by The New York Times

The intersection of faith and money can be complicated.

But investing by the tenets of your faith has become easier, and in many cases it’s neither less profitable nor more risky than investing without a religious screen. There are Islamic exchange-traded funds and real estate investment trusts, Jewish venture capital funds and Catholic separately managed accounts.

And these strategies are not just attracting investors of the same faith. In some cases, people are choosing to participate in what they see as a solid investing strategy regardless of its religious tenets.

“What we’ve seen is faith-based investing, like sustainable investing over all, is much easier to do now than it has been in the past,” said Jackie VanderBrug, head of sustainable and impact investing in the chief investment office at Bank of America. “In the past, clients would have been told that faith-based investing is a great way to lose money. We can say now that you don’t have to give up risk-adjusted returns to invest this way.”

Ms. VanderBrug added that the pandemic and the social unrest that began last summer with George Floyd’s killing had prompted more people to look to their faith and to invest in a way that expressed their values.

“The pandemic brought to light our collective interdependence and vulnerability,” she said. “We now have this lived experience of our interdependence.”

As with investing with environmental, social and governance criteria, faith-based investing allows people to adhere to the tenets of their faith while still having a diversified portfolio, albeit with some exceptions.

Click here to read the full article!

by Reuben Coulter

If you go for a walk in the bustling cities of Jakarta, Mumbai or Nairobi much of it will feel quite foreign to the average American but then you will encounter the familiar sight and smells of McDonalds or Starbucks. If you step inside there are some interesting local adaptations such as Mcdonald’s completely vegetarian menu in India. Franchise businesses around the world have seen steady growth in the past few decades, particularly in Brazil, China and Mexico, as emerging economies have grown rapidly and their citizens have acquired taste for these ‘aspirational foods’. Many developed markets are reaching brand saturation with high competition and limited room for growth. Over 60% of the International Franchise Association members (US-based franchisors) currently franchise or operate in international locations, and 16 percent generate between 25 percent and 30 percent of revenue from international activities.

At Faith Driven Entrepreneur, we have been reflecting on how we might see greater social and spiritual impact through entrepreneurship and how Faith Driven Investors can support and finance this. Every day we meet incredible entrepreneurs who have beaten the odds and through hard work and ingenuity have built vibrant businesses. But sadly we also meet entrepreneurs who are struggling. They may have a great concept and some traction but they are unable to scale and don’t achieve their potential. 

The reasons for this include;

• Most enterprises are opportunistic and not strategic

• Many founders lack core business skills or experience

• In many cases they are isolated, without support structures or a strong team

• They lack proper operating systems and corporate governance

• They can’t access sufficient growth capital

Franchising offers a powerful model to address these challenges and to achieve scale and impact through replication. In the US, the success rate of franchises is significantly higher and that is reflected in the lower cost of capital and willingness of banks to lend to them. Franchising offers several advantages over traditional business growth models, all of which serve to reduce risk and increase the likelihood of success. 

• It provides a proven business model 

• There is an established operating model with defined systems and processes

• It offers a trusted, credible brand. This is really important in countries with low safety and quality standards.

• The franchisor provides for the franchisees with additional support services, such as training, quality control, advertising, and marketing.

• While the franchisee generally contributes capital, entrepreneurial skills and operational oversight, and local market knowledge. They have ‘skin in the game’.

Done well, franchising should be a win/win as both franchisor and franchisee have a vested interest in the business succeeding. 

From a Christian perspective franchising is also a powerful way of transmitting a values-based culture and being a witness for the Gospel, often in countries which are closed. While missionaries might be blacklisted, doors are flung open to welcome in foreign brands. Franchises can offer more than hamburgers and fries; delivering incredible social impact such as standardized medical care, potable water, education, and clean energy at the base of the pyramid. Some incredible examples that we’ve encountered recently include;

• A KFC franchise in Spain which is owned by a Christian brother. He operates 9 outlets with 180 employees and expects to double in the next 12 months. In his leadership training for his employees, he is able share his faith motivation and lead them in integrating values in their lives. He works closely with a local church and is able to support their ministry with profits from the franchise.

• A chain of fitness gyms operating in countries which are often hostile to Christianity is one of the largest disciple-making movements in the world. They have tens of thousands of members who would rarely, if ever, attend a church or encounter the Gospel. These members come to their gym weekly and develop deep relationships with the local owner who has an opportunity to disciple them and connect them with a local church.

• Jibu, a water purification company in East Africa which provides water filtration technology to franchisees. Clean water is a massive need – in Uganda 51% of the population lack access to clean water, while 786m people worldwide face this challenge. Jibu has grown rapidly to 137 franchises in 7 countries. 

• And of course closer to home, well-known US franchises such as Chick-Fil-A, Auntie Anne’s and Popeyes have created cultures which love their employees, who in turn love their customers – providing a powerful platform for leadership development and Christian witness.

These examples above also illustrate two different types of approach to franchising. 

• Outside In Approach – There are proven established businesses (usually from developed markets) that have proven and predictable operating systems (eg KFC)

• Inside Out Approach – Opportunities that originate in local markets (eg Jibu)

So if franchising has such potential why don’t we see more of it? The reality is that for both approaches the barriers and costs to entry remain significant.

For an international franchisor it is challenging to enter a new market, particularly one which is significantly different from its home market. In particular, establishing market demand, adapting their business and operating model to local tastes or custom and finding the right owners with aligned vision and values can be extremely difficult.

For the local franchisor who has a vision to scale, the expertise to do this is scarce and the growth capital is practically non-existent.    

The Franchise Studio model

To solve these challenges we are developing a Franchise Studio model. This combines the talent selection and development model of an accelerator, the strategic advice and investment of a VC fund, with hands-on operational support to develop the franchise model and scale it. The founding team do not need to have their “world changing idea” in place.  They are just highly motivated, capable individuals who are motivated by their faith and looking for an exemplary opportunity to create a flourishing business which can grow for greater social and redemptive impact.  The Studio assesses, mentors, and disciples these potential founders  to determine the best “franchise fit”, often working closely with other Christian accelerators who have a pool of alumni.

The Studio can then match the founding teams with either an Outside In or Inside Out opportunity. 

1. In the Outside In approach, the Studio can take on master franchise rights for the market, and develop, grow and support a franchise model on behalf of the franchisor. It can also act as a franchisor agent – matching the opportunity with a founding team and collecting a finders fee for a founder referral to the franchisor. The Studio would also participate with the franchisor in co-funding the franchise opportunity. The Franchisor is assured of a local partner with aligned values, strong ability to execute and a pipeline of talent to expand the business as it scales.

2. In the Inside Out approach, the Studio identifies and invests in businesses in the local market which have gained some traction and works with the founding team to develop a franchise business model.

The value addition that a Franchise Studio offers includes;

• Screens and selects values aligned, high-capacity teams

• Assists in product validation

• Provide seed investment to quality teams with validated products

• Contribute expertise and mentorship

• Develop roadmap and operational systems for scale

• Centralized administrative functions for cost effectiveness

• Advise and support from franchise experts in the Faith Driven movement

• Provide Kingdom impact and transformative input and guidance to investees

Over the next 12 months we will be testing and validating the Franchise Studio model in East Africa. If faith driven franchising matures to even a fraction of the size that commercial franchising has reached, it will have achieved sufficient scale to impact millions of people in emerging and frontier markets – providing them with an opportunity to become followers of Christ, access essential goods or services and experience life to the full.

—

Acknowledgments

Special thanks to the Faith Driven franchise working group for their contributions and leadership on this journey – especially Henry Kaestner, Tony White and Ray Barreth. 

Photo by Louis Hansel on Unsplash

by Reuben Coulter

If you go for a walk in the bustling cities of Jakarta, Mumbai, or Nairobi, much of it will feel quite foreign to the average American, but then you will encounter the familiar sight and smells of McDonalds or Starbucks. If you step inside, there are some interesting local adaptations, such as McDonald’s completely vegetarian menu in India. Franchise businesses around the world have seen steady growth in the past few decades, particularly in Brazil, China, and Mexico, as emerging economies have grown rapidly and their citizens have acquired taste for these ‘aspirational foods.’ Many developed markets are reaching brand saturation with high competition and limited room for growth. Over 60% of the International Franchise Association members (US-based franchisors) currently franchise or operate in international locations, and 16 percent generate between 25-30 percent of revenue from international activities.

At Faith Driven Entrepreneur, we have been reflecting on how we might see greater social and spiritual impact through entrepreneurship and how Faith Driven Investors can support and finance this. Every day, we meet incredible entrepreneurs who have beaten the odds and, through hard work and ingenuity, have built vibrant businesses. But sadly, we also meet entrepreneurs who are struggling. They may have a great concept and some traction, but they are unable to scale and don’t achieve their potential.

The reasons for this include:

• Most enterprises are opportunistic and not strategic.

• Many founders lack core business skills or experience.

• In many cases, they are isolated, without support structures or a strong team.

• They lack proper operating systems and corporate governance.

• They can’t access sufficient growth capital.

Franchising offers a powerful model to address these challenges and to achieve scale and impact through replication. In the US, the success rate of franchises is significantly higher, and that is reflected in the lower cost of capital and in the willingness of banks to lend to them. Franchising offers several advantages over traditional business growth models, all of which serve to reduce risk and increase the likelihood of success:

• It provides a proven business model.

• There is an established operating model with defined systems and processes.

• It offers a trusted, credible brand. This is really important in countries with low safety and quality standards.

• The franchisor provides for the franchisees with additional support services, such as training, quality control, advertising, and marketing.

• The franchisee generally contributes capital, entrepreneurial skills, operational oversight, and local market knowledge. They have ‘skin in the game.’

Done well, franchising should be a win/win, as both franchisor and franchisee have a vested interest in the business succeeding.

From a Christian perspective, franchising is also a powerful way of transmitting a values-based culture and being a witness for the Gospel, often in countries which are closed. While missionaries might be blacklisted, doors are flung open to welcome in foreign brands. Franchises can offer more than hamburgers and fries—delivering incredible social impact such as standardized medical care, potable water, education, and clean energy at the base of the pyramid. Some incredible examples that we’ve encountered recently include:

• A KFC franchise in Spain is owned by a Christian brother who operates 9 outlets with 180 employees and expects to double in the next 12 months. In his leadership training for his employees, he is able share his faith motivation and lead them in integrating values in their lives. He works closely with a local church and is able to support their ministry with profits from the franchise.

• A chain of fitness gyms operating in countries which are often hostile to Christianity is one of the largest disciple-making movements in the world. They have tens of thousands of members who would rarely, if ever, attend a church or encounter the Gospel. These members come to their gym weekly and develop deep relationships with the local owner who has an opportunity to disciple them and connect them with a local church.

• Jibu, a water purification company in East Africa, provides water filtration technology to franchisees. Clean water is a massive need—in Uganda, 51% of the population lack access to clean water, while 786mm people worldwide face this challenge. Jibu has grown rapidly to 137 franchises in 7 countries.

• And, of course, closer to home, well-known US franchises such as Chick-Fil-A, Auntie Anne’s, and Popeyes have created cultures which love their employees, who in turn love their customers—providing a powerful platform for leadership development and Christian witness.

These examples above also illustrate two different types of approaches to franchising:

• Outside In Approach – There are proven established businesses (usually from developed markets) that have proven and predictable operating systems (e.g., KFC)

• Inside Out Approach – Opportunities that originate in local markets (e.g., Jibu)

So, if franchising has such potential, why don’t we see more of it? The reality is that, for both approaches, the barriers and costs to entry remain significant.

For an international franchisor, it is challenging to enter a new market, particularly one which is significantly different from his/her home market. In particular, establishing market demand, adapting the business and operating model to local tastes or customs, and finding the right owners with aligned vision and values can be extremely difficult.

For the local franchisor who has a vision to scale, the expertise to do this is scarce, and the growth capital is practically non-existent.

The Franchise Studio model

To solve these challenges, we are developing a Franchise Studio model. This combines the talent selection and development model of an accelerator, the strategic advice and investment of a VC fund, and the hands-on operational support to develop the franchise model and scale it. The founding teams do not need to have their “world changing idea” in place. They are just highly motivated, capable individuals who are motivated by their faith and looking for an exemplary opportunity to create a flourishing business which can grow for greater social and redemptive impact. The Studio assesses, mentors, and disciples these potential founders to determine the best “franchise fit,” often working closely with other Christian accelerators who have a pool of alumni.

The Studio can then match the founding teams with either an Outside In or Inside Out opportunity.

1. In the Outside In approach, the Studio can take on master franchise rights for the market and can develop, grow, and support a franchise model on behalf of the franchisor. It can also act as a franchisor agent—matching the opportunity with a founding team and collecting a finder’s fee for a founder referral to the franchisor. The Studio would also participate with the franchisor in co-funding the franchise opportunity. The Franchisor is assured of a local partner with aligned values, strong ability to execute, and a pipeline of talent to expand the business as it scales.

2. In the Inside Out approach, the Studio identifies and invests in businesses in the local market which have gained some traction and works with the founding team to develop a franchise business model.

The value addition that a Franchise Studio offers includes:

• Screening and selecting values aligned, high-capacity teams

• Assisting in product validation

• Providing seed investment to quality teams with validated products

• Contributing expertise and mentorship

• Developing roadmap and operational systems for scale

• Providing centralized administrative functions for cost effectiveness

• Delivering advice and support from franchise experts in the Faith Driven movement

• Providing Kingdom impact and transformative input and guidance to investees

Over the next 12 months, we will be testing and validating the Franchise Studio model in East Africa. If faith driven franchising matures to even a fraction of the size that commercial franchising has reached, it will have achieved sufficient scale to impact millions of people in emerging and frontier markets—providing them with an opportunity to become followers of Christ, to access essential goods or services, and to experience life to the full.

Acknowledgments

Special thanks to the Faith Driven franchise working group for their contributions and leadership on this journey—especially Henry Kaestner, Tony White, and Ray Barreth.

Article originally hosted and shared with permission by The Christian Economic Forum, a global network of leaders who join together to collaborate and introduce strategic ideas for the spread of God’s economic principles and the goodness of Jesus Christ. This article was from a collection of White Papers compiled for attendees of the CEF’s Global Event.

Article originally posted here by Christianity Today

by Christianity Today

JESSICA FRALIN

In a quiet office in San Antonio, Texas, a gong rings out. Staff members flood from their offices to clap and cheer, congratulating a client on his daughter’s graduation from college.

At PAX Financial Group, this mid-afternoon ceremony isn’t unusual. Companies define success in many ways, but PAX is dedicated to measuring hope. Because PAX, a financial planning firm, serves people, not investment portfolios, they praise what is praiseworthy in their clients’ lives, and each milestone is documented in the company’s system and observed by the ringing of the gong.

Today, the gong sounded for a father seeing a child graduate from college. Tomorrow, it could ring out to celebrate a business owner retiring well 50 years after launching. Last week, it marked one client paying off her mortgage and another client’s decision to donate six figures to worthy causes.

In an industry laser-focused on wealth accumulation, PAX is dedicated to celebrating every step of the stewardship journey. They recognize that more than leaving a legacy, clients are desperate to live one, finding ways to rejoice in today as well as prepare for tomorrow.

Like PAX, many financial institutions across the nation are turning notions of greed and gain upside down. Gospel-centered leaders of wealth-management companies are changing the financial climate and the public’s perception of it as they focus on building their clients’ lives, not just their profit margins.

Living a legacy

“Inheritance is what you leave to someone, but legacy is what you leave in someone,” says Darryl Lyons, co-founder and CEO of PAX. “Living a legacy is much more rewarding, and much more fun, than just accumulating money to leave behind.”

A commitment to generosity is revolutionizing the financial planning industry. According to cofounder Joseph Schuetze, inspiring generosity rather than simply pushing toward endless wealth accumulation allows companies to ensure that each client’s legacy when they’re gone—and their life now—will be richer. Schuetze credits C12, an organization that compels and equips Christian CEOs and business leaders to achieve excellence with eternal impact, as being a consistent driver behind these choices. He says, “C12 isn’t afraid to offer tough accountability and push you to live with high integrity.”

“It’s antithetical to this industry to convince clients to give more money away,” Schuetze explains. “We’re actually cutting into our own fees. But we are staking our claim to the ideals of the kingdom of God, not the ideals of the world of finance.” PAX goes beyond simply encouraging clients to give to charitable organizations by prompting them to actively engage with those organizations. As a result, clients see their generosity making a difference in the community. They get to live their legacies.

This is an excerpt from Faithful Investing.

by Mark A. Regier, Praxis Mutual Funds® and Everence® Financial

As we consider how investing can help shape the world around us, in a way that is pleasing to God and responsible to those around us, we’re challenged to reflect on both the “vertical” and “horizontal” natures of our faith.

The vertical dimension concerns our direct relationship with God – our desire to reflect God’s values in our worship, our thoughts, our prayers and our deeds. The horizontal aspect reflects our relationship with the individuals and communities around us, including our relationship to Creation itself.

We see this clearly in Christ’s response to a question about the greatest commandment, recorded in the Gospels of Matthew and Mark, clearly describes these two aspects of faith.

“The most important one,” answered Jesus,” is this: ‘Hear, O Israel: The Lord our God, the Lord is one. Love the Lord your God with all your heart and with all your soul and with all your mind and with all your strength.’ The second is this: ‘Love your neighbor as yourself.’ There is no commandment greater than these.” (Mark 12:29-31, NIV)

Historically, faithfulness on the vertical axis of our relationship to God has been measured through the purity of our choices, actions and thoughts – often called “holiness.” In the field of investing, holiness has often taken the form of avoidance. Religious organizations and individuals have long sought to reflect their faithfulness to God’s values by the investments they’ve rejected.

And as our world—both socially and economically—has grown more complex, however, this approach to faithfulness has become an increasing challenge. As we address modern slavery found in conflict minerals inside every cellphone and laptop, or the sweatshops hidden behind our favorite clothing brands, or the racism and sexism that can lurk within even the most respected corporations, being pure is difficult.

In addition, this vertical emphasis focuses on our own reflection of God’s purity, potentially overlooking the horizontal call to love our neighbor and other aspects of God’s Creation.

How, then, should we respond to the horizontal, reflecting the gift of life and grace from God? What is our response—through our investments–to repeated calls throughout Scripture to care for the widow and orphan, protect the weak, and minister to the poor?

Just what is required?

This question (and answer) by an Old Testament prophet in Micah is fundamental to our fullest understanding of Christian discipleship. People of faith are called to “do justice, and to love kindness and to walk humbly with your God.” (Micah 6:8, NRSV) Micah tells us that our actions and choices here on earth do matter—and we believe our investments do too.

This surprising message follows a series of questions about which offerings and sacrifices are required to bring restoration to the sinning, straying children of Israel. The questions betray a misunderstanding of God’s larger purpose, focusing on pursuing the correct ritual for the situation instead of striving for justice and kindness as they interact with others.

Many Christians have taken this call seriously – looking to their faith as a guide for their charitable giving, support for missions, choice of vocation, and the ways they relate to their families and local communities. Far fewer, however, have explored how this call to justice, kindness and a humble walk with God impacts their investment portfolio.

A lesson from the Good Samaritan

If God’s values and concerns are the objective of our investing witness, how do we measure and manage the impact our investments are having?

Authentic Christian faith requires engagement in the world, with all of its contradictions and nuances. What better example of a person trying to live faithfully in a heated political and religious setting than the Samaritan in Jesus’ familiar parable?

This parable was offered in response to a question posed to Jesus, asking, “And who is my neighbor?” It again focuses on the horizontal axis (“others”) of our relationship with God. And it is a question that remains as important today as it was then.

Found in Luke 10:25-37, this story – in its simplest form – has been baked into American culture. Many, regardless of religious background, will recognize the story of the virtuous man who helped a person in need while others passed by.

In short, the Samaritan, from an ethnic group scorned by the culture of Jesus’ audience, stopped to help a man wounded by robbers while a priest and a Levite passed him by. These holy men presumably continued on their way because touching the wounded man would have made them unclean, according to the religious rules of the day.

When Jesus flipped a question back to the questioner, asking, “Which of these three … was a neighbor to the man who fell into the hands of the robbers?” the answer was obvious: “The one who showed him mercy.” (Luke 10:36-37, NRSV)

Jesus emphasized the horizontal relationship between fellow travelers despite their different ethnicities and beliefs, and by doing so, admonished the characters who placed a higher value on their narrow understanding of what was expected of them.

We could replace any of these characters with modern stand-ins and get a similar reflective opportunity. The call, then, is to self-sacrificial action on behalf of the disadvantaged or vulnerable – a message repeated frequently throughout the New Testament. It would seem credible that a similar approach could be applied to at least a part of a mission-oriented portfolio.

With more than 2,350 references in the Bible to money and resource-related issues and it seems clear that the writers and the early church understood the power and importance of the financial aspects of our lives. And while the financial tools of our society differ greatly from those of the first century, many of the challenges remain the same.

Used by permission. Faithful Investing©2019 Church Publishing Incorporated, New York, NY 10016.