Financial services professionals are increasingly being called upon to help clients achieve their charitable goals as part of their overall investment strategy. One path that can help accomplish these dual objectives is impact donations.
Global giving in 2024 was estimated at $2.3 trillion according to Giving Tuesday, but specific figures for total donations to registered nonprofits are not available. Of this total, U.S. charitable giving alone reached an estimated $592.5 billion in 2024, according to Giving USA. Even so, notes Gallup, overall global generosity in 2024 was thought to have slightly declined.
Financial services professionals are increasingly called upon to help clients achieve their charitable giving goals as part of their overall investment strategy. One exciting area gaining traction that can help accomplish both objectives is impact investing. Impact investing is an approach that blends the principles of venture capital with philanthropic goals, so individuals achieve both social and financial returns for their donations.
Meeting Client Needs and Making a Difference
Business-savvy, socially minded individuals are looking for ways they can make a real difference with their donations. They want assurance their funding will be used for the purpose they intend, and they want their contributions to generate social and environmental change.
Impact investing is helping in this regard by bringing much needed funding to companies and organizations that require investors to fuel their work. Socially conscious donors can make a dramatic difference. Through impact investing with Cognigence, a 501(c)(3), your clients can ensure their contributions matter.
With Cognigence, your clients can choose where to donate their funds from among multiple critical causes. We’re currently focused on areas that both have a large financial burden and make an impact on the health care system or the quality of life among those afflicted across the globe. Specifically, your clients’ contributions can help Cognigence support: Entrepreneurial Education, Research and Development and Donation Investing. Cognigence helps socially conscious individuals invest their funds in areas and on issues that are connected to their values and for which they are passionate about improving. Our funding supports research, programs, and technology that benefit all people, regardless of origin, race, politics, religion, or status of life by providing an improved quality of life, at both the individual and at the societal levels. One would classify Cognigence as a company in the venture philanthropy and social impact space.
Your clients will feel confident knowing their fully tax-deductible donations will be invested with others to support their cause and achieve far-reaching effects. Other organizations spend $.50 to $.80 per donated dollar on operations, including administration and marketing; Cognigence uses as little as $.25 per dollar on operations. We also tell clients exactly where their money is being used, and we use the Harvard social return on investment (SROI) scale to measure and share their contribution’s impact.
Realizing Invaluable Returns
Unlike conventional charitable giving, Cognigence’s unique impact donation model provides an opportunity to not only make a charitable donation that is fully tax deductible and supports a cause clients care deeply about, but also offers the possibility of financial return on their contributions. Cognigence was formed to provide support in three main areas:
- Entrepreneurial Education – Not everyone can afford to go to college, but we feel everyone should have the opportunity in our digital age to have the chance. We have partnered with some great organizations that provide 'scholarships' to folk across the globe.
- Research – There are several places in our six focus areas that are underfunded, and we believe with our experience and success in the past we can improve the process and outcomes.
- Support Innovation – A lot of people don't know that most nonprofits use some of their donations directly and indirectly to support start-ups and help in their growth and success. Unlike other nonprofits we can potentially reward our donors with equity if any of these endeavors are successful. This is much different than the traditional convention of providing hard goods like t-shirts and tote bags.
What’s Different
Costs – Most nonprofits have remarkably high operating margins because their business model requires event hosting and a large staff. We have a business model that leverages digital technology and social media so we can provide more of each donated dollar to the cause. Charity Navigator updated its rating system in 2023 and now generally gives full credit to those organizations whose ratio of program expenses is 70% or more of their total expenses.
- Our goal is to leverage no more than 25% of the donated funds for operations.
- Because of our business model and lower costs, that number will go down based on the amount of donations we collect.
Transparency – Unless you take the time to read their financials, most nonprofits do not tell you where your donated dollars go. We have leveraged technology to provide donors with complete transparency, in a simple manner, on how their donations were applied and how much went to the causes of their choice.
SROI – The social return on investment is a global concept that donations should provide both tangible and intangible return on an investment. Just providing funding to causes doesn't go far enough; a more strategic view of interventions and their impacts could benefit causes more quickly.
At Cognigence, we leverage our conscience, passion, and competencies to push the frontiers of venture philanthropy and social impact. As a financial professional, you can help your socially responsible clients realize the unique benefits impact investing offers by educating them about the global good being conducted with funds donated through Cognigence.
To learn more about Cognigence and its unique
impact investment model, come hear Eric Trappen at
PICPA’s annual Tax Con on Nov. 18 and 19.
Eric V. Trappen works in business advisory and private equity and is a principal with Perspicacity Group. Learn more at Ericvtrappen.com. Cognigence is a unique platform that improves upon the charity/giving model to provide donors with transparency, impact, and gifting success.
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Statements of fact and opinion are the author's responsibility alone and do not imply an opinion on the part of the PICPA's officers or members. The information contained herein does not constitute accounting, legal, or professional advice. For actionable advice, you must engage or consult with a qualified professional.
