Morgan Stanley
Wealth Management

Morgan Stanley Portfolios Benefit Non-Profits

Nov 13, 2024

A powerful Morgan Stanley initiative combines sustainable investing with charitable giving to support the work of social justice-focused organizations across the country.

Diahann Billings-Burford and her team at Ross Initiative in Sports for Equality (RISE) —a New York City-based racial equity and social justice non-profit—faced the monumental task of encouraging more U.S. citizens to vote at a time when young voter registration, in particular, had been lagging behind 2020 numbers.1

 

In 2024, her RISE to Vote initiative, which engages athletes, coaches and staff around how to vote and why it matters, managed to empower more than 13,000 people to check their voter registration and make a voting plan. RISE to Vote’s nearly 100 voting-related events across the country were made possible in part by a new approach to Investing with Impact offered by Morgan Stanley Wealth Management. In a first of its kind for Morgan Stanley, the Firm’s Investing with Impact Diversity Portfolios pair investing with philanthropy by making a donation on behalf of investors to non-profit organizations based on the level of assets raised in the portfolios.

 

Now in its third year, this powerful combination has helped to financially support the work of social justice-focused groups across the country.

 

“Thanks to the support and generosity of RISE partners and sponsors like Morgan Stanley, RISE to Vote grew immensely in 2024, a critical election year,” says RISE CEO Billings-Burford. “That prompted more people to engage civically, with a focus on driving greater equity in their communities.”

 

Making a Bigger Impact

As more people seek to do good with their money, Morgan Stanley enhanced its longest standing suite of portfolios in 2021 to focus on Diversity, Equity and Inclusion (DEI), and added a donation component to offer Morgan Stanley Wealth Management clients an innovative way to both engage in values-aligned investing and make a philanthropic impact.

 

The Diversity Portfolios themselves allow investors to access investment strategies that seek to generate market-rate returns alongside positive impact. The companies in these portfolios have leading diversity records, promote inclusive corporate practices, and offer products and solutions that support diverse communities. The portfolios include separately managed accounts (SMAs), mutual funds and exchange-traded funds (ETFs) that, in some cases, are owned and/or operated by diverse asset managers.

 

Then, in addition to the values-aligned investing, Morgan Stanley makes an annual charitable donation to non-profits whose missions align with the portfolios’ DEI goals on behalf of investors, based on total assets raised in the portfolios.

Combining investing and charitable giving means investors’ dollars can go further when it comes to doing good.
Emily Thomas
Head of Investing with Impact

 

Combining investing and charitable giving means investors’ dollars can go further when it comes to doing good, says Emily Thomas, Head of Investing with Impact, Morgan Stanley Wealth Management.

 

“Not only are you getting that impact-aligned investment, but you’re also getting impact through the donation,” Thomas says. “This really magnifies the effect through supporting organizations that are leading some of the most important work out there.”

 

The portfolios’ charitable component was not an afterthought or “a nice to have,” says Melanie Schnoll Begun, Managing Director, Head of Philanthropy Management, Morgan Stanley Wealth Management. Instead, the philanthropy piece was inherent to the portfolios’ redesign in 2021.

 

“With great intention, we decided there should be a give-back component, where Morgan Stanley would benefit the charitable communities that aligned with the for-profit opportunities our clients are investing in,” she says. “We also know from the literature that investing in these types of companies can produce not only complementary returns, but in many instances, better returns.”

 

Schnoll Begun says the program comes at a critical time, when public support of philanthropy and diversity-and-inclusion programming and initiatives has waned in recent years. “People are getting distracted. But we cannot take our eyes off of this ball,” she says.

 

Morgan Stanley’s Mission Align 360° roadmap helps investors align all pools of capital—human, financial and philanthropic—with their mission. This initiative is an example of how the Firm leverages its human capital and expertise to help clients seeking to align their financial and philanthropic capital with their DEI goals.

Non-Profits Driving Social Change

In choosing the non-profits to support each year, Morgan Stanley has focused on smaller, early-stage organizations—primarily those with annual operating budgets between $500,000 to $5 million that have the potential to make a big impact in their community. These non-profits and their founders often struggle to attract financial support until they’ve proven their business case, which can require hefty capital.

 

Each year, an advisory council of both Morgan Stanley and industry leaders chooses a focus area for the non-profits that benefit from the Diversity Portfolios' charitable component. This year, for example, the council focused on organizations advancing civic engagement, voter education and access, and inclusive democracy in the U.S. The council then approaches a select group of non-profits in the given industry with a brief request for proposal. “Every single one of the applicants is deserving,” Schnoll Begun says.

 

Out of dozens of proposals, the council selected seven non-profits in 2022 and four in 2023. Last year’s recipients included the Formerly Incarcerated, Convicted People & Families Movement (FICPFM); Jolt Initiative; the North Carolina Black Alliance; and the Ross Initiative in Sports for Equality’s RISE to Vote initiative.

The non-profits’ story is constantly being elevated, even if they don’t receive a grant.
Melanie Schnoll Begun
Managing Director, Head of Philanthropy Management

 

FICPFM, led by executive director David Ayala, aims to empower individuals impacted by the criminal legal system to lead movements for change, drive policy reforms and rebuild communities.

 

“To us, ‘equity’ means recognizing and addressing the systemic barriers that have historically excluded predominately Black, Brown and poor communities, particularly those impacted by incarceration, from opportunity and justice,” Ayala says. “It’s not just about providing access, but also creating a world where everyone has the resources and power to thrive regardless of their past or circumstances.” 

 

The support from Morgan Stanley’s Diversity Portfolios has helped the non-profit to deepen its efforts in voter engagement, policy advocacy, as well as leadership development among impacted people.

 

But even organizations that aren’t selected for the program benefit. All non-profits that submit remain on the Firm’s radar as options for clients seeking to advance social justice through their donations. Non-profit leaders have also been invited to speak at Morgan Stanley’s annual philanthropy conference. “The non-profits’ story is constantly being elevated, even if they don’t receive a grant,” Schnoll Begun says.

 

Morgan Stanley’s Thomas says the portfolios and stories of the non-profits receiving funds also help shape clients’ conversations with the next generation. While discussing money can sometimes feel uncomfortable, framing talks around family and individual values “becomes a conversation about which everyone can get excited,” she says.

 

In 2025, Morgan Stanley Wealth Management intends to add a brand-new way for clients to help advance diversity and inclusion called Butterfly Boards. The initiative is to help transition women on non-profit boards to for-profit boards of companies that make up the Diversity Portfolios.

 

“This is about metamorphosis, and really amplifying these women’s voices,” Schnoll Begun says. As the Diversity Portfolios grow, so will opportunities for more women to join for-profit boards, while the selected non-profits will continue to reap the benefits from the program, too. “I deeply believe that this philanthropic heart of the Diversity Portfolios is really the beginning of a new frontier,” Schnoll Begun says.

Wealth Management A Powerful Tool Provides Insights to Sustainable Investors How can investors gain insight into the impact of their investment portfolios? Our Morgan Stanley Impact Quotient® tool distills complex data and tailors analysis to you.
Wealth Management Racial Equity Investing: Your Portfolio Guide Investors now have a variety of intentional investing approaches to pursue a more inclusive society, as well as their financial goals.
Wealth Management A Data-Driven Way to Help Align Your Investments and Values Tools from Morgan Stanley merge data and technology to help you find investments with positive environmental and social impact and firms leading on diversity.
A Powerful Tool Provides Insights to Sustainable Investors
Wealth Management A Powerful Tool Provides Insights to Sustainable Investors
Racial Equity Investing: Your Portfolio Guide
Wealth Management Racial Equity Investing: Your Portfolio Guide
A Data-Driven Way to Help Align Your Investments and Values
Wealth Management A Data-Driven Way to Help Align Your Investments and Values

Discover more

 Insights to help you go further.

Investing with Impact Morgan Stanley Wealth Management

Footnotes

1 “One Week Away From Election Day, Most States Are Behind 2020 in Youth Voter Registration,” Center for Information & Research on Civic Learning and Engagement (CIRCLE), Tufts University, October 30, 2024: https://circle.tufts.edu/latest-research/youth-voter-registration-major-challenge-2024-election

Disclosures

Environmental, Social and Governance-Aware Investments (ESG)

Certain portfolios may include investment holdings that takes into account one or more Environmental, Social and Governance (“ESG”) factors (referred to as “ESG investments”). For reference, environmental ("E") factors can include, but are not limited to, climate change, water, waste, and biodiversity. Social ("S") factors can include, but not are not limited to, employees, diversity & inclusion, cyber security, data privacy, health & wellness, supply chains, product safety & security, community engagement, and human rights. Governance ("G") factors can include, but are not limited to, board structure & oversight, leadership composition, pay and incentive structures, corruption & bribery, ethics & business conduct, shareholder rights, accounting & audit practices, tax evasion, and risk management. You should carefully review an investment product's prospectus or other offering documents, disclosures and/or marketing material to learn more about how it incorporates ESG factors into its investment strategy.

ESG investments may also be referred to as sustainable investments, impact aware investments, socially responsible investments or diversity, equity, and inclusion (“DEI”) investments.  It is important to understand that ESG definitions and criteria used within the industry can vary, and ESG ratings of the same subject companies and/or securities can vary among different ESG ratings providers for various reasons including.  differences in definitions, methodologies, processes, data sources and subjectivity among ESG rating providers when determining a rating. Certain issuers of investments including, but not limited to, separately managed accounts (“SMAs”), mutual funds and exchange traded funds (“ETFs”) may have differing and inconsistent views concerning ESG criteria where the ESG claims made in offering documents or other literature may overstate ESG impact. Further, socially responsible norms vary by region, and an issuer’s ESG practices or Morgan Stanley’s assessment of an issuer’s ESG practices can change over time.

Portfolios that include investment holdings deemed ESG investments or that employ ESG screening criteria as part of an overall strategy may experience performance that is lower or higher than a portfolio not employing such practices.  Portfolios with ESG restrictions and strategies as well as ESG investments may not be able to take advantage of the same opportunities or market trends as portfolios where ESG criteria is not applied. There is no assurance that an ESG investing strategy or techniques employed will be successful. Past performance is not a guarantee or a dependable measure of future results. For risks related to a specific fund, please refer to the fund's prospectus or summary prospectus.

Investment managers can have different approaches to ESG and can offer strategies that differ from the strategies offered by other investment managers with respect to the same theme or topic. Additionally, when evaluating investments, an investment manager is dependent upon information and data that may be incomplete, inaccurate or unavailable, which could cause the manager to incorrectly assess an investment’s ESG characteristics or performance. Such data or information may be obtained through voluntary or third-party reporting. Morgan Stanley does not verify that such information and data is accurate and makes no representation or warranty as to its accuracy, timeliness, or completeness when evaluating an issuer.

Morgan Stanley’s assessment of an issuer’s ESG practices or an ESG portfolio is as of the date of this material. No assurance is provided that the underlying assets have maintained or will maintain any applicable ESG designations or any stated ESG compliance, or that the underlying assets have been operated or will be operated in an ESG-compliant manner. The ESG impacts of the securities and any underlying assets may vary over time.

This can cause Morgan Stanley to incorrectly assess an issuer’s business practices with respect to its ESG practices. As a result, it is difficult to compare ESG investment products.

Morgan Stanley makes no representation as to the compliance or otherwise of any fund or portfolio with any laws or regulatory guidelines, recommendations, requirements or similar relating to the ESG characterization of any fund or portfolio, or in connection with or to meet any of your investing ESG objectives, metrics or criteria.

The appropriateness of a particular ESG investment or strategy will depend on an investor’s individual circumstances and objectives. Principal value and return of an investment will fluctuate with changes in market conditions.

An investment in an exchange-traded fund involves risks similar to those of investing in a broadly based portfolio of equity securities traded on an exchange in the relevant securities market, such as market fluctuations caused by such factors as economic and political developments, changes in interest rates and perceived trends in stock and bond prices. Investing in an international ETF also involves certain risks and considerations not typically associated with investing in an ETF that invests in the securities of U.S. issues, such as political, currency, economic and market risks. These risks are magnified in countries with emerging markets, since these countries may have relatively unstable governments and less established markets and economics. ETFs investing in physical commodities and commodity or currency futures have special tax considerations. Physical commodities may be treated as collectibles subject to a maximum 28% long-term capital gains rates, while futures are marked-to-market and may be subject to a blended 60% long- and 40% short-term capital gains tax rate. Rolling futures positions may create taxable events. For specifics and a greater explanation of possible risks with ETFs¸ along with the ETF’s investment objectives, charges and expenses, please consult a copy of the ETF’s prospectus.  Investing in sectors may be more volatile than diversifying across many industries. The investment return and principal value of ETF investments will fluctuate, so an investor’s ETF shares (Creation Units), if or when sold, may be worth more or less than the original cost.  ETFs are redeemable only in Creation Unit size through an Authorized Participant and are not individually redeemable from an ETF.

Value investing does not guarantee a profit or eliminate risk. Not all companies whose stocks are considered to be value stocks are able to turn their business around or successfully employ corrective strategies which would result in stock prices that do not rise as initially expected.

DEI Signal was launched in response to increasing evidence demonstrating the importance of diversity, equity and inclusion (DEI) in the workforce. Companies are increasingly evaluating their cultures and practices related to gender and racial equality in order to attract and retain top talent, and investors are increasingly asking for this data to be disclosed while seeking to invest with asset managers who are making progress on improving diversity. Recognizing the importance of data transparency to measuring and driving progress, and in alignment with the Inclusion pillar of the Investing with Impact framework, we are collecting over 30 data points from our asset management partners, who, combined, manage roughly 70% of global assets under management. DEI Signal was created as a framework for analyzing the data in a holistic way. The questions focus on policies to support inclusive and diverse workplaces, diverse representation and disclosure. Through these questions, DEI Signal seeks to increase transparency on diversity statistics and shepherd greater diversity and inclusion across the industry.

Morgan Stanley Wealth Management is the trade name of Morgan Stanley Smith Barney LLC, a registered broker-dealer in the United States. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security or other financial instrument or to participate in any trading strategy.  Past performance is not necessarily a guide to future performance.

Morgan Stanley Smith Barney LLC, its affiliates and Morgan Stanley Financial Advisors do not provide legal or tax advice.  Each client should always consult his/her personal tax and/or legal advisor for information concerning his/her individual situation and to learn about any potential tax or other implications that may result from acting on a particular recommendation.

This material, or any portion thereof, may not be reprinted, sold or redistributed without the written consent of Morgan Stanley Smith Barney LLC.

© 2024 Morgan Stanley Smith Barney LLC. Member SIPC.               

CRC#4018040  (11/2024)

View Disclosures Close Disclosures