There is continued confusion pertaining to the difference between socially responsible investing and faith-based investing. Faith-based investing is a form of investing that avoids companies whose activities are intrinsically evil, meaning the activities are always immoral, regardless of the circumstances or culture, as revealed by God through time. For example, abortion, the murdering of the innocent, is always wrong and immoral even if it is legally permissible within a society.
“Socially responsible investing,” on the other hand, is investing that avoids companies whose activities are not considered socially responsible and tends to correlate the important issues of a time period or a current fad. For example, though certain activities such as a company’s environmental footprint may not be socially responsible, such activities are not intrinsically evil or immoral. These standards can change and certainly do change over time.
One Question Changed It All
I remember these words from one of my clients like it was yesterday: “Can I expect God to bless my investments if I am investing in companies that violate His principles?”
Wow! I never contemplated a question like this. I’m paid to provide financial advice and improve the financial lives of my clients. Such a powerful question had never been posed to me. Here was a Christian woman asking if she could expect God to bless her investments (401[k], stocks, and mutual funds) if she was investing in the abortion industry or pornography companies. This question challenged and convicted me. I’d never thought about this in regard to my personal finances, let alone those of my clients. I felt like a deer caught in the headlights.
My education and industry experience never prepared me for this question. Today, with confidence, I can not only answer this question, but I also help individuals develop a financial plan based on integrating their faith into their investments.
Most Americans agree that both principles and values should come before any financial profits. If you, too, agree, then would it not be logical to assume that your investments ought to reflect the principles that you hold important in your daily life? This fundamental concept can be hard to follow in today’s society when it appears that so many of America’s most admired companies often put profits before principles. Stories of greed, selfishness, and corruption fill our TVs, radios, and newspapers and can pollute our perception of corporate America. For every bad story, there are also numerous good ones; you just have to be willing to look for them.
Many corporate leaders are faced with decisions in which values and profit collide. This is why it is valuable for you, the investor, to set your priorities. Let your principles and values guide you in accomplishing this task. To start, ask yourself this important question: Would I abandon my principles in favor of choosing a path of profit? Think long and hard about that very question.
There are many areas we can screen out:
- Abortion and embryonic stem cell research
- Pornography and explicit entertainment
- Human rights violations
- Addictive vices like alcohol, tobacco, and gambling
- Promotion and lobbying for anti-biblical lifestyles
- On and on…
Jesus taught, “He who is faithful in a very little thing is faithful also in much, and he who is unrighteous in a little thing is unrighteous also in much. If therefore you have not been faithful in the use of unrighteous riches, who will entrust the true riches to you?” (Luke 16:11). We have the opportunity to examine how and where we are investing God’s money.
We make conscious decisions each day and vote with our time and money. Such choices include, but are not limited to: where we work, where we spend our income, what charities and ministries we support, and where we invest our savings.
As a Christian, think about this:
Work: Most Christians wouldn’t work at an abortion clinic if they are pro-life.
Spending: Most Christians wouldn’t purchase pornography.
Giving: Most Christians wouldn’t donate money to homosexual lobbyists or fund embryonic stem cell research.
Investing: Yet when it comes to investing, many Christians do not even consider where they are investing. Millions are unknowingly investing in mutual funds and stocks that violate their faith and values. Many are shocked when they discover what is lurking in their investment portfolios – 401Ks, IRAs, brokerage accounts, and mutual funds.
You may be thinking, Well I’m not directly investing in these companies, so what difference does it really make? After all, the companies that I own in my portfolio don’t really benefit much from an increase in stock prices. Or do they?
There really is power in your choices. Money is a form of power. If you want to change the world, start with your actions. You have the ability to create change. Stock prices are affected by supply and demand. Supply represents the number of outstanding shares that a company has in the marketplace. Demand is represented by the number of investors willing to pay for the stock of a company.
Typical CEO and executive bonuses are tied to stock performance. Boards of directors and key shareholders care what the price of their company stock is. Employees who may have stock options and company stock in their 401(k)s care about the share price.
Bottom line: Typical executives, employees, board members, and key shareholders are affected by the increase or decrease of a company’s stock price. If you want to change a company’s behaviors, affect them where it really hurts: their stock price. It is virtually impossible to boycott every product a company manufactures; however, it is easy to avoid buying a company’s stock. If millions of like-minded investors rallied together to do the same, you could not only affect Wall Street, you could change the direction of this country.
Reformation in America is more likely to happen through Wall Street than through the White House. Lobbying can be effective, but changing corporate America is the key! Corporations will listen when Americans begin avoiding their company stock because of immoral activities. Case in point, I was listening to the radio this morning and heard a news report that a major pornographic distributor reported significant losses for their net earnings report due to a 30 percent drop in advertising revenues. If investors avoid buying a company because they advertise in a porn magazine, that corporation will evaluate their advertising practices. This can hurt a company where it really matters: their wallet!
Now, we as faith-based investors, not only seek to avoid companies blatantly violating biblical principles, but we also seek to invest in companies improving society. As Christians, we should want to be known for what we stand for, not just what we stand against. We also seek to find companies making a difference in the world around us: companies protecting the sanctity of human life, those protecting the poor and defenseless, those helping create life-changing and life-preserving technologies. The list goes on and on. We seek to avoid the bad companies and support the good. That’s what it means to be a faith-based investor!