Socially Responsible Investing: Putting Your Money Where Your Heart Is




1) What is socially responsible investing?




2) Where can I find social investment opportunities?

Thanks to new technology and the web, Olefson says the internet is "bursting with opportunities" and microcredit has quickly grown to become a $25 billion industry. She offers as one such site that allows you to shop for a borrower that you feel you want to help out. For its part, Kiva's marketing tag line is "loans that change lives" and the site claims to have facilitated over $450 million of loans in 70 countries. Other popular SRI funds can be found at Calvert, Domini or TIAA-CREF (TICRX).

3) What Are The Risks?

Olefson says investors can take comfort in the fact that Kiva, for example, has a near-perfect repayment rate, meaning almost 100% of people who have loaned money get their money back. In the case of traditional SRI funds, which invest in stocks and bonds, there is obviously exposure to the ups and downs and vagaries of the stock market, as well as the surrender of almost all say over what is bought and sold in the portfolio.

Also, she warns that because the loan sizes are often very small, the implied interest rate can seem exorbitant to many Westerners, in as much as a $5.00 fee on a $25.00 loan is the equivalent of a 20% mark-up.

4) How Does it Work?

Given that every investor has different objectives and needs, Olefson says one big benefit of the new social investing world is that you can decide not only where, but how long, you want to lend out your money. She says you can structure things to suit your needs and "can get your money back in a matter of months or a few years."

She also says that, in some cases, gift cards are available for those who want to easily share their social commitments with loved ones, who in turn will have to decide what to do with the money once it starts to be paid back.

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