Proverbs 1 and the Ethics of Investing
There is more at stake in investing than the risk of losing our money. There is also the risk of losing life’s wholeness. In this video, you’ll hear Eventide CIO Finny Kuruvilla, MD PhD talk about the ethical dimensions of investing using a passage from the biblical book of Proverbs.
Watch the video from Eventide and read the full article below.
I want to take us back now, really to thousands of years from before where we’re standing at this moment, and we’re going to a very ancient book. This is the Book of Proverbs, which is a book in the bible. This particular passage is from the very first chapter of the Book of Proverbs.
Let’s read it together. It says, “My son, if sinful men entice you, do not give into them. If they say, ‘Come along with us, let’s lie in wait for innocent blood. Let’s ambush some harmless soul. Let’s swallow them alive like the grave, and whole like those who go down to the pit. We will get all sorts of valuable things, and fill our houses with plunder. Cast lots with us. We will all share the purse.’
My son, do not go along with them. Do not set foot on their paths, for their feet rush into evil. They are swift to shed blood. How useless to spread a net where every bird can see it. These men lie in wait for their own blood. They ambush only themselves. Such are the paths of all who go after ill-gotten gain. It takes away the life of those who get it.” That’s Proverbs, Chapter 1, Verses 10-19.
Well, let’s now think carefully about what we just read. The first observation that I’d like to make is to notice that culpability here is contemplated even for scenarios of mere financial participation. The passage reads, “Cast lots with us,” which basically means something like, “Put your money in with us, we will all share in the purse.” There’s some kind of common purse that this business venture is drawing from.
What is fascinating about this, is the author of Proverbs implores the son, implores the daughter, to avoid these bad profits. It’s phrased in this passage, “Ill-gotten gains,” which are profits that are made at the expense of others; profits that come from some activity that results in harm towards others.
In contrast, the biblical narrative calls us to derive our profits and our livelihood from good profits, from activities that are really the byproduct of serving well the needs of others. Thousands of years ago, the author of Proverbs was making a very simple but very profound statement that we need to be careful and not join into these schemes that are hatched by people that are about ill-gotten gain, bad profits, where there may be some kind of a common purse.
Now in fact, if you think about it, a mutual fund is in some sense a common purse where there’s one pool of capital, and the fund manager allocates out of that to various companies. We as a wise son or the wise daughter seek to avoid these schemes of bad profit in favor of the opportunities for good profit.
Keeping the Jargon Straight: “Charity Enterprise” v. “Impact Company”
Our friends at Impact Foundation wrote a helpful post about the difference between a Charity Enterprise and an Impact Company. In the world of Faith Driven Investing, vocabulary is key and knowing what you’re signing up for matters. Here, we get a break down of the differences between these two ventures, as well as what to expect when getting involved with either one.
Words matter. We need to be clear on what the terms mean and the differences between similar ideas or this nascent industry of impact investing will never reach its full potential.
The terms “Charity Enterprise” and “Impact Company” are similar but bear important differences. Both involve doing good while making money, while each puts different weight and priority on those two outcomes.
A Charity Enterprise is a charity or ministry with revenue-generating activities that helps fund the organization and also complements its mission. Profits stay within the charitable realm and all returns are likely concessionary—that is less than what an investor could expect for similar risk without the impact.
When the Charity Enterprise becomes profitable, it may recycle the profits to fund other aspects of the charity and/or may distribute to donors’ charitable accounts to be granted to other ministries.
For example, Global Orphan project is a 501(c)(3) charity that engages in orphan care and prevention in Haiti and Uganda. Orphan prevention means establishing the GO Fund (a unique impact investment fund managed by GO) that helps start and operate businesses and agricultural ventures that create dignified jobs among the poor and generate profits to help pay for Orphan Care. The oldest and most robust of these is GO Exchange, a boutique collection of products–like Sseko sandals, jammies, jewelry, purses–made in the communities served by orphan villages.
Why would a donor want to get involved with a Ministry Enterprise? Because it may present a better way to do granting and charity. Traditional ministry funding means granting to a charity where the donation will be used up and another needed to take its place—the “churn and burn model”. This is essentially a 0% return investment (not including the charitable deduction the donor gets on her taxes). Even concessionary returns are better than 0% returns.
An Impact Company is a for-profit business that seeks social and eternal gains along with financial ones. To be successful, Impact Companies must run with the best disciplines of business while seeking to make a positive difference in the lives of their employees, vendors, and customers. Impact is NOT an excuse for lack of business excellence. Accordingly, Impact Companies will return risk-adjusted market-rate profits to their investors.
For example, Grace Home Health is an Impact Company that provides, not surprisingly, home health services in the Tampa Bay area. Its experienced leadership team returns significant profits to its investors while implementing a ministry plan with each client and family. Grace is a real business with real returns and positive social and eternal impact.
Why would an investor want to get involved with an Impact Company? Because it represents a better way to do investing; it’s part of God’s redemption of business and capitalism in general.
Keeping these differences in mind is essential or we risk alienating potential donor/investors by missing their expectations of financial return.
A Chaplain Going Way Above the Call of Duty
This isn’t an ordinary video on chaplaincy. It’s a story about how selfless love in the workplace can save a life.
Click the image below to watch the video.
A Microloan Can Help Poor People in Bangladesh. What About New Jersey?
Photo from WikiMedia
For a while, microfinance was the hottest trend in global development, promising you could change a poor person’s life with a very small loan. Let them start their own business and get your money back. Then you can go on to transform someone else’s life. Though the promise was not fulfilled, new uses are being found for microloans, ideas we may be able to apply to our own favorite causes.
Though microfinance did not, in fact, solve global poverty, it wasn’t a complete failure either. Under the right circumstances, it does seem to improve conditions for some poor people.
This month, a new study affirmed that finding in an unlikely place: New Jersey.
The Grameen Bank, one of the pioneers of microfinance, which has been operating its program in Bangladesh since the 1970s, released a study on one of its programs in New Jersey. The program works like this: Low-income women apply for a microloan as part of a small group, and all members of the group are accountable for ensuring each member makes payments (that’s the approach Grameen has found does the most to increase repayment rates).
Initial results six months into the study have been positive. “The Grameen America program produced improvements in several measures of material hardship – for example, how often the respondent ran out of money in the three months preceding the survey, the respondent’s ability to afford necessities, and the respondent’s current financial situation compared with the previous year,” the report states.
Aligning Return and Values: One-Pocket Investing by Access Ventures
A one-pocket mindset dispels the notion that investment strategies seeking social returns must be separated from those seeking financial returns. Rather than a siloed approach to deploying capital, one-pocket investing puts your mission at the center of your strategy, and ultimately at the center of all of your investments.
Learn more about what one-pocket investing is, its history and why it matters today by downloading the whitepaper from Access Ventures.