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Socially Responsible Spending: Where Do Americans Want Their Money to Go?

2020 has been a year of major change both socially and economically. The social impact of COVID-19 and other major stories in the spotlight this year such as the death of George Floyd and the Black Lives Matter protests have changed many of our lives, and we were interested in discovering whether or not they have also impacted the way we spend and invest our money.

For a closer look at how social justice campaigns may influence people’s investment and spending strategies, we surveyed 1,000 people who donate or invest money at least three times a year about how they decide where to put their money. Read on as we break down how many people are concerned with companies’ social stances (including Black Lives Matter and COVID-19) and which generations are most influenced by these positions, and what socially responsible investing means for Democrats and Republicans.

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Are Americans Stopping Spending Based on Their Social or Political Beliefs?

A majority of those surveyed have altered their spending habits based on businesses’ political and social stances. Sixty percent of respondents have stopped spending money at businesses they disagree with, and 75% of those have posted on social media about their decision.

According to the survey, Republicans (67%) were the most likely to stop spending money at a business due to their social or political positions, followed by 59% of Democrats and 49% of Independent voters.

Most commonly, respondents decided to stop spending money with businesses based on their approach to COVID-19 precautions (57%), their view on face masks (44%), and their opinion on the Black Lives Matter movement (44%).

While face mask mandates vary from state to state, some retailers require customers to wear masks (and some decide to waive mask requirements) to shop in their stores regardless of local legislation. Twenty-nine percent of people deciding to break up with a retailer over their political or social positions said they would never shop in those stores again.

Supporting New Businesses Based on Social and Political Affiliations

spending at new businesses

Black-owned businesses (which have historically struggled to qualify for small business loans) have seen rapidly increasing sales over recent weeks. In addition to activists circulating lists of business owners and shops that allies can buy from to support Black communities, one leader urged Americans to spend $5 million at Black-owned businesses between June and July.

Fifty-nine percent of respondents have started to support new businesses since March 2020, 75% of whom have posted on social media about the brands they’re supporting.

For a majority of respondents, COVID-19 precautions (64%) were the leading motivation to support new businesses, followed by their view on face masks (55%), and their position on the Black Lives Matter movement (45%).

Are Americans Actively Engaged in Where Their Money is Invested?

Regardless of their social or political beliefs, not all respondents take an active role in the companies or institutions where they invest their money. Slightly more than half of them (51%) chose the companies they invested in, while 14% left those decisions to their financial advisors.

who chooses where you invest money

Compared to 39% of baby boomers and 47% of Gen Xers, 55% of millennials said they select the companies they want to invest in. In contrast, older generations — including 23% of baby boomers — were more likely to work with a broker or financial adviser.

Regarding political affiliation, Independent respondents and Republicans (54% and 53%, respectively) were more likely than Democrats (47%) to pick the companies they invest in.

Are Americans “Voting With Their Wallets” More Since March 2020?

The concept of “voting with your wallet” is nothing new. Supporting companies whose social positions align with your own can be an extension of political or social engagement in the same way that boycotting companies you don’t agree with can make a statement.

voting with your wallet

Since March 2020, more than 1 in 4 respondents (27%) have decided to sell their stocks due to a company’s behavior, including 29% of millennials and 25% of Gen Xers.

While 46% of people acknowledged paying the same level of attention to companies’ social stances when purchasing stocks, 39% of respondents said they pay closer attention to those positions.

Of course, many Americans are as invested in what companies say about social matters as what they do, which don’t always align. Millennials were the most likely generation (41%) to pay closer attention to companies’ stances and actions.

Money Over Social Matters?

When asked about social stances and their investment portfolios, 52% of respondents said they prefer to invest in companies they agree with on social issues and make less money. Women (60%) were more inclined than men (47%) to make less money by investing in companies they agree with socially.

money over social matters

Focusing on Socially Responsible Investing

socially responsible investing

A majority of respondents (64%) indicated they practice socially responsible investing. Baby boomers (51%) were the least likely to consider social causes when making decisions about their investments, followed by 62% Generation Xers and 68% of millennials.

According to the survey, the most common criteria for making socially responsible investment decisions included understanding what percentage of profits a company donates (50%) and the percentage of minorities on the board of directors (45%).

Baby boomers were the most likely generation to consider the percentage of profits a company donates.

How Americans Are Giving to Worthy Causes in 2020

Given the current political and social climate, 26% of respondents have pulled money out of their savings account to donate to charitable causes since March, and 31% of people donated to organizations for the first time. Sixty-nine percent of those supporting an organization for the first time since March expected to continue donating to those causes.

charitable giving

Among respondents donating to new organizations since March, 75% contributed to causes related to COVID-19, and 48% gave money to the Black Lives Matter movement or other racial justice causes.

Millennials were the most likely generation to donate to COVID-19-related organizations (74%). Baby boomers were the least likely generation to donate to Black Lives Matter and Social Justice March 2020.

Making Decisions About Your Money

Not unlike how many people spend their money, a majority of respondents considered themselves socially responsible investors. Among those who took a more active role in their investment decisions, a company’s hiring practices, diversity of directors, and donation history were important considerations when deciding whether to invest in their brand.

At Personal Capital, we make sure you have access to all of your accounts in one place so that you can actively monitor your investments, identify and reduce hidden fees, and plan for the future. We also offer socially responsible investing options for clients of our wealth management services. Discover your own Personal Strategy by visiting us at PersonalCapital.com.

Fair Use Statement

Are your readers trying to be more socially cognizant of their spending and investing? Share the results of this study for any noncommercial use with a link back to this page as credit to our team of contributors for their work compiling these findings.

Methodology: We surveyed 1,000 people who donate or invest at least three times a year and asked them about their charitable efforts and investment practices. Our respondents had an average age of 37.7, with a standard deviation of 12.2. The generational breakdown of our respondents is as follows: Baby boomers – 112; Generation X – 256; Millennials – 572; Other generations – 60

The political breakdown of these respondents was:Democrats – 420; Independents – 234; Republicans – 327; Other – 12; Unsure – 7

We then conducted a second study to explore people’s shopping habits in response to social issues and concerns. In this second study, we had 1,014 respondents. These respondents had an average age of 37.5, with a standard deviation of 12.1. The generational breakdown of our respondents is as follows: Baby boomers – 113; Generation X – 254; Millennials – 579; Other generations – 68

The political breakdown of these respondents was: Democrats – 414; Independents – 207; Republicans – 389; Other – 4

The content contained in this blog post is intended for general informational purposes only and is not meant to constitute legal, tax, accounting or investment advice. You should consult a qualified legal or tax professional regarding your specific situation. Keep in mind that investing involves risk. The value of your investment will fluctuate over time and you may gain or lose money.

Any reference to the advisory services refers to Personal Capital Advisors Corporation, a subsidiary of Personal Capital. Personal Capital Advisors Corporation is an investment adviser registered with the Securities and Exchange Commission (SEC). Registration does not imply a certain level of skill or training nor does it imply endorsement by the SEC.

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