Want to Make a Difference in the World? Invest in a Social Cause Startup through a Self-Directed IRA

Published on December 11, 2018

High-net-worth women are using their wealth to change the world, support communities and create opportunities. This is according to a study by RBC Wealth Management (in partnership with The Economist Intelligence Unit), conducted in the U.S., Canada, the U.K., China, Hong Kong and Singapore among women with at least $1 million in investable assets. It looked at the top factors that contributed to the growing number of high-net-worth women and how these women are using their money to benefit society. Although limited in scope (365 respondents), some interesting gender and generational statistics emerged:

• Of the U.S. respondents, 60 percent said better education, investments and new technologies helped them generate wealth. Other factors were greater access to information and openness to entrepreneurship.
• More than 60 percent of the wealthiest U.S. participants with $5 million or more of investable assets are the primary decision makers in their households on financial planning, legacy planning and charitable giving.
• Regarding the key factor influencing charitable giving decisions, these women most often cited the ability to make the greatest impact; their male counterparts cited tax benefits.

Generation X and Millennial women are leading the charge for the greater good:

• Forty-three percent in the survey were aligning their spending with causes they cared about, compared to 33 percent of Baby Boomer and older women.
• Impact investing as a form of giving—wherein investors actively seek to make a positive social or environmental impact with their investments—is also more prevalent among younger women (58 percent vs. 38 percent of older women).
• Sixty-three percent of wealthy Gen Xers and Millennials in the U.S. said societal causes had become more important to them than accumulating wealth in defining their legacy. Among their older counterparts, that figure was 40 percent.

The charitable causes favored by these wealthy American women also varied by generation, with some crossover. Both older and younger women named environment/nature and health/health care as their focus but older women named education, poverty reduction, and religious or spiritual causes as their other primary causes. Younger women focused on animal rights/welfare, diversity/inclusion and human rights.

Make an impact with a self-directed IRA

Is there a non-profit organization that’s starting up and whose cause speaks to you? If so, you can become an investor (either directly or through crowdfunding) with funds from a self-directed IRA or self-directed solo 401(k).  From international fair trade initiatives to non-profits that increase opportunities for the underserved, you can include these impact investments in a self-directed IRA—and put your retirement dollars to good use in social or environmental causes that support your values.

With a self-directed retirement plan, you can make an impact investment in mission-oriented organizations that support many types of causes, such as:

• Renewable energy
• Sustainable agriculture
• Affordable housing
• Environmental conservation and education
• Clean water/sanitation projects
• Micro-enterprises that shift people from poverty into income stability

BONUS TIP: Older investors above age 70-1/2 (who must take required minimum distributions) can satisfy their required minimum distribution (RMD) by making a qualified charitable distribution from their self-directed IRA directly to a charity of their choosing.

Want to leave a lasting legacy by supporting a social cause using funds from a self-directed IRA or solo 401(k)? You can read more about self-direction in our white paper library, and our team at Next Generation is available to answer your questions and educate you about this type of retirement strategy. Contact us via email at NewAccounts@NextGenerationTrust.com or call 1.888.857.8058 for more information.