Article originally posted here by The Bridgespan Group

by Jeri Eckhart Queenan

Executive Summary

“There are two rivers [faith-inspired and secular human service organizations] running in parallel, and the separation is not to the benefit of progress.”

Rosanne Haggerty, President and CEO, Community Solutions

As varied as faith traditions are, many share a common concern with fighting poverty and elevating recognition of our shared humanity. Indeed, faith-inspired organizations serve as the bulwark of the social safety net for the most vulnerable among us.

Our research found that they account for two out of every five dollars spent on safety net services across a sample of six representative US cities. And while some funders, including government agencies, recognize faith-inspired organizations’ role in the social safety net, that perspective has not translated into funding from the largest institutional philanthropies. Among the 15 largest private foundations, faith-inspired human services nonprofits represent only 12 percent of safety net funding, much less than their 40 percent share of the sector.

Download the Executive Summary
Download the Full Article

Large institutional philanthropy’s discomfort with faith-inspired nonprofits is often grounded in both searing personal experiences and a complicated historical relationship between faith traditions and many areas of social justice. Throughout history and into the present moment, major faith traditions have also been the source of harm, trauma, and hardship in the areas of gender equity, reproductive health, and LGBTQ rights among others. At the same time, faith-inspired impact has been at the core of social movements that have transformed the United States—ranging from Quakerism among white abolitionists to the Christian temperance movement in women’s suffrage to the interfaith organizing (principally led by Black preachers, Catholic priests, Jewish rabbis) that formed the core of civil rights era organizing. This complex history—with its various tensions of conservativism, charitable humanitarianism, and progressive social justice liberation—can make it hard for funders to discern which faith communities are aligned with their equity values, let alone with their impact objectives.

As mission-driven leaders and researchers, we seek to contribute to a robust dialogue about the role of faith-inspired organizations in driving social change. This article reflects independent analysis of data, interviews with field experts, and perceptions of the social sector honed over the 20 years of Bridgespan’s work in the sector.

Our research has identified three myths that leave impact on the table:

Myth #1—Secularism is the dominant frame for America.
Reality: Despite recent declines in religious affiliation, nearly three out of every four Americans remain religiously affiliated – with Black, Latinx, rural and low-income communities actively engaging in their faith at higher rates.

Myth #2—Faith-inspired organizations are a small portion of the social sector.
Reality: Giving to religiously affiliated organizations (which includes donations to congregations) represents nearly one-third of all giving in the United States. Roughly a third of the 50 largest nonprofits in the country have a faith orientation. And, 40 percent of international nongovernmental organizations are faith-inspired.

Myth #3—Faith-inspired organizations are stodgy and lack innovation.
Reality: Many faith-inspired organizations are at the forefront of innovation in service delivery and the ability to meet the needs of the communities they serve.

As we collectively look out on the crises of a global pandemic, our country’s racial reckoning, and increasing threats to democratic norms, it is all the more imperative that we look for ways to more deeply engage with the systems and institutions that motivate, convene, and establish a sense of community across the lives of millions in this country and billions of people abroad. Highlighting exemplary organizations grounded in faith-based traditions, this study suggests that one way might be to build bridges across secular-anchored funding and faith-inspired impact. Here are a few thoughts on how to get started:

• View faith-inspired organizations as brokers of trust within communities. “As a means for intersecting with communities that are rooted in race and ethnicity,” says David Dodson, who is active in the interfaith community in North Carolina and recently retired as president of MDC, a catalyst for social change in the South, “faith-inspired organizations that are governed, run, and accountable to the people they serve can be excellent partners for funders who wish to build authentic connections and partnerships with underrepresented communities.”

• Extend trust through meaningful dialogue. Successfully engaging with these organizations hinges on trusting the roles they play in their communities, and embarking on a frank, mutual dialogue with faith-based actors about the funder’s motivations. The need to align on values goes both ways, with both funder and organization open about what drives them and where they won’t go. Some leaders we spoke with cautioned anyone hoping to partner with congregational communities to center the communities, not themselves.

• Complement faith-inspired organizations by collaborating on solutions. “Churches are really key anchors in underserved communities,” said Kathryn Pitkin Derose, senior researcher at RAND Corporation, a policy think tank. “They excel at responding to critical needs, and they know those needs in their communities very intimately. When you start to combine efforts with churches, you can really have an important impact on the community as a whole.”[1]

—-

Jeri Eckhart Queenan and Devin Murphy are partners in The Bridgespan Group’s New York office, where Peter Grunert is manager. The authors also thank Bridgespan former Consultant Liz Calder, Editorial Director Cora Daniels, Associate Consultant Erica Lezama, Case Team Leader Asimina Pantazelos, Manager David Washer, and Senior Editorial Director Larry Yu for their essential collaboration on this article.

At the end of every podcast, we like to ask our guests what they have been experiencing with God. Here’s Mike Arrieta with his lesson from the book of Daniel.

by Mike Arrieta

I remember when I first moved to Silicon Valley, one of my friends and mentors, Joie Chen, told me he was a venture capitalist. And he told me every single day he leaves the office around 5:30. And the reason why he leaves the office of 5:30 is because he’s exemplifying exercising his faith. It takes faith to leave the office at 5:30, go home to dinner with your family and then get back on at 9 or whatever else it is. And I asked him: How in the world can you do that, you know, like how can you get the best deals and still provide the best returns? He goes: Well, if I’m only working just as hard as everyone else, but I’m saying that I’m a believer, God’s basically just like a cheerleader for me. But I’m not truly trusting in what faith does it take for me to try to be the best investor but to work just as hard as everyone else?

So he pointed me to Daniel, and I never really studied Daniel, ever since then and probably never spent some time in it, until last week. We had a company that we were about to go into LOI with, and last minute he tells me he gets an offer that’s significantly more than ours. And I had a moment to realize what to do. I could either be like the rest of the world and compete on price alone, which the price is all predicated upon debt. If you’re competing as a secular buyout investor, or I exercise my faith and I trust wholeheartedly on God. And so I’ve been eating the book of Daniel like crazy over the past five days. I’ve been studying it in such a way of how a man trusted that God would legitimately save him multiple, multiple, multiple times, and how he eagerly prayed for God to intervene in his life and all the circumstances that he found himself in. So I am currently in the season of Daniel and just trusting the Lord like I never have before to get a place to trust.

Daniel 6 (NIV)

7 The royal administrators, prefects, satraps, advisers and governors have all agreed that the king should issue an edict and enforce the decree that anyone who prays to any god or human being during the next thirty days, except to you, Your Majesty, shall be thrown into the lions’ den. 8 Now, Your Majesty, issue the decree and put it in writing so that it cannot be altered—in accordance with the law of the Medes and Persians, which cannot be repealed.” 9 So King Darius put the decree in writing.

10 Now when Daniel learned that the decree had been published, he went home to his upstairs room where the windows opened toward Jerusalem. Three times a day he got down on his knees and prayed, giving thanks to his God, just as he had done before. 11 Then these men went as a group and found Daniel praying and asking God for help. 12 So they went to the king and spoke to him about his royal decree: “Did you not publish a decree that during the next thirty days anyone who prays to any god or human being except to you, Your Majesty, would be thrown into the lions’ den?”

The king answered, “The decree stands—in accordance with the law of the Medes and Persians, which cannot be repealed.”

13 Then they said to the king, “Daniel, who is one of the exiles from Judah, pays no attention to you, Your Majesty, or to the decree you put in writing. He still prays three times a day.” 14 When the king heard this, he was greatly distressed; he was determined to rescue Daniel and made every effort until sundown to save him.

15 Then the men went as a group to King Darius and said to him, “Remember, Your Majesty, that according to the law of the Medes and Persians no decree or edict that the king issues can be changed.”

16 So the king gave the order, and they brought Daniel and threw him into the lions’ den. The king said to Daniel, “May your God, whom you serve continually, rescue you!”

17 A stone was brought and placed over the mouth of the den, and the king sealed it with his own signet ring and with the rings of his nobles, so that Daniel’s situation might not be changed. 18 Then the king returned to his palace and spent the night without eating and without any entertainment being brought to him. And he could not sleep.

19 At the first light of dawn, the king got up and hurried to the lions’ den. 20 When he came near the den, he called to Daniel in an anguished voice, “Daniel, servant of the living God, has your God, whom you serve continually, been able to rescue you from the lions?”

21 Daniel answered, “May the king live forever! 22 My God sent his angel, and he shut the mouths of the lions. They have not hurt me, because I was found innocent in his sight. Nor have I ever done any wrong before you, Your Majesty.”

23 The king was overjoyed and gave orders to lift Daniel out of the den. And when Daniel was lifted from the den, no wound was found on him, because he had trusted in his God.

24 At the king’s command, the men who had falsely accused Daniel were brought in and thrown into the lions’ den, along with their wives and children. And before they reached the floor of the den, the lions overpowered them and crushed all their bones.

25 Then King Darius wrote to all the nations and peoples of every language in all the earth:

“May you prosper greatly!

26 “I issue a decree that in every part of my kingdom people must fear and reverence the God of Daniel.

“For he is the living God
    and he endures forever;
his kingdom will not be destroyed,
    his dominion will never end.
27 He rescues and he saves;
    he performs signs and wonders
    in the heavens and on the earth.
He has rescued Daniel
    from the power of the lions.”

28 So Daniel prospered during the reign of Darius and the reign of Cyrus[b] the Persian.

Article originally posted here by Eventide

by Jason Myhre

Article originally posted here by Inspire

by Dr. Erik Davidson, CFA

The weapons we fight with are not the weapons of the world. On the contrary, they have divine power to demolish strongholds.

2 Corinthians 10:4

Note – As we comment on the current economic and market environment, it is always with the full understanding that the Coronavirus Crisis is first and foremost a humanitarian one. Therefore, our hearts groan as we “weep with those who weep” (Romans 12:15), and we cling to the promise that “He heals the broken-hearted and binds up their wounds.” (Psalm 147:3)

With the abrupt end of the longest bull market in the history of the U.S. stock market, investors are now understandably worried about the probable depth and length of the current bear market in which we find ourselves. So, let’s take a look at this bear market in the context of the history of prior bear markets.

So far, the current stock market’s worst drawdown from its February 19 peak (S&P 500 close of 3386) was its March 23 nadir (S&P 500 close of 2237) for a loss of 33.9%. With the recent rebound, as of March 31 (S&P 500 close of 2585), the stock market is now down “only” 23.7%. While it is certainly possible that further downside awaits, our view is that the lows we have experienced are closer to the bottom than to the top. Here is our rationale:

Referring to history, the U.S. stock market has seen deeper bear markets than what we have seen so far with this downturn. The 2007 – 2009 Financial Crisis saw a decline of 56.8% in the S&P 500 and the 2000 – 2002 Technology Bust, exacerbated by the September 11 terrorist attack, recorded a 49.2% peak-to-trough loss. The 1973 – 1974 Oil Embargo Crash was 48.2% and the Great Crash of 1930 – 1932 saw a devastating loss of 82.8%. However, each of these more substantive stock market drops listed was preceded by periods of exuberant valuation bubbles in stocks themselves or in housing as seen in the Financial Crisis.

Though we had expressed concerns about the record length of the most recent bull market and economic expansions with valuations starting to show signs of excess (see Trouble), we were not of the view that equities had reached bubble territory. In our opinion, the cause for this current bear market was the exogenous event of the Coronavirus outbreak. Therefore, assuming that this shock will be addressed, it is probable that this stock slide will not be as dramatic as those listed above. As an example of the impact of an exogenous event, the heightened Cold War tensions preceding the Cuban Missile Crisis in 1961 – 1962 led to a drop in the S&P 500 of 28.0%. Moreover, even with the tragic loss of life and economic destruction of World War II, that exogenous event caused the S&P 500 to drop “only” by 42.3% during the 1939 – 1942 bear market.

The current crisis environment is increasingly being described as one of “wartime.” Given the potential fatalities, the disruptive impact to “normal” life, and the economic damage, this “battle” metaphor seems warranted. The Bible contains many stories of wars and battles and oftentimes employs combat imagery, including Ephesians 6’s reference to “putting on the full armor of God.”

Christians know from 2 Corinthians 10:4 that the weapons with which we are called to fight with are “not the weapons of the world.” Specifically, we are called to employ spiritual weapons which “have divine power to demolish strongholds.” During this time of anguish and loss, believers can be praying and fasting for the demolition of the Coronavirus stronghold.

Beyond those spiritual weapons, there are many other God-ordained “weapons” that are being brought to bear against the “invisible enemy” that humanity faces together. By themselves, none of these weapons are sufficient, but in combination they can prevail to the benefit of our collective physical and economic health.

Healthcare Weapons – Many of our family, friends, and neighbors are serving on the front lines of this war as doctors, nurses, etc. by delivering skilled and compassionate medical care to the sick and dying. These members of our communities are putting themselves in harm’s way for our safety. They should forever be remembered as heroes for their selfless service during this time.

Medical Science Weapons – Never underestimate the power of human ingenuity when brought to bear against what might appear to be insurmountable challenges. At this very moment, scientists, doctors, researchers, pharmaceutical firms, biotech companies, hospitals, medical device manufacturers, medical testing companies, and many others around the world are working around the clock to bring quickly to market the medical solutions needed to end this pandemic crisis.

Behavioral Weapons – By now, we are all too familiar with the concepts of “social distancing,” “shelter in place,” etc. While inconvenient and confining, these constraints are proving to be effective in curbing the transmission of the virus as well as “flattening the curve” to accommodate medical capacity constraints.

Monetary Weapons – The Federal Reserve Bank of the United States has taken its own wartime efforts to mitigate the inevitable economic damage of the Coronavirus. By pushing the overnight Federal Funds target rate to below ¼% and reinstituting Quantitative Easing with $4 Trillion of bond purchases, the Fed has loosened its monetary policy spigots wide open.

Fiscal Weapons – With last week’s signing of the Phase 3 $2.1 Trillion stimulus package, there is little doubt that the nation’s checkbook is open in the fight to save the economy. While a recession for the country has become almost a foregone conclusion, the battle lines are now being drawn with payments to households, loans to small businesses, etc., in an effort to keep the economy from entering a depression. Also, many regulatory red-tape constraints are rapidly being cut to free up companies to conduct business as needed to meet the marketplace needs.

This list of weapons, when used in combination, can give us confidence that we will prevail against the Coronavirus enemy. Lives will be saved, the economy will recover, and our collective “pursuit of happiness” continued. We will get through this!

So, while there is likely more turbulence yet to come in this epic battle against the unseen enemy, investors can take comfort at the multitude and strength of the “weapons” being brought to bear against it. As stewards of God’s financial capital, we should recognize our responsibility–in fact our “calling” (Luke 19 Parable of the Talents)–not to cower in fear but rather to look for opportunities to deploy capital prudently in this time of need. Getting practical, in Bear Market “To Do” List – P.E.A.C.E., we suggested Dollar Cost Averaging (DCA) as a strategy to ease cash into this turbulent stock market. Finally, as followers of Christ, let us pray together earnestly for that “divine power to demolish strongholds.”

by Brett Smith

“For whoever wants to save their life will lose it, but whoever loses their life for the gospel will save it. What good is it for someone to gain the whole world, yet forfeit their soul?” Mark 8: 35-36

What would you say if I told you that secular investors are far outpacing faith-based investors in the practice of impact investing? Let’s first define the term, of course. Impact investing is defined as “investing with an intention to generate positive, measurable social and environmental impact alongside a financial return” (GIIN, 2020). 

Faith-based investors often align their values with their investments, but we’re only getting half the picture. Recent studies suggest 88% of faith-based investors use some form of negative screening to eliminate companies or industries that they consider unsuitable. However, only 11% of faith-based investors allocated capital to impact investing, missing out on the opportunity to screen in positive outcomes such as human flourishing (1). 

While people have speculated about possible explanations, we developed a study at the L.I.F.E. (Leading the Integration of Faith & Entrepreneurship) Research Lab at Miami University in Oxford, Ohio to understand how faith-based investors were able to overcome some of the challenges that were holding them back from impact investing. Through a collection of 99 data sources including interviews, conferences, and secondary data, we identified four key issues that enabled faith-based investors to participate in impact investing. 

1. Impact investing is about multiple identities. One of biggest challenges for faith-based investors considering impact investments was managing their identities. While much has been written about our identity in Christ, investors often experienced multiple identities in the context of impact investing. Specifically, investors managed three different identities: an investor identity – which focused on the economic side of gaining a financial return, a social identity – which focused on solving a persistent problem to contribute to human flourishing, and a faith identity – which focused on listening to where they were called and contributing to human flourishing. For faith-based investors, one of the primary lessons was gaining an awareness of these multiple identities and the potential tensions among these identities in the context of impact investing.  

2. Impact investing requires prioritization. Due to the potentially conflicting goals of these three identities, investors often experienced identity tensions as they were pulled in multiple directions. While impact investing idealizes the potential for maximizing financial, social and spiritual returns, the expectations from the norms of investing occasionally conflicted with the goal of human flourishing. As investors compared these trade-offs, they often prioritized their faith-based identity in order to reduce these tensions. While prioritizing didn’t eliminate these identity tensions such as accepting concessionary returns, it did provide a focus for their decision-making. 

3. Impact investing depends on measurement. While clear models exist for investors to measure financial performance, there is much greater ambiguity and challenge for measuring social and spiritual performance. As a result, investors used two different paths for measuring these latter types of performance. One approach simplified the challenge of measuring spiritual returns. For example, some investors viewed social returns, such as the employment of marginalized people, as a spiritual return. This approach simplified the challenge of measuring spiritual returns. Other investors engaged in a process of measuring financial, social, and spiritual returns separately. The measurement of spiritual returns ranged from generalized rankings (1-5 scale) to specific measurements of fruit of the spirit (2). Regardless of the approach, investors engaged in due diligence on the social and spiritual returns of the investment.     

4. Impact investing is about obedience. Faith-based investors clearly identified the importance of obedience to God in regard to their investment practices. For some investors, obedience meant the intentional inclusion of social and / or spiritual returns as part of their investment portfolio. For other investors, obedience required them to sacrifice some financial returns for increased social and / or spiritual returns. For example, MIGMIR funds is called “up and left” to concessionary financial outcomes and magnified social and spiritual outcomes. Regardless of the calling, faith-based investors were generally called to surrender their will for the capital to submit to God’s will for the capital. The act of surrendering was not a one-time decision but rather an ongoing, daily process. As one active investor explained, “I am on my knees every morning asking about His will for the capital…but, I am still on the S in surrender.”        

While impact investing is expanding rapidly across the globe, the vast majority of faith-based investors have yet to include impact investing as a significant part of their portfolios. These four lessons may help inform other faith-based investors about impact investing and encourage their participation in the intentional inclusion of impact investing in their portfolio.

It’s important to acknowledge that obedience of faith-based impact investors varied just as obedience does in the Bible. In the Bible, some were called to avoid eating an apple and others to go to a place that God will show them. In the same way, the specific form factor is far less important than the obedience to pursue how God might be calling you into impact investing. Greater participation of faith-based investors in impact investing offers the potential to mitigate persistent social problems for marginalized people around the world and promote human flourishing for the sake of the gospel and the glory of God. 

For a copy of the complete study, please contact me directly: smithbr2@miamioh.edu

Thanks to my co-authors Amanda Lawson, Jessica Jones, Tim Holcomb, and Aimee Minnich. 

Thanks to many of our friends within the FDE / FDI community that made this study possible. Special thanks to Greg Lernihan, Tim MacCready, Aimee Minnich, and Henry Kaestner who were gracious with their time and insights. 

Finally, thanks to L.I.F.E. Research Lab for providing funding to make this study possible. The goal of the L.I.F.E Research Lab is to create practically-relevant, academically-rigorous research at the intersection of faith and entrepreneurship. For more information, please visit: https://miamioh.edu/fsb/academics/entrepreneurship/focus-areas/social-entrepreneurship/leading-the-integration-of-faith-and-entrepreneurship-research-lab/index.html

——

Footnotes
(1)  Engaging Faith-Based Investors in Impact Investing, Global Impact Investing Network (2020). 

(2)  For additional information about this measurement approach, see Eido Research: https://www.eidoresearch.com/

Photo by William Fortunato from Pexels

Article originally posted here by Science Direct

by Brett Smith

While research highlights the importance of an entrepreneurial identity in acquiring resources, our exploratory study advances research on identity, entrepreneurship, and resource exchange by highlighting the other side of the coin: the role of an investor identity. Based on our qualitative study, we find that investors engage in sensegiving through organizational identity claims and actions to (re)define their organizational reality about who they are and what they do. They engage in investor identity work to adapt to the strategic changes in a market category and sustain resource provision. Our findings have theoretical implications for identity and entrepreneurship research including the construct of investor identity and its sensegiving function, its dynamism and role in strategic changes, and its role in subjective assessment of investor decision-making.

Acquiring financial resources is one of the most important and challenging processes for entrepreneurial ventures (e.g., Ko and McKelvie, 2018). It is important because entrepreneurial ventures need resources to exploit identified opportunities (Shane, 2003); yet, it is challenging because new ventures suffer from a liability of newness, whereby their uncertainty and lack of operating history make it difficult for investors to evaluate them (Stinchcombe, 1965; Zimmerman and Zeitz, 2002). For entrepreneurial ventures, one way to acquire resources amidst this uncertainty is through their entrepreneurial identities, “the constellation of claims … that gives meaning to the questions of ‘who we are’ and ‘what we do’” (Navis and Glynn, 2011: 480). Using identity claims, entrepreneurial ventures attempt to influence investor perceptions about their organization and “these claims provide an important starting point” for investor evaluations (Pontikes, 2012: 111). Extant research offers rich insights into how entrepreneurial ventures use their identities to acquire resources from investors (e.g., Martens et al., 2007; Navis and Glynn, 2010, 2011; Santos and Eisenhardt, 2009; Younger and Fisher, 2020).

While the attention on entrepreneurial identities has been useful, it has also resulted in an incomplete picture of the resource exchange process, as it disproportionately focuses on one side of the coin – the identities of entrepreneurial organizations as a means to acquire resources. This is unfortunate because resource exchange is a dyadic process, including both resource acquisition by entrepreneurs and resource provision by investors (e.g., Huang and Knight, 2017). A nascent stream of research suggests the identities of investors play a key role in resource exchange (e.g., Fisher, 2012; Pontikes, 2012). This focus on investor identity is important because it can extend our knowledge about resource provision and investor decision-making (Navis and Glynn, 2011). However, we know little about the role of identities during resource exchange from the other side of the coin – the investor perspective.

To address this gap, we seek to make three contributions. First, we augment the literature on entrepreneurial identity in resource acquisition by focusing on investor identity during resource provision. Second, we show how the dynamic nature of investor identity work can lead to and enable strategic changes by investors. Finally, we extend research on investor decision-making, complementing work on objective decision-making criteria with research focused on identity and subjective criteria.

Click here to read more!