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GreenMoney Journal - publishing since 1992
Fall 2010 issue
Socially Responsible Investing – Better Companies, Better Communities
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Virtue, Vice, and the Gnashing of Teeth, - a Survey of Faith-Based Investing
Ted Ketcham, editor, GreenMoney Journal
For the overseer must be above reproach as God's steward, not self-willed, not quick-tempered,
not addicted to wine, not pugnacious, not fond of sordid gain.
-Titus 1:5-9
Coming to faith-based investing from a Judeo-Christian heritage, I find the Bible an
appropriate place to begin. The Apostle Paul's letter to Titus concerns choosing the ideal leaders
for a Christian community, but it also provides a great job description for socially responsible
fund managers. Again, in 1 Timothy 3:8 Paul declares, "Deacons likewise must be men of dignity, not
double-tongued, or addicted to much wine or fond of sordid gain,..."
"Sordid gain" recurs
often in Paul's warnings to the stewards of his young church. Coupled with "dignity" and "above
reproach" his words imply that he would be very comfortable with the modern-day seek and avoid
strategies for today's social investors.
The Bible doesn't offer much guidance in choosing
specific SRI funds, but the best-known parables used by Jesus to teach his most important lessons
make it clear that stewardship was to be rewarded and foolish investing was to be punished.
In the Parable of the Talents, for example, Jesus says that a man of considerable wealth
entrusted his money to three servants (accountants? financial planners?) for a period of time, and
that they were expected to invest it profitably. When the rich guy returned to demand an
accounting, two of the servants had been astute enough to lend the money at interest and they were
generously rewarded for their stewardship - 100 percent for one and 40 percent for the other (a
fund manager could be proud!). They got to keep the dough and were promoted. The third servant, who
received less to work with than the others, nervously chose the "low-risk" investment strategy of
burying it in the very non-volatile ground, where he reasoned that at least the principle would be
protected. For his cautiousness he was made to return the investment and fired. Worse, his employer
ordered his assistants to "throw that worthless servant outside, into the darkness, where there
will be weeping and gnashing of teeth."
There was a lot of weeping and teeth gnashing
back then. Those with investment portfolios can sometimes relate.
Other of Jesus'
"investment" parables uses seeds to teach the lesson. The Parable of the Sower advises listeners to
consider the "soil" in which the seeds of faith are sown and the Parable of the Mustard Seed
promotes a large gain from a small start - the mustard seed of faith.
In the Parable of
the Weeds, we are warned that weeds that can be sown by the enemy (Haliburton? Enron? Wal-Mart?),
which become so enmeshed with the "good seed" that nothing can be done until harvest time and a
final separation can be made.
For the fishermen, Jesus heated it up a bit with the Parable
of the Net, warning that the necessary separation of good fish from the bad would be mirrored in a
final cosmic accounting: "The angels will come and separate the wicked from the righteous and throw
them into the fiery furnace, where there will be [again!] weeping and gnashing of teeth."
Thus it appears that along with our sins of commission and/or omission, our investment
portfolios may also be tallied in the ultimate "evidence," if we accept the notion of a final
judgment, and that we're supposed to be using whatever we have for purposes more noble than just
burying our assets.
Fortunately for today's variety of faith-guided investors who neither
farm nor fish, there is a constellation of faith-based organizations and funds whose strategies
reflect many different options for faith and financial growth opportunity. They include the
Interfaith Center for Corporate Responsibility (ICCR) which, for over thirty years
has been a leader of the corporate social responsibility movement; The Shefa Fund,
which mobilizes Progressive American Jewish resources for social change and spiritual innovation by
making socially responsible grants and investments; Christian Brothers Investment Services,
Inc. (CBIS) which manages approximately $3 billion for Catholic organizations seeking to
combine faith and finance through the responsible stewardship of Catholic assets; the Ave
Maria Fund, which aggressively screens against companies that promote pornography and
other touchstone conservative issues; the Mennonite Mutual Aid (MMA) which, since
1945, has helped investors match their faith and values; The Aquinas Funds and Aquinas
Investment Advisers, Inc., which manages the Aquinas Funds and other activities for The
Catholic Foundation; The Noah Fund, a conservative Christian, large-cap growth
fund that avoids tobacco, alcohol, pornography, gambling and abortion-related stocks; The
Timothy Plan, a family of funds that offers a "biblical choice" for investors;
Amana Mutual Funds Trust Growth Fund, based on Islamic principles; and finally,
Thrivent Financial for Lutherans, formerly the Aid Association for Lutherans and
Lutheran Brotherhood;
These organizations offer Christians - from conservatives to
progressives, - Moslems, and Jews a range of faith-based information and choices.
Founded
in 1974, the Interfaith Center for Corporate Responsibility (ICCR) is an
international coalition of 275 faith-based institutional investors including denominations,
religious communities, pension funds, healthcare corporations, foundations and dioceses with
combined portfolios worth an estimated $100 billion. ICCR issues include Access to Health Care,
Contract Supplier System, Corporate Governance, Enabling Access to Capital, Environmental Justice,
Global Warming, Promoting Human Rights, Violence & Militarization of Society and Water and Food.
Learn more at http://www.iccr.org
In Judaism, tzedakah means to create justice to turn
the blessing of shefa, abundance, into food, shelter, clothing and opportunity for everyone. One of
two Jewish organizations affiliated with the Interfaith Center for Corporate responsibility, the
Shefa Fund is philanthropic rather than investment oriented. The fund receives and distributes
pooled funds allocated for community investing and grant-making. For more information, visit
http://www.shefa.org
Founded in 1945 by the Mennonite Church, Mennonite Mutual
Aid (MMA) grew out of a long tradition of faith communities putting faith into action by
sharing resources with each other. MMA began by offering loans to church service volunteers and
expanded to include many other services. Ten years ago MMA Praxis Mutual Funds were launched, based
upon a stewardship investment philosophy tailored to the beliefs and financial needs of the
individual investor.
While the majority of MMA services are offered to people and
organizations connected with Mennonite and other Anabaptist denominations, services and products
are open to everyone. For more information, visit http://www.mmapraxis.com
Christian Brothers Investment Services, Inc. (CBIS) manages approximately $3
billion for Catholic organizations seeking to combine faith and finance through the responsible
stewardship of Catholic assets. It was founded to provide investment programs that seek to preserve
capital, provide income for current needs, and growth for future needs, and incorporate ethical
standards into the investment management process. CBIS was ranked the world's number one investment
management firm focusing on socially responsible investing (SRI) for the Catholic institutional
market, according to Pensions & Investments 2004 money manager survey in the May, 2004 issue.
Visit- http://www.cbisonline.com for more info.
Another conservative Catholic
investment option is Ave Maria Mutual Funds. It is designed specifically for
investors looking for financially sound investments in companies that do not violate the core
teachings of the Catholic Church. The funds place equal emphasis on performance and moral criteria,
with emphasis on pro-life and pro-family beliefs, as determined by an advisory board that includes
Thomas Monaghan, owner of Dominos Pizza, Bowie Kuhn, former Commissioner of Major League Baseball,
and Phyllis Schlafly, author and long-time activist for conservative religious agendas. Web
address: http://www.avemariafund.com
The Aquinas Funds and Aquinas Investment
Advisers, Inc., was formerly known as the Catholic Foundation, which has managed monies
for Catholic organizations since 1985. Monies were pooled into a Common Trust with a bond fund and
two equity funds. The Funds have grown steadily. In 1994, substantially all of the assets of the
Funds were transferred to The Aquinas Funds, a family of mutual funds advised by
Aquinas Investment Advisers, Inc., a subsidiary of The Catholic Foundation. The Foundation has two
missions: to achieve its investment objectives ("profits") and to promote Catholic and family
values as outlined by the National Council of Catholic Bishops' investment guidelines.
As
with AMM Praxis, Aquinas Funds seeks to tailor investments to individualized screens and risk
levels. Information is available at http://www.aquinasfunds.com
A newer arrival to the
faith-based investing community is the Noah Fund, founded in 1996 by William L.
Van Alen Jr. From a modest start-up of $100,000 the fund has grown to nearly $10 million as of
July, 2004. Like other conservative Christian investment portfolios, the fund eschews tobacco,
alcoholic beverage, pornography, gambling, and any business that supports abortion. Of its top five
holdings, four are tech stocks and the other is Wal-Mart.
Says Van Alen, "We realize that
simply because one has a strong moral value system, that shouldn't hinder one's potential financial
gain in the marketplace. However, be aware that these goals may not be achieved from a financial
standpoint."
Information available at http://www.noahfund.com
Considerably larger is
The Timothy Plan family of funds, which had its genesis in 1992 when founder and
president Arthur Ally sought a specialized retirement plan for pastors of independent churches.
When he applied the screens appropriate to a conservative Christian world-view he was frustrated by
the current SRI offerings, and considered them "fronts" for a "'New Age' agenda" in spite of their
usual screens for tobacco, alcohol and weapons. Ally and his team created the Timothy plan, so
named for Timothy 5:8 ("But if anyone does not provide for his own,... he has denied the faith and
is worse than an unbeliever.") and based on more ideologically conservative screening criteria. For
more information go to http://www.timothyplan.com
A non-Christian faith-based fund whose
investments may nevertheless look quite similar to those in the Timothy Plan and the Noah Fund is
Amana Mutual Funds Trust Growth Fund. With net assets of $32 million, Amana seeks
long-term capital growth consistent with Islamic, rather than Christian, ideology. The fund invests
at least 80 percent of assets in common stocks that management determines do not violate Islamic
religious principles at the time of investment. Businesses excluded include liquor, pornography,
and gambling, as well as any investments that pay interest. Pork products are also avoided.
Management selects securities based on expectation of increased earnings and share price; current
dividends are not a consideration. The fund may invest up to 10 percent of assets in foreign
securities not traded publicly in the United States. Their web site is http://www.amanafunds.com
The grandparent of faith-based investing is Thrivent Financial for
Lutherans, which began its life in the insurance business 102 years ago as the Aid
Association for Lutherans. "Luther Union" began in 1917 and became "Lutheran Brotherhood" in 1920.
Both evolved from insurance to broader investing, and in 2001 the two merged to become the biggest
fund of its type in the U.S., with assets of over $62 billion at the end of 2003.
Although
Thrivent funds now include the Calvert line of social investing funds, Thrivent's faith-based
direction emphasizes giving, volunteer programs, and direct community service. Grants are awarded
in such categories as Arts and Culture, Education and Youth, and Health and Human Services.
In 2002 Thrivent contributed $200 million in charitable outreach, while members volunteered
over 18 million hours of their time and service. Visit http://www.thrivent.com
for more
information.
Good Versus Evil in Mutual Funds
Writing for the
Motley Fool, Selena Maranjian recently compared results of the Noah Fund and the Timothy
Large/Mid-Cap Growth fund to those of the Vice Fund managed by Caroline Waxler, the author of
"Stocking Up on Sin: How to Crush the Market with Vice-Based Investing." The Vice Fund invests in
tobacco, gambling, and anything else the faith-based funds won't touch. Waxler claims that, at
least in the market place, the devil is winning.
Compared to the Vice Fund's 34 percent
return in 2003, Timothy and Noah, for example, earned 20 percent and 25.1 percent, respectively.
While 34 percent falls far short of "market crushing," it wins the game, - if the game is
only about the single bottom line of profit, which for Waxler it apparently is. Also, analysts
caution that these numbers are based on the short-term, and that both investment extremes have
their limitations.
But the Vice Fund makes me think of the parables referenced earlier.
There were good investments and bad investments, good fish and bad fish, and good seed sown upon
weeds; each was a metaphor for those who sought good or those who did evil (and sought those
"sordid gains"). The investment lesson seemed to be, repeatedly, that our talent capital was to
grow as a metaphor for faith itself, and that "sordidness" was to be discouraged.
Furthermore, the message was that financial growth and benign intentions were not mutually
exclusive and that those who forgot that, the cast-outs, would be wailing and gnashing their teeth,
either in this life or the next.
Faith-based and vice-based investors will just have to
wait to see whose teeth will be doing the gnashing. Fortunately for those of us whose investment
goals are more "long-term" (as in eternity), there are plenty of faith-based institutions waiting
to help balance our hearts and our investments.
Article written by Ted Ketcham, GreenMoney
Journal
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