Feature Article, 12/4/2025

Aligning Investments with Nonprofit Values: Beyond ESG

Julie Albright, CFA, CFP®, Wealth Advisor at Mercer Advisors

For years, values-based investing was often equated with ESG, or environmental, social and governance screens applied broadly across portfolios. While ESG remains relevant, nonprofits today have far more flexibility to define and express their unique values through investment decisions.

Mission-driven organizations face growing expectations for transparency, not only in programs but also in financial stewardship. Investments that conflict with an organization’s purpose can undermine trust, while those that reinforce it can strengthen relationships and amplify impact.

What does values-based investing look like now?
It is more than avoiding certain industries. Nonprofits can actively shape portfolios to reflect priorities such as sustainability, social equity or local economic development. This might include divesting from fossil fuels, supporting affordable housing initiatives or allocating to funds that advance diversity in corporate leadership. Impact investing, where financial returns are paired with measurable social or environmental outcomes, is another emerging approach.

Start with clarity and intention.
Begin by defining what “aligned” means for your organization. Which values are essential? Which goals are aspirational? Engage stakeholders early, including board members, investment committees and key donors, to build consensus and avoid surprises later.

Next, translate those priorities into an Investment Policy Statement. A well-crafted IPS serves as both roadmap and guardrail, guiding decisions while maintaining accountability. It should outline objectives, risk tolerance and any screens or mandates tied to mission. For example, a nonprofit focused on health equity might prohibit investments in tobacco companies while favoring funds that address social determinants of health.

Balance purpose with performance.
Values-based investing does not mean sacrificing financial responsibility. Many strategies, such as ESG integration, seek competitive returns while managing long-term risks. The key is to evaluate options through both lenses: mission alignment and fiduciary duty.

Why it matters.
Aligning investments with values reinforces credibility and signals to donors that every dollar, whether spent or invested, advances the mission. In a landscape where trust is currency, that alignment can differentiate your organization and inspire deeper engagement.

As tools and strategies evolve, nonprofits have an unprecedented opportunity to ensure their portfolios reflect not just financial goals but the principles that define who they are.

To learn more about how a fiduciary financial partner can help support mission-aligned investments, please visit https://nonprofits.merceradvisors.com.

Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.