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be agent of change

Faith investing can
be agent of change

For John Best, tying money management to religious or philosophical values has always made sense. While he is not overtly religious or “Boy Scoutish” in business, he says, he operates from a “deep, abiding belief in the goodness of fellow people” and in the integrity of the American free-enterprise system.
Pamela Klainer believes that the perceived economic scarcity of the 1990s is driving the religious and business communities to set aside their ideological differences and, as management expert Peter Drucker has suggested, collaborate on projects that will benefit both.
“People used to think they could work only with those who agreed with them,” says Klainer, whose careers have included educator, financial planner, business consultant and writer. “Now churches and businesses are saying, “Is there a piece where our missions overlap, where we can work together while respecting our differences?”’
Klainer will test that theory Feb. 1 and 2 with a conference she is planning at the Colgate Rochester Divinity School titled “Money Management for People of Faith.” The conference will bring together people from diverse spiritual and professional paths to talk about linking resource decisions to a larger sense of meaning. Topics will include “Effective and Ethical Fundraising,” “Making Peace With Money” and “Stewardship of Human Resources.”
The conference will include members of Rochester’s financial, grant-making, religious and private-philanthropic communities. It will be followed by a yearlong series of courses in stewardship studies at the Divinity School.
Klainer is managing partner of a consulting firm, WorkPlay LLC, which aims to help transform workers into adult learners, workplaces into learning communities and institutions into collaborative partnerships. Her decision to organize the conference grew out of the observation that churches and synagogues have long been centers for social action, and that how effectively a congregation translates faith into action depends upon its ability to make good resource decisions.
While some, like Lowry’s father, say faith and money mix as well as oil and water, Klainer believes that pulling the two together is vital to achieving solid goals.
“Social change requires money,” she says. “And there are skills associated with money.”
Indeed, the diversity of views gathered for this story indicates that the faith/ money mixture is ripe for exploration.
Among the conference presenters will be Best, a Certified Financial Planner and principal of Best Times Financial Planning who ties his business and investment decisions to faith issues– faith in other people, faith in free enterprise and faith in a higher being.
He sees the conference as an “unusual opportunity for the community to highlight the connection” between money and beliefs. In today’s complex world, people are vulnerable, he says; to live a peaceful and fulfilled life, one must rely to a certain degree on faith. At the same time, attention to the skills of investing remains essential.
Best offers his clients 14 years of experience in financial planning and a string of credentials. Yet he says they also appreciate the spiritual orientation he brings to his work.
“If we led our lives (based only on skepticism), we would be empty, fearful, anxious and without peace,” Best says. “Faith releases one from the chains of guarantees.” In line with that philosophy, his conference topic will be: “There is No Such Thing As a Risk-Free Investment.”
People often turn to a money manager to help them manage their fear of risk, he says, to tap into the adviser’s belief in and experience with the system.
Best says some religious organizations are just beginning to realize that to get the most mileage out of their resources, they need endowment funds and professional money management.
Other money managers echo the importance of that niche.
Robert Wayland-Smith, vice president and manager of the upstate trust and investment division of Chase Manhattan Bank N.A., includes the spectrum of non-profit organizations. He sees participating in the conference as an opportunity to provide investment alternatives to a community that often is not well- served and faces special limitations, but that controls large pools of resources.
“It’s difficult to manage investments effectively when decisions are made by large groups (of volunteers) who meet irregularly,” he says. “In investing, timing is critical.” A professional can address those issues, as well as tailor an organization’s investments to reflect its values.
Targeting religious organizations is among the strategies of Chris Cappon, a fee-only registered investment adviser in Henrietta and principal of Socially- Responsible Portfolios. Many of those who might invest based on religious beliefs may not even be aware of the funds available to them, Cappon says, perhaps because those funds are fairly new and do little or no advertising.
The Timothy Plan, for instance, is a Christian fund that invests only in organizations with no connections to abortion, pornography, tobacco, alcohol or gambling. Two Amana funds use an Islamic screen that includes no interest-paying investments.
Cappon also cites the 2-year-old Aquinas Fund, which caters to Catholics.
Addressing the concerns of religious organizations provides rich opportunities for professional money managers. According to the Boston-based Social Investment Forum and Business Ethics magazine, religious organizations accounted for 30 percent of the $639 billion invested in formal socially responsible funds in 1994 through major investment houses. That represents nearly $200 billion.
“Religious groups have played the most important role in socially responsible investing historically,” says Boston College’s Lowry. “The “sin screen’ (prohibitions on investments supporting alcohol, tobacco or gambling) has been around for a century and has been used by universities and churches. Quakers and Methodists started the Pax World Fund back in the 1970s.”
In an advertisement in Business Ethics, Pax World reports an average annual rate of return over the last decade of 9.97 percent. The Parnassus Fund, another leader in social responsibility, returned 14.35 percent annually from June 1985 to June 1995. Over the same period, the S&P 500 returned an average 14.62 percent.
Long before such figures were available, Lowry was conducting his own experiment with socially responsible investing. Left with an inheritance in the late 1970s, he invested part in traditional stocks, and part in stocks that met criteria set by his wife: pro-environment, pro-woman and anti-war. After a few years, he saw his wife’s returns far outpacing the traditional approach he had taken with the other money.
In 1982, he began publishing his newsletter, Good Money, to track the performance of other SR funds. Based in Worcester, Vt., Lowry’s firm also publishes Good Money’s Social Funds Guide: An Investor Guide to Environmentally & Socially Screened Mutual Funds.
Since the early 1980s, Lowry says, the number of socially screened funds available to the public has grown from five to 60.
Still, despite that growth and the performance of funds such as Parnassus, he says, Wall Street tends to ignore social responsibility as a legitimate investment strategy. That is an improvement, however, over the investment community’s earlier view of SRI as a fiscally foolish fad for “left-wing flakes,” Lowry says.
That softening, he says, is the result of investors’ discovery “that you can make a difference, change something and make money at the same time,” Lowry says. He cites the impact of investor boycotts on tobacco companies.
SRI advocates point out that companies that do right by the environment, their employees and their communities are less likely to be sued or run afoul of government regulations; therefore, they represent excellent long-term risks. Also important is the maturation of the SRI industry, and the growing skills and sophistication of its fund managers.
What Lowry also sees as new is the broadening of the term socially responsible, which now includes both religious screens and causes of “the old PC crowd”: Vietnam War and apartheid opposition, environmental efforts and women’s rights.
“Early (SR) activity was not recognized by religious groups,” Lowry says. At the same time, he contends, early SR advocates–with their opposition to “politically incorrect” issues such as abortion and pornography in investment screens–were too exclusionary and preachy.
“Our job is not to preach,” Lowry says. “Not everyone has the same values. (Tailored investments are available) for all kinds of people with all kinds of values.”
(Rose Ericson is a Rochester-area free-lance writer.)

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