Seven Key Areas
Faith-consistent use of assets:
Finance, investments and micro-finance
The first of the Seven Key Areas, Faith-Consistent Use of Assets, is a big one. Faiths are major stakeholders in the physical planet when it comes to land, buildings, forests and water – and that's before we get to health care, financial investments and microfinance, and purchasing power and consumption behaviours, all of which fall into this category. For that reason, we have split this section into several pages. Here we focus on finance and investments.
'We need to start to talk about money in ways that dethrone it and make it subject to human ethics and standards of love and decency'
Joel Soloman, author
Aligning faith values and finances
The world's religions are controllers of large amounts of wealth, mostly held on behalf of members. The assets of some religions run into the trillions of US dollars, and investments for many total several billion. These assets earn huge incomes, used to support the running of faith groups and places of worship and for charitable purposes. But with great wealth comes great responsibility – are faith groups investing in assets which reflect their values? Are they investing their funds in ways that support their ethical, social and environmental goals?
Questions to consider as you are developing your Faith Plan
The guide below provides prompts and pointers to help you identify what steps you can take to align your faith values and finance. You can also download a copy of the questions to work offline.
MANAGEMENT OF FINANCES and INVESTMENTS
First steps: Examine your financial assets (pensions, investments, endowments and other funds) and the policies which govern these investments.
1. Is there a clear and link between the core beliefs, values and teachings of your faith tradition and the way that you invest?
2. If you have a formal investment plan, is this reflected in your investment policies and guidelines (your sector, asset and geographical allocation, risk exposure, return objectives, liquidity requirement, impact and time horizon). In short, do you practice faith-consistent investing?
3. Have you clearly identified the positive ethical, social and environmental issues you want to support with your investments, and have you considered the long and short term consequences of your investment decisions?
4. Similarly, have you considered the consequences of your decisions to screen out certain investments? How might you counteract unintended negative (often societal) effects of avoiding certain types of investments (by sector, industry or asset class)?
Next steps: How have you documented your faith-consistent investing policy and the lessons learned?
1. Taking the previous questions together, have you documented your faith-consistent investing commitments in your investment policy and guidelines, or any similar documents agreed by your governing bodies? FaithInvest has produced some useful guides which can support this process.
2. Have you tracked the impact as well as the financial performance of your investment decisions?
What successes can you celebrate – whether financial or broader social, ethical or environmental successes?
3. What challenges have you learnt from?
4. What general principles can you share about the types of approaches and investments that worked well or poorly?
5. Have you considered directly investing in, or working to create, the kind of financial institutions that enable investment in positive social, economic and environmental change? For example, development finance institutions, or microfinance initiatives.
CONSULTANTS and SERVICE PROVIDERS
Examine the approach of the consultants, managers, custodians and other professional service providers who support you with your investments.
1. Have you considered the ethics and values of groups you employ to support you with your investments?
2. Are these advisors aware of, and familiar with, what faith-consistent investing means for your organisation? The FaithInvest member network is set up to facilitate sharing of this knowledge, through working group discussions and sharing of case studies. These groups also address the areas where there are gaps – and work together to help professional service providers to understand of and commit to providing different investment options which are consistent with the values and beliefs of different faiths.
3. Have you documented specific criteria that you apply to selecting advisors, and the reporting you require from these advisors to monitor the alignment of your investments?
GRANT GIVING & DAY-TO-DAY FINANCIAL MANAGEMENT
Examine your approach to grant giving, or giving which does not expect a market level of return.
1. Is there anything that you can learn from your approach to grant giving which can be translated into your approach to investments, eg links to faith beliefs, values and teachings?
2. Could you convert any grant-supported projects into more sustainable, and therefore investable, businesses?
Where there are challenges that can only be supported through giving grants, with no expectation of a financial return, have you examined how to make this giving as effective as possible (eg first loss capital, common good research and development)?
Examine your own day-to-day financial management.
3. Can you incorporate faith-consistent principles into the way you spend, identify suppliers, and use, manage, restore, reuse or recycle resources?
A sound investment: Women in the Ivory Coast benefit from Regmifa, an investment fund which makes loans for small businesses and is part-backed by the Cabrini Sisters
How a group of Catholic sisters decided to put their money to work for maximum impact
The Cabrini Sisters are active across the world, running schools, hospitals, social services, immigration services, and more in 17 countries across the Americas, Europe, Africa and Australia.
Two years ago, the Sisters – more formally known as the Missionary Sisters of the Sacred Heart of Jesus – decided to create an impact investing portfolio. This means investing in causes that ordinary investors would not. They expect a financial return, but they are prepared to wait – and the social impact of their investment is always the first thing to be considered.
The focus is on those who are forced to migrate due to poverty, climate change, lack of work, or discrimination. Beneficiaries include migrants to the US who have to pay legal fees (and who will get a state refund perhaps years down the line), and women in the Ivory Coast who use micro-loans to set up in business.