Wiser Wealth: How Individual Investors and Underserved Communities Can Help Each Other

Individual Investor checking her holdings

While corporations typically have more resources to help with a project, there is truth in the common adages about individuals being able to be the change they want to see.

That holds true in the case of communities in need finding some of their help can come from any one person.

And for individuals who do choose to give back to their community, they will even find it helps them come tax time.

Abby Schultz of Penta elaborates, explaining how methods such as donor-advised funds (DAFs) and opportunity zone funds are ideal for individuals to lend support due in part to being beneficial to both parties.

Some plans like these allow investors to set up funds that annually deduct a certain amount for a predetermined number of years, and then at the end of that time the fund’s remainder plus any interest reverts to the organizer (or another stipulated party) and can be claimed with a tax break.

So helping the community also winds up helping the investor.

So why are more individuals not giving back in this way? Fran Seegull, the President of U.S. Impact Investment Alliance explains. “Part of it has to do with the fact that if you look at wealth platforms, and if you look at DAF platforms, for the most part, they are national and community investing tends to be regional, or local, or even hyperlocal.” Seegull goes on to say, “The impulse and the interest is there. The question is, how to have community investing and local opportunities interoperate with these national platforms.”

The good news is that more options are appearing. ImpactAssets and CapShift are two such choices offering options like recoverable grants, which provides funding to a nonprofit until they are back on their feet, at which time the fund remainder goes back to the investor.

For people in lower income brackets, there is the participatory model for local restorative wealth building, which is designed for smaller level donations from people whose income is below $200,000.

Ultimately, it is encouraging that more avenues are appearing for individual investors to make a difference, and that there is even personal incentive for investors to do so.

“When you look at the big picture there are only a limited amount of ways to legally reduce your tax burden,” said Fred Hubler, President and Founder of Creative Capital Wealth Management Group in Phoenixville. “Donor advised funds and investing in opportunity zones are fairly easy to understand and could help reduce taxes while helping the less fortunate. Donor advised funds have been around for a long time and probably will still be around for a long time, however opportunity funds are relatively new and will not be around forever.”

However, more funding options are still needed to truly capitalize on the potential that individuals can do to help restore communities that have fallen in value.

For more help in making your investment decisions, make sure to check out Penta’s article by clicking here.


Fred Hubner

Want to know if you’re on the right path financially? Fred Hubler’s Second Opinion Service (SOS) is a no-obligation review with Creative Capital Wealth Management Group‘s Chief Wealth Strategist. It’s simply not possible to get a reliable second opinion from the same person who gave you the first one. Click here to schedule an SOS meeting.



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