Is Business Only About Profit?
This article and video were originally published here.
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What is the dominant story that we tell about business today?
We all know what to say: Shareholder Value Maximization.
You may know this quote…
“There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”
In this quote, Milton Friedman is communicating that there is no social story to business, the business of business is business, it’s about making money. This excludes any conversation about the impact that business can have for the good or for the harm of their stakeholders.
These stakeholders are outside of business, and to the extent that we try to bring them into our story about business, we are only going to mess things up and distract from the real goals of business.
So what are the outcomes that we see today under the banner of shareholder value maximization? We do see wonder in business…
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Advancement in human agriculture
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Access to Clean Water
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Renewable forms of energy
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The ability to fly through the sky
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Innovations in technology and medical care that preserve and even save human lives
But we also see tragedy in business… If any business that makes a profit is a good business, then it doesn’t matter what they do or how they do it. Under the banner of profit as the purpose of business, some businesses have felt totally ok with developing products and services that prey on human weakness or exploit natural resources, and ultimately cause much harm. There is huge disillusionment with business today, and resulting in a loss of faith and trust in corporations.
I think that what people really believe about business is something more like this statement: “Business is not as it was intended. A vast devastation has struck it. Nevertheless, it is great in its ruins. Like a glorious cathedral after a bombing, business still displays the grandeur for which it was designed.”
If you picture a bombed-out cathedral as you think about business, we can still see the beauty of business, while there is much that needs restoration. We need a return to this higher purpose of business. Jeff Van Duzer, who is Provost of Seattle Pacific University and formerly the Dean of their Business School, fully rejects this idea that business is about profit-only. He says that business has always existed “to provide goods and services to enable a community to flourish and to provide people with opportunities for meaningful work.”
Charles Handy addresses this even more directly. He says,
“…To turn shareholders needs into a purpose is to be guilty of a logical confusion—to mistake a necessary condition for a sufficient one. We need to eat to live; food is a necessary condition of life. But if we lived mainly to eat—making food a sole or sufficient purpose of life —we would become gross. The purpose of a business, in other words, is not to make a profit, full stop. It is to make a profit so that the business can do something more or better.”
At Eventide, we believe the true story of business is to serve the common good.
This video expresses the views of Eventide Asset Management, LLC (“Eventide”), an investment adviser, and there is no guarantee that any investment strategy will achieve its objectives, generate profits, or avoid losses. Viewers should be aware that Eventide’s approach may not produce the desired results, and Eventide’s ethical values screening criteria could cause it to underperform other firms that do not have such screening criteria. All investments involve risk, including the possible loss of principal.
Eventide is providing this information for informational purposes only.
8039-NLD-8/21/2018
Edify Mission
Image by Jordan Rowland
Check out Edify.org to find out more about their mission!
by Edify
Edify’s mission is to improve and to expand sustainable, affordable Christ-centered education in the developing world. They partner with entrepreneurs who need access to training, capital, and technology to grow their schools.
Watch their video below!
CIF Releases Results from 2019 Survey of Financial Advisors on Faith Driven Investing
The full report of the survey is published here by the Christian Investment Forum.
Advisors are increasingly comfortable with Faith Driven Investing, are interested in recommending it, but have been slow to engage in conversations with investor clients.
Charlotte, NC / January 31, 2020 — The Christian Investment Forum released the results of the 2019 Survey of Financial Advisors on Faith Driven Investing Awareness and Use. It shows continued, albeit slowing, improvements in all three areas of focus – awareness, knowledge, and use. This slowing growth is relative to the last survey completed in 2016, which had shown more substantial improvements compared to 2013. The results also show some interesting and seemingly inconsistent responses, such as:
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Ninety-six percent (96%) were somewhat to very familiar with Faith Driven Investing concepts; BUT
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Only thirteen percent (13%) were able to accurately identify that there are more than 50 Faith Driven Investing funds and ETF’s available in the market (there are over 90).
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Ninety percent (90%) are interested in recommending investments that align with their clients’ faith and values; BUT
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Twenty-four percent (24%) said no clients had asked about Faith Driven Investing in the last year, and another fifty-one percent (51%) said only 10% of clients had asked, yet industry research suggests just the opposite – the majority of investors are interested in values based investing.
To a large degree, the issues limiting the use of Faith Driven Investing remain the same since the initial study in 2013. There continue to be gaps in perception compared to reality on product availability and performance. Yet some further structural changes are needed – additional investment products that can more closely align with the different faith values of investors, increased acceptance of funds onto proprietary platforms, and additional research to support the already existing data on ESG (Environmental, Social, Governance) investing, FDI (Faith Driven Investing), performance, and expenses.
The greatest opportunities to build momentum towards increasing the use of Faith Driven Investing are in helping encourage further education, and more importantly encourage conversations between advisors and investors. Both advisors and investors show high levels of interest in Faith Driven Investing, but neither advisors or investors are initiating a conversation or asking questions about FDI. More education on the topic of Faith Driven Investing can help to increase confidence for advisors to have the conversation. Similarly, more investor oriented information can help Christians recognize their role in asking questions of their financial advisor.
For those interested in supporting and growing Faith Driven Investing, there are strong reasons to be optimistic about the future growth in the use of FDI overall, and as a share of total assets under management. Data from this survey confirms previous research that a majority of investors and advisors alike have an interest in better aligning investments with the client’s personal faith and priorities. Macro trends in the market are showing strong investor interest in a more meaningful and integrated approach to investing in alignment with values. There are more organizations engaging in the conversation about Faith Driven Investing, and collaboration between them is improving. All of this helps to encourage others to understand they are not alone in desiring a more integrated approach to investing with their faith.
Check out the full report of the survey here!
About the Christian Investment Forum:
Founded in 2012, the Christian Investment Forum (CIF) is a Kingdom-focused 501c6 investment association committed to educating advisors and investors by providing opportunities to bring about change – in the hearts, homes, cities, and world that we serve. CIF strives to be an organization that enables others to advance and promote Faith Driven Investing (sometimes referred to as Biblically responsible investing or BRI), and cause greater Kingdom impact. CIF Foundation is a 501c3 non-profit organization that is a wholly owned non-profit entity of the Christian Investment Forum. The objective and purpose of the Foundation is to support the activities and purpose of the Christian Investment Forum (CIF), its sole member, in order to more effectively achieve the mission and goals of CIF. It is the intent of the CIF Foundation to provide research and education services to individual investors, advisors, and financial professionals related to Faith Driven Investing. Learn more at www.christianinvest.org
National Faith Driven Investor Gathering in Dallas – Sept 23-24th
One year ago, a small group of us gathered in Deer Valley to dream about how the Gospel might advance through Faith Driven Investing. This movement of investors, fund managers, and leaders believes that God owns it all and that He cares deeply about how we steward His investments. Watermark Community Church in Dallas is graciously working with us to host what will be this year’s defining gathering for Faith Driven Investors on September 23-24th!
We confirmed the dates less than a week ago, so more details will be coming out soon. We have already confirmed that Andy Crouch from Praxis, Finny Kuruvilla from Eventide, Ron Blue from Kingdom Advisors, and Todd Wagner from Watermark Community Church will be speaking. There will be tracks specifically designed for Real Estate, Private Equity, Direct Investments, Family Office, and Institutional Investing. We’ll feature actual faith-driven investment opportunities in new startups, real estate, and video properties including Phil Vischer, Creator of Veggietales. You can also stick around an extra day to network with entrepreneurs by joining us for the Faith Driven Entrepreneur Conference immediately following.
Seating will be limited to 700 attendees and registration is open! The Faith Driven Investor is a ministry subsidized by the generosity of a few individuals and foundations. There are some added discounts available for the first 100 registered.
We’re excited to see you there!
Strategy in the Age of Superabundant Capital
Image taken from Harvard Business Review
This article was originally published here by Harvard Business Review.
by Michael Mankins, Karen Harris, and David Harding
For most of the past 50 years, business leaders viewed financial capital as their most precious resource. They worked hard to ensure that every penny went to funding only the most promising projects. A generation of executives was taught to apply hurdle rates that reflected the high capital costs prevalent for most of the 1980s and 1990s. And companies like General Electric and Berkshire Hathaway were lauded for the discipline with which they invested.
Today financial capital is no longer a scarce resource—it is abundant and cheap. Bain’s Macro Trends Group estimates that global financial capital has more than tripled over the past three decades and now stands at roughly 10 times global GDP. As capital has grown more plentiful, its price has plummeted. For many large companies, the after-tax cost of borrowing is close to the rate of inflation, meaning that real borrowing costs hover near zero. Any reasonably profitable large enterprise can readily obtain the capital it needs to buy new equipment, fund new product development, enter new markets, and even acquire new businesses. To be sure, leadership teams still need to manage their money carefully—after all, waste is waste. But the skillful allocation of financial capital is no longer a source of sustained competitive advantage.
Read the rest of this article here!
Podcast Episode 15 – Multiple Bottom Line Investing with Pete Ochs
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Today’s episode takes us to jail. Well…not exactly. But we are interviewing a man who owns and operates a business that is run out of a high-security prison.
His name is Pete Ochs, and in addition to working as founder and chairman of an impact investing company, he’s also working to make Hutchinson Correctional Facility in Kansas the best prison in America. How? Well, we’ll let him tell you…
Pete is an expert when it comes to multiple bottom line investing—something many Faith Driven Investors are familiar with—and in this episode, he walked us through what that means, what it can look like, and how others can apply this approach to their own lives.
As always, thanks for listening.
Useful Links:
Jailhouse Business of Generosity