How to become a solidarity-based saver or investor?
Each one of us can do good with his or her money. It’s pretty simple!
Lots of people today would like to live in a world which they feel more concerned about social and environmental issues. But how to bring such a world to life? It is all a question of initiatives and money. Happily enough, and thanks to the Finansol label, there are three ways to become a solidarity-based saver or investor in France.
Look up your banker to...
...share your interest payments
How? You open a savings account or a term account and you chose to give between 25 and 100% of your annual return to a NGO or an association.
Where? Several major retail banks and insurance companies offer 'solidarity-based savings accounts'. Give yours a try. You might be disappointed: such savings accounts are not always promoted by the branch officers.
What return? Since you are giving up part of your return to a charity, your effective pre-tax return is more or less 1%.
What tax benefits? The part of the income you give away entitles you to a mild taxation (5% only) plus a 66% tax rebate. The other part is added to your other revenues and therefore taxed at your marginal rate.
...or invest in a solidarity-based fund
How? You open a savings account or a term account and all your savings or a certain proportion – it depends on the fund you’ve chosen – are invested in companies that create a positive social and environmental return on investment.
Where? You shall have to shop for them. The Finansol list of labeled founds should help you find what your bank has to offer.
What return? It depends on the fund you’ve chosen.
What tax benefits? There is no particular tax break offered to you.
Ask your company for information
How? As a wage earner, you can invest part of your salary in what is known as 'corporate savings plans' called PEEs. Your savings are subsidized by your company up to a certain point. Your capital gains are tax-free after a five-year holding period. These plans are managed by asset management firms who offer you to choose between at least three different funds invested in stocks and bonds of quoted companies. Since 2010, one of these funds must invest between 5 and 10% of its assets in solidarity-oriented companies.
Where? All the large French companies and some of the small businesses offer PEEs. Some large French companies also offer PERCOs that are somewhat like 401k plans in the United States. In that case, the lock-up period extends until your retirement.
What return? Solidarity-based enterprises offer no or a very low return on investment (1 to 2% per annum). But since their weight in the fund is under 10% (7% on average), they have a minor impact on the global performance.
What tax benefits? See above. There are numerous ways of retrieving your savings tax-free (marriage, home-ownership, lay-off, etc.).
Invest directly in a solidarity-based enterprise
How? You feel a strong concern for a social or environmental activity, such as housing for the poor, inclusion of jobless workers, clean energy or microfinance in France or abroad. You can purchase publicly offered shares of the social businesses that run these activities.
Where? Have a look on solidarity-based entreprises which have carried out citizen capital-raising activity on this link.
What return? You are given a guarantee that you shall get your money back after a five-year lock-up period of time. No dividend is to be expected. Limited capital gains (2% per annum) are sometimes made possible.
What tax benefits? Your investment entitles you to an 18% income tax reduction or a 50% estate tax reduction as long as you don’t sell your shares before five years.