How to Be a “Financial Activist”

Hello and Happy Tuesday!

I always begin my regular email updates to my list with this cheerful greeting; however, given the events that transpired down in Charlottesville, VA this past weekend, it’s hard to feel positive.

But as I watched the terrifying, hateful demonstrations by alt-right groups on the news, my initial shock gradually transformed into anger, and then — thankfully– into inspiration and a call to action.

Action and activism can take many forms, from marching in the streets to writing letters to those in government and leadership positions. One form that should not be overlooked is financial activism – how your dollars can support causes and passions you believe in.

“We can tell our values by looking at our checkbook stubs.” ~ Gloria Steinem

Have a cause or set of values you want to support? Here are three ways to get started:

1) Donations

Obviously the most common approach is to donate directly to an organization or group. If you want to deduct the donation on your tax return, remember that the contribution must be a qualified organization (i.e., 501c(3) organizations) and that contributions to individuals are never deductible. This also assumes that you itemize your deductions on your tax return. Remember too to keep a copy of your receipt – while you do not need to provide this to your tax preparer, it is necessary if you are ever audited and need to show evidence that you contributed.

Another point to keep in mind is that contributions to political campaigns, whether directly to the candidate, to one of their political campaign committees or to a Political Action Committee (PACs), are not tax deductible. If the added tax benefit is extremely important to you, you may want to consider donating to a qualified charity aligned with those same issues/causes instead.

Finally, if you plan on making charitable contributions, make sure you include them as an item in your budget. When figuring out how much to set aside for a given year, I recommend people increase their anticipated contributions by a few extra dollars to account for spur-of-moment contributions. There always seems to be a friend or co-worker who decides to do a run for charity and asks for contributions, or an unanticipated event or disaster that happens in the year when you may feel compelled to do an unplanned donation. Therefore, setting a little aside a little extra will ensure that you are covered.

2) Put Your Money Where Your Mouth Is

In addition to charitable contributions, financial activism can take the form of just being more intentional about how you spend your day-to-day money or money already budgeted for.

I did this personally when I realized that my husband and I needed to update our estate planning documents. Our last attorney was no longer available so as asked around for references, I decided to look for female attorneys only in order to support women business owners.

Empowering women financially is extremely important to me and part of the reason why my own practice has some dedicated services for women. I thought it would be a good way to show my support toward advancing women professionally and financially. Of course, not all of my dollars are directed in this manner, but it is one way I feel I can make an impact with money that’s already budgeted for.

For you, it might be to frequent a local business as opposed to go to a national store, if you are passionate about supporting small business owners. It may be to find services or products sold from your alumni connections to indirectly support your alma mater. Or simply to shop at businesses which have a social mission associated with it, such as Tom’s or Warby Parker.

Of course, another form this can take is to direct dollars away from businesses or organizations that you disagree with. For example, in my own personal budget, I temporarily boycotted Uber after the controversy ensued over their CEO and alleged culture of sexism at the corporation.

3) The Next Level – SRI

If you’re ready to take it beyond your day to day budget, and your financial plan allows for it, you can start looking into Socially Responsible Investments or SRI’s. These usually take the form of mutual funds that hold securities in companies that adhere to certain social, ethical, religious or environmental beliefs.

Assets invested in funds using SRI strategies totaled nearly $7 trillion in 2014, a 76% jump in the two years prior, according to the Forum for Sustainable and Responsible Investment. While most of that money comes from institutions, such as pension funds and endowments, individuals have increasingly become interested in these funds as well.

Since many of these funds are new – only coming onto the scene in the last five to ten years – it’s important to do your due diligence. Like shopping around for other mutual funds, you want to consider the expense ratio and turnover (because that will add to your costs/returns indirectly) and who manages it, starting perhaps with institutions that you already trust or are more familiar with and are most established. If you already hold funds at Vanguard, for example, you can easily start your research there by reviewing some of their SRI funds.

You also want to make sure the fund still aligns with the asset allocation you have chosen based on your risk tolerance and overall goals. Even though it might have a great cause about which you are passionate, it still needs to make sense financially. If you are unsure about this, make sure you consult with a financial planner, preferably one that is fee-only and has no conflicting interest because he/she will not make a commission off the sale of any fund or product he/she recommends.

So, despite the shocking events that unfolded this past week, remember that you too can make a difference in furthering whatever causes or beliefs you hold sacred. And a great place to start is being intentional with your dollars and thinking about how they can support the world you’d like to live in.