Impact Investing: A Primer for Family Offices

Impact investing enables high net worth individuals to be explicit about their shared values and to reflect them in their investment and wealth management decisions. In addition, an impact investing strategy aligned with family values can help to engage a younger generation in the leadership and management of a family office.Family offices act as responsible stewards of the wealth of high-net-worth and ultra-high-net-worth individuals, their families and their heirs. Yet after wealth is generated by one generation of a family, an estimated 60% lose that wealth by the end of second generation, and a staggering 90% by the end of third. Many multi-generational family offices are now exploring whether impact investing is a way to unite families around values and positive legacies, thereby more closely involving family members in responsible long-term investing.While impact investing may not suit all family offices, for those that choose to become involved, there is a shortage of expertise, tools and frameworks to enable engagement. As a result, despite growing interest, many struggle with the initial steps of engagement. One of the main goals of this primer is to help family offices interested in impact investing to begin to understand how they can put it into practice. It offers useful frameworks and insights for multi-family offices, family businesses, family foundations and high-net-worth individuals as well as policy-makers and advisers.Each family office’s motivations, operational contexts and goals for impact investing are unique – there is no standard course that fits every family. While this creates a daunting array of potential engagement opportunities, it also allows for a wide variety of opportunities to engage in impact investing. Thus, rather than prescribing a single approach, the primer offers high-level frameworks and disseminates insights that are the result of extensive conversations with family offices, family businesses, family foundations and advisers. The goal of this primer is to help interested family offices ask the right questions and take the first steps as they contemplate their path into impact investing.