Let's say that you budget a certain amount of money to give to charity every year, based on a philanthropy plan. That might be optimistic but let's start there. That money could come from a savings account, a private foundation, a transfer of appreciated stock, or a donor-advised fund*. You are probably concerned about where that money goes: which nonprofit will use it well, and what kind of difference it will make with the causes you care about.

Yet as an investor, how and where your philanthropy money grows before you give it can also contribute to a social or environmental cause. This is not new to investors; socially responsible investing has been around since the 1960s. Yet some philanthropists are just now connecting their charitable goals with their decisions about how those resources are invested.

Claramiller

Clara Miller. Source: The F.B. Heron Foundation.

As Clara Miller of the F.B. Heron Foundation says, "All investing is impact investing." She goes on to say that "Foundations are investing 100 percent of their assets for impact; they just don't know whether it's positive or negative." The F.B. Heron Foundation is guided by a belief in socially responsible investing and job creation to meet their mission of fighting poverty, so their orientation at this end of the spectrum is congruent.

Phil Buchanan, the president of the Center for Effective Philanthropy (CEP), sees that some Universities like Stanford, Syracuse, and Columbia, have divested from investments in fossil fuels and for-profit prison companies, in part motivated by activism from students, alumni, and faculty. However 80% of the larger foundations in a recent CEP study use no investment screens at all. The Rockefeller Brothers Fund, like the F. B. Heron Foundation, is a vocal and notable exception to this. As climate change is a priority program focus for Rockefeller Brothers, they divested their fossil fuel investments in the fall of 2014.

You might consider this with your own charitable giving resources. These philanthropy leaders are talking about limiting investment options, based on the products or activities of certain corporations. Should you maximize your investment earnings with the idea of having more money to donate to effective nonprofits, or should you use your investing as a tool toward social and environmental change -- and risk having less money to give? More specifically, where do you draw the line of which industries or corporations you exclude for moral reasons?

These are hard questions to answer, particularly as an independent investor or donor. Luckily, philanthropy leaders are taking time to think this through, grappling with these issues, and acting on resolutions. Following these developments in the philanthropy sector can inform your decisions as well.

*Note: With a donor advised fund, you only have advisory power over how that fund is invested and the grants made from it.

As a Motley Fool reader, you're interested in learning and being smart about your investing. Mark Ewert helps people to be as skilled at charitable giving as you are at investing, so contact him if you are looking for support. You can purchase his new book, The Generosity Path: Finding the Richness in Giving, through his website or at your local bookstore.