New research shows clear goals should come first in investing and philanthropy

According to new research by the Center for Sustainable Finance and Private Wealth (CSP), University of St.Gallen (HSG), MIT Sloan Sustainability Initiative, Stanford PACS, and Impact Frontiers, a common reason investors and philanthropists struggle to make progress on their financial and impact goals is that they have not clearly defined them. Drawing on years of work with investors and philanthropists, combined with research on goal-setting, behavioral economics, and effective philanthropy, The Investor’s Guide to Goals-based Investing and Philanthropy examines why unclear goals so often lead to fragmented decisions and disappointing results.

"Training wealthy investors for over a decade has clearly shown us unprecedented opportunities to deploy capital for impact, but most lack the very first, key step of formulating clear goals - making implementation piecemeal," said Dr. Falko Paetzold, founder of CSP.

The findings are unmistakable: the opportunities to deploy capital for impact are real, but clear goals remain a surprisingly neglected starting point. Without them, even serious investors can drift into fragmented and piecemeal decisions. With them, they are in a much better position to pursue their financial and impact goals in ways that are coherent, deliberate, and more effective.

“Broad aspirations are not enough,” said Dr. Vera Michalchik of Stanford PACS. “Investors need clear goals to think about trade-offs and make coherent investment and philanthropic decisions over time.”

Case studies

The report features unique case studies of private wealth holders, including Max Zeller of Carbon Removal Partners, Hanson Gong of Oogway Capital, and Betsy and Jesse Fink of MissionPoint Partners, and ReFED, among others. Their examples show how different goals can lead to very different strategies, structures, and decisions in practice.

One featured story is Dr. Julie Engelhorn, a member of the extended Engelhorn family, who approaches investing and philanthropy by maintaining distinct structures for different goals, including catalytic investing, systemic investing, high-leverage philanthropy, and family and regenerative farming projects.

"I realized I didn't need one strategy to rule them all. I needed different vehicles for different kinds of impact, and the freedom to manage them differently," Engelhorn shares in the report. Engelhorn’s approach illustrates that managing multiple goals coherently may require more explicit separation into “buckets”, whether mental or formal, than investors typically use.

Breaking from tradition to unlock action

Building on established goals-based investing thinking, including work associated with Robert Merton and John Cochrane, the guide extends that logic more explicitly into philanthropy and impact. A portfolio built to fund retirement should not look the same as one built to buy a second home or generate global health impact, because different goals imply different trade-offs, time horizons, and strategies.

Traditional advisors organize around asset classes like stocks, bonds, and real estate. The shift to goals-based investing is simple but profound: instead of organizing around these asset classes, investors organize around what actually matters, like financial security, legacy, and impact. Breaking from traditional investing, the goals-based approach challenges the assumption that maximizing wealth is the ultimate objective.

"Capital is a means, not an end," said Dr. Jonathan Harris, lead author of the report. "The traditional model forces investors to fit their goals into pre-existing structures and targets. Goals-based investing flips that on its head, letting the intended outcomes drive allocation from the start."

Taken seriously, that shift also requires being clearer about when a goal is actually about impact. The guide introduces the definition of an impact goal as any goal focused on others, like community, society, or the planet. That makes it distinct not only from personal financial goals, but also from vague notions of values alignment or generic ESG positioning.

The guide illustrates how managing multiple goals incoherently can leave value on the table, financially, in terms of impact, or both. When investors define their own financial needs more clearly, they are in a better position to direct time and capital toward genuine impact ambitions - including working with others where coordination or compromise can achieve more than acting alone.

About the Investor Guides series

Over a decade ago, CSP documented investors’ uncertainty about creating impact with capital. Since then, CSP’s investor guides have brought topical, research-backed insights to thousands of wealth holders, and decision-makers across sustainable finance, impact investing, and wealth management.

About the Center for Sustainable Finance and Private Wealth (CSP)

CSP is a vibrant network of wealth holders, researchers, educators and entrepreneurs committed to making private wealth a force for good. Our research and trainings empower private investors, philanthropists, inheritors, and their advisors to achieve greater and more systemic environmental and social impact using all their forms of capital. We operate globally with teams based in the U.S., Switzerland, and Singapore. Our academic home is at the University of St.Gallen (HSG) in Switzerland, working closely with the MIT Sloan School of Management Sustainability Initiative and the Stanford Center on Philanthropy and Civil Society.

About the MIT Sloan Sustainability Initiative

The MIT Sloan Sustainability Initiative is a research and education initiative committed to advancing systems change for an equitable and sustainable world. We created the Sustainability Initiative to empower forward-thinking people to turn their sustainability ideas into action. Positioned at the intersection of business and sustainability, we provide a collaborative environment for students, alumni, faculty, researchers, private-sector partners, and policymakers to work together and fuel sustainability action nationally and globally.

About Stanford PACS

Stanford PACS is a global, interdisciplinary research center at Stanford University and the publisher of Stanford Social Innovation Review, connecting scholars and practitioners to strengthen philanthropy, civil society, and social innovation.

About Impact Frontiers

Impact Frontiers helps investors integrate impact alongside financial risk and return in real investment decisions. As a successor organization to the Impact Management Project, it convenes peer-learning communities for investors and facilitates consensus-building on areas of impact management not addressed by existing standards, frameworks, or guidance.