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Assessing the profound effects of the past year, Punit Renjen, chief executive officer of Deloitte Global, recently emphasized the “enormous opportunity for leaders to reset and realign their values and commitments. People around the world are demanding action — and this time feels different.”
After decades of working with dynamic families, and now as CEO of a wealth management firm that’s part of a seven-generation business-owning family itself, I agree. Of course, we’ve experienced shocks before. Recessions, pandemics and social uprisings are not unique. What is unique is the confluence of these events amidst a climate crisis, contentious politics, major upheavals to our daily lives and echo chambers of data, media and information. This convergence of issues and energy is creating a groundswell of intention and action.
Corporate commitments garner the most attention. Local companies like REI, McKinstry, Amazon, Microsoft and others are increasing their efforts for carbon neutrality. Companies across the spectrum are promising to combat inequity and social injustice. But it’s not just businesses. Individuals, families, foundations and philanthropists are also experiencing a fundamental shift in their outlook and the impact they can have. For many, that’s changing the way they think about their wealth in three important ways.
First, they’re leveraging their assets for change. Impact investing is seeing one of its strongest surges in decades. Research from Morningstar shows that $20.9 billion has been invested in sustainable funds during the first half of 2020, just shy of the amount of new money for all of 2019. Among our clients, we’re hearing new ur-gency about environmental, social and governance funds. People are also asking how to support Black-owned businesses and close equity gaps. People are recognizing the power of their resources to address systemic issues at home and on a global scale.
People are also using philanthropy in new ways. According to a Foundation Source study, “2020: The Year That Changed Everything,” 39% of small private foundations shifted their missions and 42% increased their grants since the beginning of the year. Covid-19 increased the needs of nonprofits and social justice concerns were the primary reasons. This certainly maps to our experience in the Pacific Northwest, where charitable giving is strong.
Second, they’re creating new connections. In the early days of Covid-19, many set themselves up as advocates, placing calls to elected officials, community stakeholders and their own social and business networks to draw attention to critical issues that needed to be addressed. These efforts led to the creation of new coalitions of changemakers that pooled resources for action.
We’re also observing the families we work with creating new connections with like-minded peers and educating themselves on topics from financial strategies, to raising a strong and resilient next generation, even to protecting themselves online.
These individuals are using what I call their total balance sheets to address what matters most for their futures, whether that’s taking on a societal issue or ensuring financial resiliency for their families. And, by leveraging assets for more than a financial return and partnering with peers for compounding impact, they’re challenging others to do the same.
Finally, they’re doubling down on planning. People are asking “what impact do I want to make, and how can I leverage my assets to accomplish my goals?” In the early days of the pandemic, families used financial tools like gifts of stock or other assets, donations from retirement funds, charitable lead annuity trusts, donor-advised funds and private foundations as vehicles for impact. Now, as people recognize there is more to do, they’re taking a multigenerational approach. In many ways, 2020 has become a catalyst to clarifying goals, values and responsibilities.
People are beginning to look more closely at their total balance sheets, creating new connections and building new models of high-impact planning to address any number of needs, whether here at home or around the globe. They’re taking this unique moment, as Deloitte Global’s Renjen said, to reset and realign their values and commitments — for their families, communities and futures — with financial tools that can make them a reality.
People are rethinking their wealth. They’re putting their inten-tions in to action. Our communities — and the world — will be better for it.
Kristen P. Bauer became CEO of Laird Norton Wealth Management in May. Reach her at firstname.lastname@example.org.