Christ’s Returns

"Among themselves the merchants have a common rule which is their chief maxim … I care nothing about my neighbor; so long as I have my profit and satisfy my greed, of what concern is it to me if it injures my neighbor in 10 ways at once? There you see how shamelessly this maxim flies squarely in the face not only of Christian love but also of natural law." —Martin Luther, 1524

Some 250 years after Martin Luther suggested that we are not only justified by faith but that it should permeate all areas of our lives, including enterprise, a young man in Mount Holly, New Jersey, opened a humble tailor shop.

Unlike other businessmen, John Woolman refused to purchase any cotton or dye supplies handled by slaves. His commitment to Christian love—with excellence, mind you—attracted customers in droves, despite occasions when he could only offer them beige sackcloth.

In 1759 Woolman convinced the Philadelphia Quakers to pass the first resolution in the American Colonies not to own, deal, or sell slaves. Why use God's blessings, he reasoned, to buy people captive to chains for personal profit?

Another two and a half centuries passed: summer 1997. My internship as a consultant in Santa Clara, California, had ended, and I picked up my last paycheck. How did I begin to employ the talents my Master entrusted to me? Well, I invested a portion of them just like everybody else—in a top-performing mutual fund mentioned in Money magazine. Highest return? Sign me up!

I cheerfully chanted the popular market mantra—one criterion, one conclusion—only recently pausing to ask: "What is a stock, anyway?"

Besides a fancy certificate or electronic symbol on ticker tape, a stock represents ownership shares in a corporation. You might be the sole proprietor of a lemonade stand, or one of 888,000 shareholders in McDonald's. As an owner, you participate in providing a product or service to people. Lemonade or Big Macs. You also become its promoter and profiteer.

I uncovered a disturbing reality. While the managers of many publicly traded corporations choose to grow by providing beneficial goods for society, others have decided that as long as they have their profits and satisfy their greed, they will sell products or services that appeal to weaknesses and addictions, and that ultimately harm others. Such companies include those profiting from abortion, pornography, tobacco, gambling, and sweatshops—and never mind if it injures my neighbor in 10 ways at once.

Some investors are anguished to learn that while mutual funds offer the diversification of owning many companies, some of these companies profit from people captive to chains. Upon closer inspection of my own mutual fund, I discovered that my Lord's money was partially invested in General Motors, which sells more hard-core sex videos (through its Hughes Electronics subsidiary, which owns DIRECTV) than Hustler Magazine Inc. each year.

If the Master angrily called the third servant "wicked and lazy" for merely burying his one talent (Matt. 25:24-30), what awaited me?

Master, with your money I purchased ownership shares in a company profiting from porn. Our company bought destitute women at a low price, for sale to addicted men at a higher price …

Sadness overcame me. Jesus promises freedom to the prisoners, liberty to the oppressed. How could I then use his talents to produce, promote, and profit from the chains?

A recent CT cover story (June 12, 2000) inquired, "How did evangelicals get so wealthy?" One accurate answer: the longest bull market run in U.S. history. Yet in our eager embrace of the stock market through the 1990s, many of us uncritically adopted its doctrine—high return is all that matters—and neglected to reflect on the moral implications.

Jesus warns that tithing our spices is insufficient if we remain blind to the more important matters of justice, mercy, and faithfulness (Matt. 23:23). Yet stewardship teaching in the church tends to begin and end with giving 10 percent. If God owns it all (Ps. 50:12), is he not intimately concerned with the other 90 percent? A full understanding of stewardship considers justice, mercy, and faithfulness in 100 percent of all that God has entrusted to us.

Bad Tree, Bad Fruit

Ethical investing—the thoughtful consideration of ethics and values in investment decisions—traces its American roots back to people of Christian faith, beginning with Woolman and other Quakers whose tender hearts for Jesus inspired careful attention to the source of their profits and wealth.

Today ethical investing is most often associated with portfolio screening, the inclusion of moral (nonfinancial) criteria when choosing investments. I can choose to avoid or "screen out" porn-subsidizer General Motors, because a portion of its profits is accumulated through the exploitation of others.

Too often, this valuable expression of faith and values has been overlooked, mistakenly earmarked only for barefoot, tie-dye-wearing tree-huggers. Yet the modern movement, more commonly identified as Socially Responsible Investing (SRI) has experienced phenomenal growth across all segments of investors and institutions. Universities (Harvard), nonprofit organizations (the American Medical Association), and public and private pension funds (TIA-CREFF) have all adopted at least one "screen" against an industry in their massive investments.

Very conservative estimates are that more than $1.49 trillion—or almost $1 of every $10—of the roughly $16.3 trillion under professional management in the United States is screened, most often for tobacco, gambling, and/or alcohol stocks.

Most evangelicals have slept through the SRI movement of the past 30 years (the first evangelical book on the subject wasn't published until 1990). We are now awakening from our slumber. Mildly concerned when corporate profit maximizing resulted in environmental pollution, we are startled to discover the same philosophy leading to moral and cultural pollution.

Some of the contaminants are obvious. In addition to pornography, a few corporations have identified ways of making money from abortions. Hospitals such as The Healthcare Co. perform the procedure for profit. And biotech firm Geron Corp. destroys the most defenseless in its unapologetic use of human em bryos for research.

Entertainment has also undergone a huge transformation over the last decade, with content moving from Cosby's "Father knows best" to Ally McBeal's "Now let's undress." Viacom (owner of MTV and Showtime), General Electric (owner of NBC), and other media conglomerates stand accused of promoting anti-theistic, morally destructive worldviews around the globe.

In response to these harmful corporate activities of the 1990s, "morally conservative" investors have emerged with Values-Based Investing (VBI) to distinguish the new "life-ethics" issues of abortion, pornography, and entertainment (though tobacco, gambling, and alcohol screens are also often included in VBI):

• Florida, 1988. Gary Moore started writing The Thoughtful Christian's Guide to Investing, the first book outlining a comprehensive scriptural basis for an evangelical embrace of ethical investing.

• Ohio, 1989. Tom Stohbar began identifying and documenting all U.S. publicly traded companies with operations in violation of life-ethics standards. Through his nonprofit Pro Vita Advisors, Stohbar offers his frequently updated list free to those who request it.

Conscientious evangelicals who obtain such lists can avoid investing in individual companies that violate their concerns. But what about mutual funds?

• Florida, 1992. Art Ally asked himself this very question while peering into the bathroom mirror to shave one morning. Such reflections inspired his 1994 launching of the Timothy Plan Small-Cap Value Fund, the first mutual fund "screened" for companies violating VBI concerns. (Small-cap means that the companies each have a market capitalization of under $1 billion; value signifies that they are considered undervalued relative to their true worth.)

• Pennsylvania, 1996. Bill Van Allen established the Noah Fund, the first large-cap growth fund for conservative investors, and the first to achieve significant recognition for its superb financial performance of 51.3 percent in 1998, and 30.6 percent in 1999. (Large-cap means that the companies each have a market capitalization of more than $5 billion; growth signifies their high earnings/growth potential.)

Today, 18 mutual funds screen for life-ethics concerns. Other resources exist as well.

Washington, 1997. Scott Fehrenbacher constructed eVALUEator and (in 1998) My Investigator, the first computer programs measuring the percentage of "sin stocks" in each of the mainstream mutual funds.

• Mississippi, 1998. Patrick Johnson founded the Values Investment Forum to research and assign numerical ratings to all U.S. corporations, as a more sophisticated resource for institutional investors.

Other notable Christians have discerned the ethical dimension in their investment decisions. After Beverly LaHaye hosted Fehrenbacher on her radio show and first learned of ethical investing, she immediately called her financial adviser. She learned that "20-28 cents of every dollar invested in Concerned Women of America retirement funds were in things we fight against." LaHaye did not hesitate to change funds.

Despite the incredible advance of information, options, and resources over the past decade, morally conservative investor response continues to lag.

More than $6.6 trillion is invested in 10,000-plus mainstream mutual funds managed solely with a profit maxim regardless of human cost. Investors have committed more than $154 billion to 175 traditional SRI funds. By contrast, a mere $90 million has been invested in the 18 VBI mutual funds with life-ethics screens.

Many Christians already sensitive to these issues meet with discouragement from financial advisers who brush their ethical concerns aside. Ironically, those financial advisers who deny, excuse, or protest ethical investing the most often understand the least—few have spent time honestly researching the topic. Some financial advisers even admit they simply "don't want the bother."

The Great Twinkie Defense

At the 1999 Christian Financial Planners Institute Annual Meeting, Rusty Leonard, former vice president of Templeton Investment Counsel, encountered this mindset while explaining his vision for an international/global VBI fund.

"Poo!" a nearby financial adviser scoffed. "If you abuse too much alcohol, that's bad for you. If you abuse too many Twinkies, that's bad for you too."

Such tart responses reflect an undeveloped understanding of ethical investing. The SRI community has successfully applied the practice for 30 years, over the usual objections:

Ethical investing will hurt financial performance. Academic research demonstrates that screening, or the exclusion of certain industries from stock portfolios, does not significantly affect financial returns.

"Nearly all empirical studies to date have concluded that firms which are perceived as having met socially responsible criteria have either outperformed the market or performed as well as other firms which are not (necessarily) socially responsible," report Moses Pava and Joshua Krausz in the Journal of Business Ethic.

These studies are consistent with financial economic theory as well as 10-plus years of historical evidence in SRI indices and mutual funds (see graph). Indeed, during the market downturn last year, the Timothy Large/Mid Cap Value Fund enjoyed a one year annual average gain of 18.88 percent as of June 30 (see chart, p. 80).

In 1999, the Social Investment Forum found that 70 percent of all ethical funds with assets exceeding $100 million were awarded top Morningstar, Lipper, and Wisenberger ratings. Last year, 88 percent of these funds received top financial performance marks despite the economic downturn.

"We did our own tests, and found that returns should not be hurt," says Kurt Knorr, director of investment research at Ronald Blue and Co., in a conversation with Christianity Today.

Evangelical financial advisers Ronald Blue and Austin Pryor acknowledge that screening does not harm financial performance, but they have discouraged ethical investing for other reasons. They declined an interview with Christianity Today, but referred CT to their assistants and/or publications to explain their views.

For example, a Ronald Blue & Co. form letter tells clients, "Christians cannot agree on [morally offensive] categories."

SRI proponents respond that Christians who invest in individual stocks can apply any screening criteria they choose. And in screened mutual funds they find stunning agreement—nearly all VBI funds consistently avoid investments in companies profiting from abortion, pornography, entertainment, tobacco, gambling, and alcohol, proponents say.

Only the "non-marriage lifestyle" screen—applied to companies offering domestic partner benefits—has elicited disagreement. Consumers decide; some VBI funds offer the screen, while others do not.

Knorr, of Ronald Blue & Co., makes another complaint typical of SRI detractors: "There are too many gray areas."

The argument has been made, however, that ethical gray areas are no more elusive than the financial gray areas in which investors have always operated. Every investment decision is based on a company's expected growth, anticipated earnings, and other estimated variables. Likewise, in the evaluation of corporate ethics, Christian investors must be willing to do the hard but rewarding work of estimating moral boundaries and anticipating potentially immoral outcomes.

Operating in a gray area didn't stop Leonard from concluding that excessive alcohol—not Twinkies—could result in drunken-driving deaths, college rapes, and child abuse by alcoholic parents.

Pryor, in his book Sound Mind Investing, makes another frequent objection: "Your investment … is absolutely insignificant." He argues that the earnings from problematic companies will only amount to pennies. Christian SRI advocates respond that this begs the question: Is this how much we're willing to earn to knowingly destroy the image of God (in abortion-related companies, for example)? And if we're only talking pennies here, what is the financial harm of avoiding such companies if other options exist?

In his book, Pryor also voices the common refrain, "It's impossible to be pure." But when God commands, "Do not share in the sins of others, keep yourself pure" (1 Tim. 5:22), he does not add, "unless it's impossible; then give up trying altogether." While Christians may never be 100 percent pure in a given area, the inability to achieve perfection has never excused us from an honest and enthusiastic pursuit.

Cheerios for Little David

Portfolio screening is the first and most crucial facet of faithful stewardship. Yet the triumph of the Christian life extends beyond mere sin avoidance; often God calls us out of isolation into the heart of Nineveh to do good (Jonah 1:2).

Shareholder action—the second facet of ethical investing—provides the rich opportunity to engage the most injurious corporations with the love of Christ. When we own individual stocks, exercising our shareowner rights—writing letters, voting proxies, and filing shareholder resolutions—can influence corporate leaders, companies, culture, and the world.

Case Study: In an October 1997 issue of The New Republic, Art Ally announced his personal 10-year boycott of Cheerios in opposition to corporate parent General Mills's contributions to abortion provider Planned Parenthood Federation of America (PPFA). While Ally was eating his Kellogg's Frosted Mini-Wheats, Michigan attorney Chip Kleinbrook decided to take further action.

Like Ally and other consumers, Kleinbrook could practice ethical spending by boycotting products and writing letters to the corporation, voicing disgruntlement over the PPFA contributions. But as a shareholder, Kleinbrook had a few other options.

He expressed his opinions by voting his proxy—an annual ballot in which all shareowners vote on issues of company concern. As a shareowner with at least $2,000 of General Mills stock for over a year, Kleinbrook decided to get feisty and file a shareholder resolution—adding his own proposition to the company ballot. He typed it up on his home computer: "Stop donating to PPFA."

Filing a shareholder resolution allowed Kleinbrook to respectfully salute the sidewalk picketers goodbye and step right into the heart of the corporation—the 1998 Annual Meeting. After enjoying a few different flavors of Cheerios and other tasty hors d'oeuvres, he stood at the podium before the quiet and attentive board of directors, executives, and managers and aired his views.

Kleinbrook's resolution received 3 percent support—significant enough for inclusion on the next year's ballot. Yet the board members were already contrite and, yes, a little embarrassed by the growing controversy Kleinbrook further publicized. Within three months they quietly changed their policy, and PPFA donations ended.

"What else is a little David to do," Kleinbrook says, smiling, "when seeking to influence a corporate Goliath?"

Tom Stohbar grins too. Through Pro Vita Advisors, he has been at the forefront of assisting folks like Kleinbrook in filing "life-ethics" shareholder resolutions. Stohbar and the advocacy group Life Decisions International have directed letters and resolutions to convince more than 70 companies—including AT&T and Target—to drop millions of dollars of PPFA contributions.

Additionally, almost 275 Catholic and mainline Protestant communities—connected through the Interfaith Center on Corporate Responsibility (ICCR)—have enjoyed success in shareholder action. In the 1970s and '80s, religious investors convinced many U.S. corporations to withdraw operations from South Africa, effectively pressuring the government to end apartheid without bloodshed. In the 1990s, shareholder advocacy applied to companies such as Coca-Cola, Nike, and Wal-Mart improved conditions in hundreds of factories throughout the Third World.

Multinational corporations continue to grow in world dominance and power—51 companies earn revenues whose equivalents in gross domestic product would rank them among the world's 100 largest economies. Few of these giants are politically or morally neutral. Whose values will they reflect? In Sudan, Christians continue to face horrific persecution by a militant Khartoum regime supported significantly by oil contracts with corporations like Talisman Energy of Canada, PetroChina, and Lundin Oil of Sweden, all traded on U.S. stock exchanges.

Some state and church institutions have divested these companies' shares. Others have considered effecting change through shareholder action. Yet most shareowners stand by unconcerned so long as they obtain their 12 percent returns.

The cries of the harvesters—in Sudan's deserts, Cambodia's sweatshops, and Sri Lanka's factories—reach the ears of the Lord (James 5:4). Those of us who own stocks hold the corporate ownership, and its power, in our own hands. And we decide. Thus some Christians are now fulfilling stewardship responsibilities by voting proxies (where ethical resolutions often appear) and performing other acts of engagement.

Plant a Mustard Seed

Creative investing—the third and final facet of ethical investing—entails seeking out investments that potentially provide a financial harvest and, by virtue of their benefit to others, eternal treasure.

When the Israelites heeded God's call to glean their fields (Deut. 24:19), they received a return on their initial seed investments and simultaneously served the poor. Modern examples of creative investing include:

Community banks and credit unions operate as full commercial banking institutions—featuring competitive rates and FDIC (Federal Deposit Insurance Corporation) or NCUSIF (National Credit Union Share Insurance Fund) insurance—with a special mission to serve the inner-city poor with loans to repair and develop their neighborhoods.

While South Shore Bank of Chicago is one of the most celebrated examples, the Evangelical Christian Credit Union is perhaps the most overlooked. Officially chartered in 1964, ECCU serves as a full commercial bank for Christians. With cash deposits from World Vision, Focus on the Family, and your Aunt Nelly, the Web-based ECCU lends up to $250 million annually to other evangelicals—with a 25 percent target for reaching inner-city ministries.

ECCU loans build churches and serve the poor; depositors can be certain they won't be funding abortion clinics.

Independent films by Christians like Mercy Streets, Intangible Joy, and In My Sleep provide unique investment opportunities. An investor accepts high risk but is entitled to a share of box-office receipts (if the film gets distribution) and retail video profits. Other perks can include royal treatment on the set, a role as an extra, a free T-shirt, and tickets to premiere parties. And if the film moves just one person to trust in Christ, the investment return is priceless.

Real-estate regeneration is well illustrated by Vision 16, a collaboration of Seattle businessmen who each purchased a rundown home near the University of Washington. They then rent the homes to local Christian students who live in community while ministering to the area's homeless and prostitutes. The investors receive rent checks, maintaining ideal mission sites for service and evangelism.

Social venture capital provides initial funding for start-up companies that earn a profit and bless society through the process of their operations.

One such company is Greenwood Resources, an environmentally sustainable logging company founded by Christian entrepreneurs who are committed to serving rural community needs.

An investor can provide private financing directly to such companies or through a diversified social venture capital (VC) fund with accreditation. Strategic Capital Group is the only social VC fund with an explicitly evangelical focus—to encourage and finance "Great Commission Companies" providing sustainable, value-added jobs, with strategic access to sharing the gospel in Third World countries. Micro-lending opportunities also provide small loans to assist the poor overseas.

Locating creative investments is not a matter of where to look as much as how to look. If numerous Krispy Kreme doughnut shops hire the underprivileged, the decision to invest in this company—while taking financial factors into consideration—glorifies God. In this form of positive portfolio screening, more evangelicals are considering the impact their investments have in the lives of others (1 Cor. 10:24). As they love their neighbors in this tangible way, they invest in eternity.

The Bottom Line

Adhering to the cultural adage "What you don't know won't hurt you," it is easy to hide from the truth. But we are beholden to Christ's disquieting reminder that everything in darkness shall be revealed in the light (Matt. 10:26).

So I looked. After a few moments online, I accessed a recent semiannual report and discovered that, in addition to General Motors, my Vanguard 500 Index Fund holds stock in other companies profiting from pornography (Hilton Hotels), objectionable entertainment (Disney), gambling (Harrah's Entertainment), and tobacco (Philip Morris).

To my greater despair, I found that I was also profiting from Pharmacia, a company producing the prostaglandins used in late-term abortions. Isaiah 1:13-15 came to mind: "Bring me no more vain offerings; incense is an abomination to me. … though you make many prayers, I will not listen; your hands are full of blood."

Even our generous giving may be in vain when we fail to consider the origins of our wealth.

Fortunately, there are alternatives, and though they require extra effort to discover, the effort seems worth the knowledge that I am not profiting at the expense of priceless souls.

Restored in the freedom of God's grace, we can seek to give our accounting: "Master, your money was multiplied many times over. In addition, I was a witness to your light in the world by providing beneficial products for my neighbor. I voted company proxies according to my conscience. And I helped build a church. … Your kingdom was extended in 10 ways at once!"

Mary Naber graduated cum laude from Harvard with a degree in economics and religion. She is a Crosswalk.com Money Channel columnist and national speaker on faith and finances.

Related Elsewhere

Also appearing on our site today:

How shall we then invest? | Practical steps toward building Kingdom equity.

Resources for Portfolio Screening:

• Pro Vita Advisors offers a free list of companies violating life-ethics VBI screens.
• My Investigator is a free online database with ethical research on corporations and mutual funds.
• eVALUEator has a database similar to My Investigator, sold to finanical advisers for $400 a year.
• MoneyAndValues.com gives free fund ethical reports if you agree to meet with a representative.
• Values Investment Forum is a leader in values-based investing research for institutional investors.
• American Values Investments are currently developing research on corporations with positive ethical behavior.
• Socrates is a leader in SRI research for institutional investors, by KLD & Co. Inc.
• Investor Responsibility Research Center is for institutional investors.

VBI Mutual Funds:

• Christian Stewardship Funds includes large-cap equity index, small-cap equity index, international equity, and bond index funds.
• Noah Fund is a large-cap growth fund.
• Shepherd Funds offers growth, small-cap, fixed-income, and international funds.
• Stewardship Partners includes international and global funds.
• Timothy Plan offers aggressive growth, large/mid-cap growth, small-cap values, large/mid-cap value, fised income, strategic growth, conservative growth, and money market funds.

Shareholder Action Resources:

• Pro Vita Advisors assists investors in the filing of life-ethics shareholder resolutions.
• Interfaith Center on Corporate Responsibility is an association of 275 Protestant, Roman Catholic, and Jewish institutional investors jointly advocating corporate ethical responsibility.
• Investor Responsibility Research Center provides research on corporate proxies for institutional investors.

Creative Investing Resources:

• Evangelical Christian Credit Union is a full-service commercial bank fulfilling unique evangelical needs.
• South Shore Bank of Chicago is the original community development bank.

Catholic Mutual Funds:

• Aquinas Funds offers growth, small-cap, fixed-income, and international funds.
• Ave Maria Catholic Values Fund offers small/mid/large-cap value fund.
• Catholic Values Investment Trust offers a large-cap growth fund.

Other Online Resources:

• Faithful Steward gives information and links (by Mary Nabor) to resources for all three facets of ethical investing.
• Values Investing has useful resources on VBI, provided by VIF.
• Social Invest is the official site of the Social Investment Forum, a nonprofit devoted
• Social Funds is the leader in up-to-date research and reporting on SRI.
• Responsible Shopper identifies corporations by their products. Also offers free SRI ethical reports.

Crosswalk.com's Money channel offers many resources for values-based investing.

Christianity Today's Weblogearlier noted corporate America's increasing involvement in pornography(exposed in a New York Times article) and the coalition of religious investors who are fighting AT&T.

Recent media coverage of socially responsible investing includes:

'Strive for more sustainable growth'— The New Straits Times Press (September 12, 2001)

Personal faith a growth factor in investing — Chicago Tribune (Sept. 9, 2001)

Putting Their Faith in Investment Choices — Los Angeles Times (Aug. 30, 2001)

Survey: Religion Affects Investing — Associated Press (Aug. 29, 2001)

Previous Christianity Todaystories about ethical investing include:

Ma Bell, Madam | Socially responsive investors question AT&T's trafficking in hardcore smut. (March 21, 2001)

Is the Stock Market Good Stewardship? | I see more of our Christian brothers investing in the market. Is this a healthy trend? (Nov. 1, 2000)

Pious Profits? | Socially responsible' investing grows popular. (Sept. 6, 1999)

Disney Boycott Gathers Steam | Organization holds rallies, asks people to dump their stock in Disney companies. (Oct. 6, 1997)

Holding Corporate America Accountable | Christians press for greater responsibility from businesses. (Oct. 28, 1996)

See our Money & Businessarea for recent Christianity Todaycoverage of ethical investing issues.