Faith-Driven Investing By Winters Richwine

Join the Faith-Driven Investing Movement

It is an exciting time in the faith-driven investing movement. In recent years, more options have become available, and investors increasingly seek to align their finances with their values and beliefs.

Three Key Components

While a faith-driven approach has likely been a practice for millennia, many credit John Wesley’s 1759 sermon “The Use of Money” as a landmark in the movement.  Today, this approach focuses on a three-part framework:

• Avoid: This element can be based on Proverbs 16:8 (WYC), which states, “Better is a little with rightfulness, than many fruits with wickedness.”  Negative screening is the most longstanding form of faith-driven investing and seeks to exclude investments connected to activities such as alcohol, tobacco, gambling, pornography, and abortion. 
• Embrace: More recently, faith-driven investing has emphasized redemptive activities more. Human flourishing is a key consideration. The embrace component seeks out companies with products, services, and business practices that benefit people and the environment or seek justice.
• Engage: The third piece centers on the view that capital provides influence. A significant investment in a company may facilitate a meeting with its management. Additionally, share ownership allows for votes in shareholder initiatives that shape a company’s operations.

Special Considerations

Faith-driven investing is a key decision based on a key investment philosophy that impacts an organization’s investment assets. This approach supports the alignment of an organization’s actions with its mission. It can represent another tool in a development team’s toolkit, as like-minded donors may be more willing to support the organization financially. It may also reduce the potential for a negative headline from an objectionable holding.

Conversely, this approach may create some challenges.  One challenge is cost.  Sometimes, a faith-driven investment product is not among the lowest-expense options in its category.  The second potential challenge is product availability.  With these strategies representing a small portion of the overall financial markets, this subset is still not expansive.  Thankfully, both items are becoming less significant as potential concerns.

How to Utilize It

As mentioned earlier, participating in faith-driven investing is easier than ever. Public market investment products are widely available on most major custodian platforms, and access is available to both large and small investors.

While some funds may describe themselves as socially responsible or ESG (Environmental, Social, & Governance) focused, these investment themes do not necessarily align with a Christian worldview. The safest approach is to seek out Christian asset managers and/or investment advisors.

Mutual funds and exchange-traded funds can be easily purchased for smaller investors. Separately managed accounts (SMAs), direct indexing accounts, and private market investments (e.g., venture capital, private equity, and private real estate) are also available for accredited investors and qualified purchasers with higher capital levels.

Conclusion

Ministries are increasingly adopting faith-driven investing.  Christian investment firms are continuing to expand and offer new options to investors.  If your organization has not considered pursuing this approach, now is an excellent time!

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Winters Richwine, CFA, CPA, is a Principal and Chief Operating Officer at Cornerstone Management.  Cornerstone Management is an investment advisory and planned gift administration firm with a mission of preserving, growing, and distributing the assets entrusted to the Christian nonprofit community.

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