Big Profits, Lost Soul?

In the book of Mark, this question is posed: “What does it profit a man to gain the whole world, and forfeit his soul?” (8:36 nasb). Through the effort to find solutions to address the issues that go along with this question, faith-based investing was born. This movement seeks to align a person’s faith, moral beliefs, and ultimately God’s Word with the investment community. When one invests according to his or her faith, it seems like the logical and holy thing to do.  Yet many are quick to find reasons why faith-based investing isn’t right for them.

After years of advancement, you would almost expect faith-based investing (which is also referred to as biblically responsible investing), would have been mainstream among the Christian community a long time ago.  After all, why wouldn’t you want to screen companies involved in immoral activities out of your investment portfolio? Yet, still today, many of the most influential Christian leaders fail to recognize the merits of faith-based investing.

Confusion between SRI and BRI

And many who consider what they are doing faith-based investing end up taking more of a social rather than a moral approach toward investing.  This is primarily due to the continued confusion pertaining to the difference between socially responsible investing (SRI) and faith-based investing or biblically responsible investing (BRI). While most faith-based investing advocates encourage socially responsible investing, their focus on “faith-based investing” looks more deeply at moral issues.  These moral decisions involve 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 that can cause damage to or are not conducive to preserving the environment may not be socially responsible, such activities are not intrinsically evil or immoral.

So Why Isn’t Faith-Based Investing Mainstream?

The biggest obstacle that has prevented faith-based investing from becoming mainstream comes from many questions about its practicality. Let us look at three major questions about the practicality of faith-based investing and provide you some food for thought.

Question # 1:  We all fall short of God’s Glory so why try to find faith-based investment options?

In other words, if we are all sinners, no company is ever pure.  While this is true – no company is entirely pure, there certainly are poor, good, and better choices.   For example, there are companies blatantly opposing Christian principles and values, there are companies taking a neutral stance on social and moral issues, and there are companies making a positive difference in our society. The choice is up to you.  You can avoid companies violating biblical principles and support ones making a positive difference or look the other way.

Another offshoot question also examines where we spend money.  If I can’t avoid supporting immoral companies when I make purchases why try when I invest?  Now this question is much more complicated but my response is that we should always try to avoid both -spending and investing money with companies involved in immoral activities.   I am then asked about the practicality of this.

While a company may be involved in immoral activities and it’s virtually impossible to avoid all of their products (think Microsoft), it is much easier to avoid their company’s stock.  Your responsibility is heavier as a shareholder of stock in a company as opposed to being a consumer and buying a company’s product. As a shareholder, do you want to profit at the expense of your principles?  Is this the type of company you are proud to own?

Question# 2: My ownership stake is so small does it really matter?

I often hear, “What about when I invest in mutual funds?” Many argue that investing via mutual funds avoids the need to know where you’re investing because you have delegated control.  Your investment dollars are often spread among hundreds or even thousands of companies.  How can small percentages in each really matter?

Even though you may own hundreds of companies many are still involved in immoral activities.  Just because you have small portions in each company does not relinquish your responsibility.  After all, you hired that fund family and manager to look after the money God entrusted to you.  To say it doesn’t matter to God is underestimating His response. I would believe based on His Word, He would care more about the source of your profits than the amount. He cares no matter how small. The Parable of Talents in Matthew 25:14-30 shows us this.

Question # 3: Won’t my returns suffer?

This is often the crux of the matter.  This lends itself to two issues:  One: will investing with my faith as the central theme cost me something?  Two: if it does, couldn’t God bless me in some other way?

The first issue looks at the human element: money!  Where our treasure is our hearts surely follow.  I have yet to meet someone who wasn’t concerned about the practicality of faith-based investing due to the preconceived notion that you would get less of a return.  This despite many studies show screening neither helps nor harms performance.  Numerous studies prove my point.  Great performance comes down to asset allocation, good stock selection, and knowing when to buy and sell.

The second issue looks at our faithfulness.  Faith-based investing is not about a legalistic set of rules.  It is about the desire to grow closer to God through our finances.   This is a main reason I never push faith-based investing on a potential clients.  It is truly between an investor and where the Holy Spirit is leading.   My job is point out the many faith-based investment options available, how we can screen out certain types of companies and screen in other types, and how we can assemble a portfolio to help a client achieve their dreams and goals.

Faith-Based investing though not always easy does require some time and effort on your part.  Like anything worthwhile in life, the more you put in the greater the potential benefit.  As I have seen firsthand the benefits of faith-based investing, I have yet to hear a question that has made me rethink the practicality of investing according to one’s faith!