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Camels, Cash and Kingdom Investments

A growing number of Christians are trying to match their investments and spending to their beliefs. It could be to avoid support for tobacco companies. It could be to help protect human rights. Or it could be about knowing how the people who picked the coffee are treated. Whatever the concern, there is burgeoning interest in ensuring that one's investments and purchases reflect one's values. Christians have long pondered the meaning of Christ's words that "it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God"(Matthew 19:24).

Now many of Christ's followers want faith to go well beyond giving to church and charity, or even supporting a boycott or writing a letter. If money talks, Christians are looking for ways to pronounce with their investments and to make their dollars eloquent. So far there are few answers for Christians who want to know how mutual fund companies or coffee producers measure up against Christian principles.

"It would help a great deal if there were more clear choices that Christians could invest in and be assured that their money is doing good for others," said Henry Eygenraam, executive director of Christian Stewardship Services, based in Markham, Ont. On behalf of 35 Christian charities, Eygenraam travels across Canada as a specialist in stewardship, planned giving and financial and estate planning.

His desire is shared by an increasing number of evangelical Christians. Having learned to make careful choices about charitable giving, some Christians are now asking pointed questions about their investments and even about the groceries they buy. Naming Christ—good ethics or good business?

New businesses that call themselves "Christian" advertise regularly to the Christian community. But Christians should always exercise caution before buying, financial advisors warn.

Scandals involving televangelists and fraudulent investment schemes marketed to Christians have made some people more cautious, but other Christians continue to make the mistake of "suspending their decision-making process when they hear that some product is supposedly Christian," says Henry Eygenraam, director of Christian Stewardship Services in Markham, Ont. "Just because an investment counsellor claims to be Christian or just because they go to your church doesn't mean they are necessarily competent," he warns.

Eygenraam says he is even more diligent when someone approaches him and wants to sell him something with a Christian label, than he is with other products.

"Some of the companies that profess to be Christian can be the worst offenders … "

"I may go to a restaurant that I hear is run by Christians, but if the food and service are lousy, I won't go back," he says. A cross on the letterhead doesn't mean you can assume anything," agrees Roland Van Andel, an investment planner for Fortress Equity Management in Dundas, Ont. "Some of the companies that profess to be Christian can be the worst offenders. We [at Fortress] don't mind being open that we're Christian, but it doesn't necessarily make me a better planner. People should always get a second opinion about financial advice at first, until they know an advisor well." —BF

Mutual Funds with "Christian" Values

One option soon to be available to Canadians is "Christian" mutual funds. In the United States, more than 30 mutual funds that claim to make investment decisions based in part on religious values have been instituted in the United States in the last five years. The funds are identified as Lutheran, Roman Catholic, Mennonite, evangelical, Islamic and Christian Scientist.

These funds hold more than $9.2 billion U.S. in assets, according to the November issue of Money magazine. The Mennonite funds, begun five years ago by Mennonite Mutual Aid (MMA) of Goshen, Ind., now total more than $200 million U.S.MMA Praxis funds are expected to become available to Canadian investors next year. That would make them the first self-declared, religious-values funds in Canada.

Since one in every three Canadian households have invested money in mutual funds, these funds may appeal to many Christians. MMA managers do not invest in companies that:

1) involve more than five percent of their business in the military sector;

2) participate in the abortion, tobacco or gambling industries;

3) have been fined for pollution emissions or have poor environmental practices;

4) have a history of treating their workers unfairly;

5) produce violent entertainment. Walt Disney Co. is excluded, for example, because of subsidiaries that produce films with content considered too violent.

"We admit these aren't all black and white decisions, but we do our best to be faithful within an always changing, complex and often ambiguous world," said John Liechty, president of MMA. Liechty distances his funds from others operated according to the agenda of the "religious right."

American funds such as the Timothy Plan based in Winter Park, Fla. refuse to invest in companies that offer same-sex health benefits to employees, advertise in pornographic media, or donate to Planned Parenthood.

Though Praxis fund managers believe that the Bible forbids homosexual behaviour, they don't screen for companies which offer same-sex benefits, which they say is a human rights issue. "We seek to do more than merely screen out 'sin stocks,'" Liechty said. MMA fund managers look to invest in companies that support social and physical health, such as producers of food, medicine, water purification systems, housing and health care.

Stop Unethical Investing

Walter Bergen of Abbotsford, B.C. says a Mennonite fund in Canada would help mitigate an existing incongruity. "Mennonites who oppose smoking, alcohol abuse and gambling unknowingly invest in companies which profit from these activities," because their employers' pension plans in-vest in the wrong companies.

"It's unconscionable. In our ignorance, we profit. This needs to change," wrote Bergen, in a letter published in Canadian Mennonite in March. "Ethical investing is not a magic solution for the world's problems, but it is a responsible step to lining up our investing with our values," wrote Bergen, resource development director of Mennonite Central Committee of British Columbia. In a letter of response, Mark Weber of Waterloo, Ont., announced that discussions about bringing the MMA Praxis funds to Canada had already started. Weber is member relations manager at the Mennonite Savings and Credit Union, an Ontario credit union with six branches that wants to be among the institutions that sell the Mennonite funds to Canadians.

Several Mennonite groups are now preparing a business plan for a Canadian Mennonite fund as a result of a meeting held in Winnipeg Oct. 8-9, at which the credit union presented research of the Canadian market.

Mennonite church bodies do not want to be owners of the fund, but have agreed to offer advice when requested." When I speak in churches about ethical investing … people come up to me and say they never realized their investments could be in some sense contradicting their beliefs," said Weber. Many Christians mistakenly assume that money decisions are value-neutral, he says.

Canada already has 14 funds that claim to screen their investments based on a set of ethical values, mostly environmental ones. The United States has 114 such funds, plus some 30 self-declared religious ones. Screened funds make up only one percent of the Canadian mutual fund market, but they are among the fastest growing funds. Investing with a conscience does not mean decreased returns, says Weber.

Socially responsible companies avoid court cases and do better over the long term …

Socially responsible companies avoid court cases and do better over the long term, he says. The Domini 400 Social Index of socially responsible American corporations shows a higher five-year return than the Standard and Poor's 500 Index, which measures returns for a range of corporations. Among the positive public relations, screened funds recently faced strong criticism.

In March the Vancouver Sun pointed out that Ethical Funds Inc., based in Vancouver, was investing in three companies that either owned tobacco, supplied products to the military or had a major pollution spill at an overseas gold mine. In July

This magazine pointed out that Ethical also invested in Disney and Columbia/HCA Healthcare, both of which have made a recent top-10 list for worst corporations. The list, compiled by Ralph Nader, a consumer advocate in the United States, cited Disney in 1996 for its $1 per day pay rate to third-world employees, and Columbia in 1997 for "cutting costs, slashing staff and putting profits before patients." This also complains that screening currently lacks any industry-wide standards, uses vague definitions and often follows a best-of-sector approach.

This approach means that most ethical funds invest in the "most responsible" banks and natural resource companies, even if no company in those sectors has exemplary behaviour. Pressuring for Improvements As funds grow in size, they gain clout with the companies they invest in. MMA Praxis managers try to use that clout to force improvements in certain business practices.

For example, last year they met with officials at Johnson & Johnson about the wages of employees in Mexico. MMA also sponsors shareholder resolutions, which are non-binding votes intended to show company managers how widely held an opinion is among shareholders.

Last year, it co-sponsored resolutions at Hewlett Packard and other companies about environmental reporting, human rights standards and sweatshop monitoring. "Companies always use the excuse, when they make decisions that hurt somebody, that they have to do it because shareholders demand the most money possible for their investments.

But Christians who become shareholders can speak out to say that the bottom line is not the only way they judge the success of their investments," said Harry Kitts, executive director of Citizens for Public Justice, a national Christian advocacy group based in Toronto. "Calling companies to account for their business practices is definitely something Christians should be involved in as a matter of doing justice," agreed Daniel Gennarelli of Toronto, coordinator of the Taskforce on Churches and Corporate Responsibility.

The task force represents many of the denominations that compose the Canadian Council of Churches, including United, Presbyterian, Evangelical Lutheran and Anglican. The task force, known as TCCR and pronounced "ticker" as in "stock ticker," uses church pension-fund holdings to press for high business standards. For example, it has pushed several companies to start making annual environmental reports to shareholders, and called banks to improve access to services for low-income Canadians.

TCCR distributes Principles for Global Corporate Responsibility: Bench Marks for Measuring Business Performance, a document that outlines codes of conduct for good corporate citizens. Counterpart church groups in the United Kingdom and the United States are distributing the same document. "TCCR used corporate pressure to help reduce racial injustice in South Africa," said Eugene Ellmen of Toronto, author of The 1998 Canadian Ethical Money Guide:The best mutual funds and stocks for ethical investors (Lorimer, 1997). In the 1960s and 1970s apartheid era in South Africa, TCCR members purchased shares in Alcan, Massey Ferguson and other Canadian companies that had operations in that country. Then they attended shareholder meetings and called the businesses to withdraw from the country. "That pressure, which mounted around the world, helped force the end of the apartheid system," said Ellmen.

Rising Interest

Ellmen is a founding member of the national Social Investment Organization, a non-profit network based in Toronto that researches and publishes material on ethical investing, social investment and corporate "social performance" issues. It is involved in a conference on human rights and ethical business practices, Jan. 11-12 at the Westin Harbour Castle in Toronto.

Pries thinks that many evangelicals haven't had to think about stewardly investing until recently …

The conference, together with an increasing number of books such as Shopping with a Conscience:The informed shopper's guide to retailers, suppliers, and service providers in Canada (Ethics can, 1994), shows that Christians are not alone in wanting to practise ethical buying and investing. Interest in ethical investing among Christians is so new that most churches still have not discussed lining up personal investments and church retirement funds with Christian principles, says Gerhard Pries of Winnipeg. Pries thinks that many evangelicals haven't had to think about stewardly investing until recently "because most of us are immigrants without much in the way of inherited wealth—we haven't had the capital to invest. Christians often tell me they've never thought about putting their savings to use for the good of their community," Pries added.

He argues that Christians should always think: How will my use of money affect those I live with? "Part of the Bible's call to 'do justice' means working for the good of communities we are a part of—including family, church, city and beyond," said Pries. Investing for Community Development Pries directs one of only two "alternative," global Christian funds open to Canadian investors.

Alternative funds make it their aim to support poor entrepreneurs in foreign countries at the expense of a competitive rate of financial return. Pries runs his alternative $3 million fund for the Mennonite Economic Development Associates (MEDA). The Global Investment Fund focuses on providing small loans to poor entrepreneurs overseas, and currently brings a 3.5 percent rate of return. In February the fund began the lengthy, expensive process of registering with provincial securities commissions so that it can be marketed to private investors.

Until recently the fund was a MEDA-owned program with few public investors, although some mutual funds, church groups, corporations and individuals now invest in the fund, says Pries. "The star performer in our portfolio was CHISPA, the MEDA-created micro-credit institution in Nicaragua," declares the fund's annual report. It explains the mandate of the fund with the following slogan: "Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime. Give a man a loan and he'll open a seafood restaurant."

A similar fund is operated by the Ecumenical Development Cooperative Society (EDCS), a Netherlands-based group which has a Canadian chapter based in Hamilton, Ont.

The EDCS fund earns a two percent annual return, according to a Globe & Mail article in April. But knowing that the money is used to help poor women in Peru and Senegal start small businesses is another kind of reward, investors say.Liechty, the head of MMA, says his funds also recently began such "community development investing" in poor, inner-city community businesses here in North America.

A successful Canadian proponent of such practices is the Canadian Alternative Investment Cooperative (CAIC), formed in Toronto in 1983 by a number of Roman Catholic religious communities, which wanted to pool their resources to support positive social change. CAIC has since grown to 50 members—only registered Canadian charities may join—with a lending pool of $4.75 million. CAIC uses the fund to invest in youth and women's shelters, daycare and job training centres, co-ops, street missions and the like across Canada.

Beware Marketing, Dealer Warns Funds that market themselves as "ethical" bother Tom Caldwell, president and CEO of Caldwell Securities Ltd., a mid-size investment dealer based in Toronto. "When they call themselves 'ethical,' that implies all other funds are unethical," says Caldwell. "That's just not true." Most fund managers are highly principled and avoid unethical investing, he says.

Evangelicals should be aware that self-declared "ethical" funds tend to apply a politically leftist set of ethical standards …

Evangelicals should be aware that self-declared "ethical" funds tend to apply a politically leftist set of ethical standards which can conflict with what conservative Christians consider ethical, says Caldwell. Caldwell advises that any fund intending to market itself, as a Christian fund should be careful not to imply that other funds are un-Christian. Caldwell says that he, his partners and a "good chunk" of his employees are Christians, who run an "ethical and honourable business."

Funds that trumpet their screening procedures are nothing special, he adds. All funds use a set of standards when making investment decisions. Investors should also think twice about accepting criticism of companies that have laid off employees or dramatically cut costs. "Those companies aren't necessarily unethical—it can also be a matter of getting rid of dead wood and restoring new life and efficiency," he said. As for community development investing, Caldwell is sceptical of the effectiveness of mixing charity and investing. He says it's better to do charity by making donations to worthy organizations, and to keep investments focused on making a good return so one has more money to give away.

Faith Begins to Smell the Coffee

Christians are also asking the same questions about their day-to-day spending: what values are held by the company that produced the product? In fact the question is widespread as a result of the rising awareness of the plight of many workers in third-World countries producing food and goods for western consumption. Consumers have begun to research their choices, whether for coffee or running shoes.

The non-profit Ten Thousand Villages chain, which has 38 stores in Canada, sells imported coffee, jewellery, baskets, wicker work and Christmas decorations from co-operatives that pay a living wage to their third-world labourers, and rugs that are certified to be made without using forced child labour.

The stores, formerly known as Self-help Crafts, are the product of a 50-year-old program of Mennonite Central Committee (MCC), the service, relief and development agency of Mennonite and Brethren in Christ churches in North America, explained Doug Dirks, director of the stores' Canadian operations, from their warehouse headquarters in New Hamburg, Ont. Dirks, who lived in Bangladesh for three years, said he knows people who once were beggars who now earn a basic income by producing handicrafts for the stores. The workers—more than 10,000 in 35 different poor countries—cannot earn a living selling such products in their own countries because few people there have spending money, he explains. "We try to negotiate the prices so that workers can earn enough to have food and shelter, basic health care and schooling for their children," said Dirks. "And in North America we make sure that we tell the story of the various artisans behind the products." About $1,600 in retail sales provides a year of full-time work for a third-world artisan. Christians who "have the world's goods and see their brothers in need" are called to show "love, not in word or speech but in deed," he said, quoting 1 John 4:18-19.

The stores, often run by volunteers, reach well beyond the Christian community, since many of the overseas workers and North American customers are not Christians, says Dirks. Ten Thousand Villages often works with a secular fair-trade organization called Bridgehead, based in Ottawa. The two groups sometimes order from the same suppliers and even make occasional joint orders, says Dirks.

Bridgehead has three stores in Canada, and is connected with Oxfam Canada, a secular relief and development organization that receives much of its support from mainline churches such as United, Anglican and Presbyterian. Donate by Calling Heart Line, a long-distance phone company, is yet another business that markets itself as a good use of Christians' dollars. Heart Line donates 10 percent of customers' payments to a registered Christian ministry of the customer's choice. Kevin Gilchrist founded Heart Line in 1996 in Woodstock, Ont.

Most major long-distance companies contribute to attacks on family values, either by advertising on sitcoms that promote promiscuity or by donating to pro-gay organizations, says Gilchrist, who attends a Fellowship Baptist church. His company advertises in Christian media.

Christian organizations must apply for registration with Heart Line. Those that agree with its statement of Christian faith and are approved become sub-agents of Heart Line, with a duty to promote the service among their supporters. "I like to think Christians are becoming more aware of where their dollars go. If I measure that awareness by the number of people and organizations signing on with Heart Line, I'd say growth has been slow in the last two years, but is now accelerating," said Gilchrist.

Heart Line has about 1,200 customers. Some large Christian organizations have not yet joined Heart Line, probably because they are waiting to see a good track record, Gilchrist said. But now that the company has proven itself with small Christian organizations, he thinks it has the good references it needs to appeal to larger ones.

"Whether you're an individual or a national Christian ministry, you need to make sure you get good references and have a proven track record before committing. I know a couple of ministries that got burned by committing too hastily to work with new Christian business partners," he said.

Although financial advisors recommend getting a second opinion on all investment claims, the development of new investment options based on self-declared religious principles will clearly continue, fuelled by a natural Christian desire to submit all—including finances—to the lordship of Jesus Christ. Sample U.S. Christian mutual fund returns NAME Lutheran Brotherhood A Aquinas Equity Income (Catholic) Aquinas Fixed Income MMA Praxis Growth Equity (Mennonite) MMA Praxis Intermediate Fixed Income Pax World Balanced (United Methodist) 3-YR RETURN (percentages) 19.7817.546.78 16.59 6.39 18.36

Note: These funds are not available in Canada, and each uses different types of screening. Evangelical-based funds such as the Noah Fund and Timothy Fund are not old enough to demonstrate comparable returns.—source: Social Investment Forum, Washington, D.C. (Oct. 30, 1998)

Bill Fledderus once spent all his childhood paper route savings on a Commodore 64 computer which now reposes in his parents' basement. Recently he transferred his adult savings from a bank (where interest paid was competitive only with a sock under his mattress) to a "safe" money-market fund. After researching this article he isn't very happy about that either.




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