number has come down a bit—as have overall market inflows—but nonetheless, the most recent (third) quarter figure is $15.7 billion, which is 60 percent above the Q3 2020 figure. It’s true that ESG is typically a way of evaluating an investment’s risk—and not necessarily the same as trying to make an impact through an investment—but many investment professionals perceive that the influx into ESG instruments reflects a desire to achieve sustainability goals.
Another milestone, as Worth contributor William Hogue recently noted, was MacKenzie Scott’s remarkable announcement in June that she had given away billions of dollars in a very short period of time, without the usual charitable infrastructure. Nearly all the grants went to small- and medium-sized nonprofits and were given with no requirements as to how the funds were to be used or for any required outcomes.
New Profit, a venture philanthropy fund that partners with Worth, was one recipient of Scott’s unrestricted grants. New Profit hailed the grant as a validation of its model to fund “proximate leaders,” people within communities (especially marginalized communities) who are best positioned to create sustainable solutions to social problems.
This trend in charitable impact is a natural outgrowth of recent events, according to David Callahan, the founder and editor of Inside Philanthropy. “Philanthropy nearly always reflects what is happening in contemporary society,” Callahan told Worth, “and we can already see our changing world’s effect on philanthropy, with corporations pledging money to racial justice efforts and emergency philanthropic funding programs for community-based organizations to tackle COVID-19.”
As Hogue’s story noted, earlier this year, Worth surveyed its readers about their attitudes toward philanthropic giving. Interestingly, survey respondents listed their philanthropic priorities as “education” at the top of their list, followed by “women and girls” and “human services.” The survey also revealed a strong desire to donate along with other like-minded donors—another way of trying to maximize impact.
Another powerful factor in 2021 has been the series of reminders about the urgency to combat climate change, including the UN’s “code red” climate report and the COP26 summit in Glasgow. These developments have increased the pressure already being exercised by corporate shareholders, stakeholders and employees. More than half of American adults believe that corporations should take action against climate change; it’s one of the rare issues on which there is not a huge difference between Democrats (66 percent) and Republicans (47 percent).
While, of course, trends in investment and philanthropy change over time, these forces seem powerful enough to make 2022 another year of impact.