Religious Investments
Faith-Based Groups Increasingly Turn to Wall Street to Push Their Moral Agendas

By G. Jeffrey MacDonald
Religion News Service
Saturday, August 11, 2007

Religious activists with a moral agenda for corporate America used to rely primarily on consumer boycotts and sympathetic lawmakers to get the attention of Wall Street.

But now their toolbox is growing -- and there's a lot more money it.

Over the past decade, America's market for religious investment products has grown by more than 3,500 percent, according to data from fund-tracker Morningstar Inc.

During the same period, faith-based mutual funds, which routinely agitate for social change in corporate board rooms or shun stocks they deem immoral, grew from about $500 million to more than $17 billion.

What's emerging, observers say, is a market-based response to popular demand for ways that people of faith can make their voices heard on issues closest to their hearts. And people of faith -- especially social conservatives -- are seizing what they see as a new opportunity to make a difference.

"It's just a matter of growing up" and adding more sophisticated tools for advancing an agenda, said Ronald A. Simkins, director of the Kripke Center for the Study of Religion & Society at Creighton University in Omaha. "Now, instead of boycotting Disney, they'll be investing in Fox Family Films."

Religious conservatives are mobilizing to attach a voice to the cash they have on Wall Street. For example, the Tupelo, Miss.-based American Family Association is for the first time urging its 2.8 million online members to purge their investment portfolios of companies that support a "gay agenda" or "anti-family" practices.

Yet, as social conservatives increasingly tether their agendas to their investments, they're hardly walking in lockstep. On the contrary, they're choosing among a range of religious financial products -- including 16 families of faith-based mutual funds -- that vary in how they define corporate responsibility.

Evangelicals, for instance, are getting behind more than one vision. Some have contributed to the $600 million Timothy Plan, a family of mutual funds with evangelical roots and a pledge to avoid "securities of any company that is actively contributing to the moral decline of our society." Translation: screening out companies -- including many in the benchmark S&P 500 Index -- affiliated with pornography, abortion, gambling, tobacco, alcohol and non-married lifestyles.

However, evangelicals are also behind much of the $900 million invested with the politically enigmatic Mennonite Mutual Aid Praxis Mutual Funds. This group avoids companies such as Pfizer, which fund managers regard as manufacturers of abortion products. But it also lobbies on behalf of shareholders for eco-friendly corporate policies, and its pacifist orientation screens out stocks in defense contractors and bonds issued by the U.S. Treasury.

MMA hears evangelicals saying " 'I want more,' " said Mark Regier, the MMA's stewardship investing services manager. " 'As an evangelical or conservative Christian, I do care about the environment. I do care about human rights. I do see the sense in being engaged with companies and encouraging them to move to more positive positions on social issues." '

Roman Catholics, too, are taking their faith in different directions on Wall Street. For instance, the KLD Catholic Values 400 Index attracts investors concerned not only about abortion but also environmental protection and discouraging overseas sweatshops. AHA Socially Responsible Equity Fund says it embraces the teachings of the U.S. Conference of Catholic Bishops. Ave Maria Mutual Funds, with about $550 million in assets, sticks with just three criteria that it regards as paramount: no abortion products or services; no pornography production or distribution (including hotels where room TVs offer adult programming); and no employee benefits for unmarried couples.

In some cases, faith-based funds seem to be accruing assets both because of, and in spite of, their moral goals. The Amana Funds, which specialize in investing according to Islamic principles, has grown from $30 million under management in 2003 to more than $700 million this year. A major reason, according to Deputy Portfolio Manager Monem Salam, is the funds' strong financial returns, which he says have attracted many new, non-Muslim investors.

Still, promoters of what's known as "morally responsible" or "biblically responsible" investing are expecting the values component to be a powerful drawing card.

Kingdom Advisors, a nationwide network of more than 1,200 Christian financial advisers, this year created a subgroup of those who offer biblically responsible investment products. Centurion Funds, named after a faithful figure in the Gospel of Luke, launched less than a year ago with a pledge from company President David C. Lenoir to "not just avoid the 'sin stocks' but to look for the good in companies."

And more than 600 investors, each committing at least $100,000 to private money management with Stewardship Partners in Matthews, N.C., have demonstrated there's a market for customizing equity portfolios according to what chief executive Howard J. "Rusty" Leonard calls "red state Christian values."

"Red state Christians [who tend to vote Republican in national elections] give money to Christian ministries that try to sway the political process," Leonard said. "They got their people elected, but they didn't see their issues advanced to any great degree. . . . Meanwhile, their opponents in the culture wars were coming around the left flank and going into the corporate sector, which red state Christians have ignored. We're hoping to change that."

For socially conservative activists, the process of engaging corporations has evolved gradually over two decades. Until now, the American Family Association, for instance, has focused on consumer action, such as a successful 2006 boycott that led to the demise of NBC's racy "The Book of Daniel." Consumer pressure is easier than investor pressure to explain and to use in rallying a broad base of supporters, according to AFA President Tim Wildmon.

But he says his organization has been remiss in letting agenda-driven investing be the near-exclusive province of left-leaning mutual funds with a "socially responsible" label.

"We just dropped the ball on that," he said. "We haven't been very smart in that regard. But now that's about to start changing."

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