Catholics should think first, invest later.
No, I don't mean that I'm toying with the idea of closing out the account and spending a couple of weeks in Tahiti. That money is meant as a starter kit for my financial security, and that is how it is going to be used. It'll stay in a mutual fund gathering dust and--I hope--a respectable rate of interest. That decision, however, doesn't liberate me from any further concern about the money. What it does is commit me to a new world of responsibilities.
Before things get too hysterical, I have to point out that we're not talking megabucks here. The amount of the cash is beside the point, however. It is money; it is invested; it is at work--whether for good or ill is now up to me. It's up to all of us in fact.
Do you know how your money is being used? You should. Whether you like it or not or whether you acknowledge it or not, money never sleeps. Your local bank may be reinvesting your money into the homes and small businesses that are building your community or it could be financing a new shopping mall where your kids' playground used to be. That money you've salted away for retirement in a mutual fund or an IRA could be paying for more ecologically friendly technology or for the latest public-relations campaign from that company that turned your favorite mountain stream into a polluted dump.
American culture teaches lessons about business that Christians find acceptable because, frankly, they're easy to deal with--they require less energy, less imagination, less legwork. Invest your money at one end of the economic machinery, they're told, and your return in interest income comes out magically at the other end. Unfortunately there's nothing magical about that process. In between your investment and your profit are people and communities and ecologies that are sometimes devastated by industry. There are human costs and economic and environmental byproducts of production that have to be factored into business plans.
If you are a middle-class Catholic with money to invest (and you are investing your money even when participating in the most mundane of financial enterprises--opening a checking account, for instance) you may feel one step removed from those responsibilities. You are, after all, not making the decisions that cause environmental damage or resolving a bad management decision through mass layoffs. But while you may not be corporate stewards, you are the stewards of your own wealth.
And you have to be a better steward. You have to put your money to work not only for your own future, but also for everyone's. There is no such thing as a neutral position when it comes to money. To be indifferent about how your bank or your broker or the managers of your mutual fund use your money isn't an abstention; it's an endorsement. Your indifference okays every act, every outrage, every layoff administered by every company that is using your money.
You may have already heard of the economic phenomenon called "socially responsible" investing. The managers of socially responsible money market and mutual funds--Pax World, Parnassus, and Working Assets are just a few--review potential investments not only according to their likely return but also across a gamut of social-justice concerns. They screen out companies that, for instance, have a bad record on the environment or the treatment of their workers.
What difference do these funds make? Not much as far as the interest you're likely to earn. Despite unfounded fears that social funds are "too risky," most financial analysts report that socially responsible funds do no worse than their less socially conscious competitors--sometimes they do better. But what they do best is ensure that your money finds its way into the corporate hands that are interested more in industrial and economic stewardship than quick profits. The appearance of these new funds mean that small investors have more options--more power. Catholics are called on to use that power.
A lot of people complain that they can't add one more issue to an already crowded plate of social concerns. Who has time to look over an investment portfolio when you've got a demonstration to run to or an irate letter to write to the misbehaving corporation of the month? But think about how much time and energy you would save if you didn't have to write that letter or attend that demonstration because your money was being invested in the kinds of enterprises and corporations that don't misbehave in the first place.
Why should you trust these social-fund managers to be any more responsible with your money than your old investment crew was? You shouldn't. That's the point. Find out what you're money is doing and change what you don't like. Take a hard look at these new funds; don't just switch to the first one that waves a green flag at you. Don't think you have the time for all the extra research? You don't need any more time than you're already spending on managing your money. Socially-responsible mutual funds have managers who do the work for you. If you're more of a hands-on investor, the amount of time and effort required is up to you--how many issues do you feel strongly about?
It doesn't take much effort to find out how your bank is using your money. Ask for its community reinvestment statement. Banks (and savings and loans) are required by law to keep them, and they can give you a pretty clear idea of how a bank is putting your money to work. Ask also for the federal performance evaluation of your bank. They are required to provide it to you.
A growing number of community-development banks are opening across the country. If your community doesn't have one, consider opening an account with a development bank in another town. In the era of the nationwide financial grid, it's not inconceivable to do all your banking electronically.
Catholics rightly attribute a heavy moral responsibility to those people who guide U.S. industry and business. They expect businesses and executive managers to make the right moral choices when reviewing the day-to-day decisions that determine a company's social and environmental impact. Catholics hold businesspeople to the moral standard of right stewardship of the earth's resources and of their company's resources--both financial and human--and the right stewardship of a company's relationship with the community where it works.
How many follow the thread of that responsibility, however, back to their pension funds, their 401K plans, their IRAs, their mutual funds--even their checking and savings accounts? The significant role in the machinery of capitalism played by the small investor isn't something Catholics can ignore. There are few companies that end up gracing newspaper headlines because of some misdeed or another that are not propped up by the small investments of private individuals.
It's easy not to feel any moral responsibility for money. The inhuman efficiency of the ATM cuts us off from more people than just bank tellers; we don't find out if our banks are closing out the lives of our neighbors by redlining low-income communities. The convenience of automatic payroll deductions relieve us of more than the burden of having to physically handle our investments--it absents us from the moral decision making that is part of investing. And how much easier is it to let a mutual-fund manager or broker agonize over where to best invest your money?
While many investors maintain a sort of willful ignorance of the way their money is being spent, others simply don't care as long as some return is achieved on investments. They argue that the business of business is business, that creating wealth and employment are the proper aims of business--not resolving the world's ills. That would be a fair moral place to stand if business and industry didn't create so many of the social and economic inequities and environmental problems that trouble our world.
The church has a long history of standing up for the right of workers to organize and to be treated with dignity. Can I say with confidence that I support the church's position while I allow my money to be invested in a company that mistreats or dehumanizes its work force? What if my money is invested in a company that is optimizing profits by shutting down a plant in the U.S. and opening one in a country where it can pay nearslavery wages?
U.S. culture teaches that money is blameless, that things are best if money follows its natural course from investment to profit--assuming that any unpleasantness generated during that process can be dealt with through a new tax-deductible charitable organization or institutional relief system.
But that's not what the church teaches. Catholic teaching "rejects the notion that a free market automatically produces justice" (from the U.S. Catholic bishops' pastoral "Economic Justice for All").
The church teaches that the economy is supposed to serve people--not the other way around--celebrating the dignity of labor and elevating the conditions of humankind in a sustainable and equitable manner.
Every day it appears that great decisions are made and great transformations effected by America's $5 trillion economy. Maybe small investors can delude themselves that they are not actors in this tremendous drama, that they don't participate except as the source of the raw material of capital.
The truth is that there are really no great decisions or tremendous deeds in our economy. There are only thousands of small ones. And we make them in every way we put our money to work.
Each month, advance copies of Sounding Board are mailed to a representative sample of U.S. CATHOLIC subscribers. Their answers to questions about Sounding Board and a balanced selection of their comments about the article as a whole appear in Feedback.
1. I have money invested in a:
35% checking / savings account.
24% pension / retirement plan.
13% money market.
20% stocks / bonds.
2. Christians have a responsibility to be stew-
ards of their own wealth, which includes
knowing how their money is spent.
3. I trust my bank to put my money to good use.
4. I'm not responsible for the way a company
uses my money.
5. I don't care how my money is invested as
long as it makes a decent return.
6. In the long run, creating wealth will do more
to better society than restricting investments
to a narrow group.
7. I don't trust the long-term stability of social
8. I intend to ask my money managers to ex-
plain where my money is going.
9. Investing in social funds will not change social
and economic inequities.
10. Regarding the U.S. bishops' pastoral "Eco-
nomic Justice for All":
18% I have read it.
42% I have read excerpts of it.
9% I heard it preached about from the pulpit.
26% I am unfamiliar with its contents.
11. Along with Kevin Clarke, I think it's my
Christian duty to make sure my money is
invested in a socially responsible way.
I BASE MY INVESTMENT DECISIONS ON:
I check to see that the organization is stable, provides a good return on the investment, and gives back to the community.
Christine Olsem Bellevue, Iowa
I consult with brokers, bankers, and advisers. I read as much as I can about the investment.
Helen V. Kramer Baltimore, Md.
I always invest in credit unions. They are responsible and give the highest rate.
David Delka Madison, Wis.
I check risk and return. I consider the general reputation of the investment firm.
Astrid Schutt-Aine Miami, Fla.
So far I have not invested any money because each time I begin to research the different options available, I get overwhelmed with the information needed to make a good decision financially and morally and with my lack of knowledge in the area of business.
Meg Moloney Reading, Mass.
I have found a CPA that understands my investment philosophy. We discuss my five-year and ten-year plan to be able to invest properly. My CPA is a religious man, we have a good ecumenical rapport. I look at the prospectus of investment companies to see how investments are made.
George Leal Newcastle, Okla.
I read about the bank or company, and I research thoroughly.
Kathleen M. Robnett Loddonia, Mo.
In the past I've done nothing. I will contact the bank and credit union and ask where investments are made and how decisions are made.
Rosemary Sullivan Lansing, Mich.
ONE PLACE I WOULD HATE TO SEE MY MONEY GO IS:
China--the government seems to be clueless about the whole concept of basic human rights. I think withdrawing investments and trade preferences is the only way that government will take humanrights issues seriously.
Becky Thatcher Cleveland, Ohio
To government programs that do not help the poor become self-sufficient or to companies that do the same--companies that exploit workers because of lower standards of living in those countries or to companies that abuse or overuse natural resources.
Mary Sue Sharp Cape Girardeau, Mo.
I would be very upset if money that I gave to the church was used as hush money to keep a sex offender from being punished.
Ralph Pungercar Rockford, Ill.
To anything that contributes to the rich getting richer and the poor kept poor.
Stella M. Clasen Garden Plain, Kans.
The federal government--I have the opportunity to see how the tax dollars are spent in the areas of justice, drugs, and alcohol abuse. Citizens would be outraged to see the billions of dollars that are spent on "beltway bandits," the private consultants, their new buildings, and ideas that are not relevant to local communities. The prevailing attitude is that ordinary citizens are not capable of making responsible decisions but need "experts" to tell them what to do and how to do it, rather than providing citizens with quality educational data and information and allowing them to make their own decisions on a community level.
Name withheld Indiana
Planned Parenthood, companies that employ illegal workers, and companies using low-paid overseas workers.
Barbara M. Kruger Fremont, Nebr.
An industry that closes down American plants to operate below minimum wage in another country.
Bob Barto Lisbon, Ohio
To the manufacture and development of weapons, the tobacco industry, or the entertainment industry, which continually promotes violence and immorality.
William Van Dril Allegan, Mich.
To national and state funding for abortion.
Name withheld Wamego, Kans.
To any company that acts as if it has no responsibility except profit.
James A. Downing Crystal Lake, Ill.
To life-insurance companies--the rate of return is abysmal. Policies are sold to consumers on the basis of the blatant greed of the industry--rather than on the needs of the client. Clients in whole-life polices are savagely overcharged for an undervalued product.
Paul Hodge Seekonk, Mass.
To a company that does not pay or benefit their employees fairly and one that makes too large a profit from the labors of another. Some profit is okay--but it must be well balanced with what the one who is providing the labor is receiving.
Name withheld Water Valley, Tex.
To companies that discriminate racially or sexually, that do not pay a living wage, or that use parttime employees to eliminate the need to pay benefits.
Marilyn Siefert Toledo, Ohio
THE INVESTMENT I'M REALLY PROUD OR ASHAMED OF IS:
The contribution/investment I make to Providence St. Mell School--an inner-city, private school that was closed by the Chicago archdiocese and reopened by investors. Today, the school's graduates, many of whom come from economically deprived backgrounds, attend some of the finest colleges in the country.
Gregory Gerber Oak Park, Ill.
Hanging on to our Chrysler stock when those who consider themselves experts in investments said that Lee Iacocca could not turn Chrysler around. He did. He saved jobs--high-paying ones--for thousands of Chrysler workers. Everyone who hung on to the stock should be proud of such a fine American company.
Evelyn L. Janice Southgate, Mich.
I'm proud that the profits on my investments allow me to contribute to my church, former high school, and service organizations that offer scholarships to women and housing to homeless women and children.
Name withheld Reseda, Calif.
A retirement plan with the Knights of Columbus.
Lois K. Berns Independence, Iowa
I'm ashamed of investments I made in my younger years when I failed to make responsible Christian choices regarding those investments.
Name withheld Sheboygan, Wis.
Saving for college for my children.
Greg Nenninger Leopold, Mo.
We rent a small house below market rate to a year-round carpenter rather than using high summer rentals. I believe that it is important to sustain and support the year-round population of our small community.
Monica Hull-Shea Block Island, R.I.
I am proud of my investment in Wal-Mart because locally they help not-for-profit groups, such as our high-school band program raise money, and because it's just a good investment. They also claim to buy American.
Susan Marcotte Schaumburg, Ill.
My investment in my local credit union is one I'm proud of. It's money I'm confident is beneficial to the community, whether in the form of personal or commercial loans.
John Vlasin East Lansing, Mich.
Social responsibility is not the same as moral responsibility. Society is constantly changing what it thinks is responsible and right, whereas moral truths stay constant. One needs to be sure that one's money is invested in a morally responsible way as opposed to being invested in a socially responsible, liberal, trendy cause of the day.
Patricia Curran San Antonio, Tex.
After reading Clarke's article, I intend to check up on a few of my investments. I initially thought this article was of no relevance to me, but then I began making a list: an IRA, pension fund, money-market account, checking account, savings bonds, and whole-life insurance policies are all using my money.
Daniel Foley Northfield, Minn.
I do not know how one can invest in businesses and not expect them to act for what they are. Companies are out to make money or go out of business. I do not favor polluting the environment, the practice of unfair labor, unjustified mass layoffs, and so on. This does not mean that cutbacks in labor are always unjustified. If a decision is to cut back labor or go out of business, then the former may be the lesser of two evils. We all need each other to keep things going. There is so much money available for investment that the few who follow Clarke's guidelines will have little or no impact in the real business world.
William Addeo Riva, Md.
What I should do about investigating the stock I own is not what I do. When the annual report from a company comes out, I read the information under shareholders proposals and from that learn about the human and environmental situation concerning each company. From that my vote could be affected. The one good thing about my investments is that charitable organizations are to receive the money from the sale of the stock at the time of my death. I've been trying to make them as much money as possible!
Name withheld Lexington, Mich.
This article makes me much more aware of the importance of investment goals and my responsibility in choosing and finding out more about these goals.
Loretta Corrigan Independence, Mo.
We have a Christian responsibility to know how our money is used. We ultimately have a higher power to account to, and we are also responsible to each other.
Dale R. Szczech Provincetown, Mass.
It would be nice if we could control where our tax money goes as well as we can our investments.
Katherine White Newport News, Va.
Your article makes me more aware that even small investors have an impact. If enough of us speak out, we can have an effect on the way companies use our money. Even the most dramatic changes happen one small step at a time. If we do nothing, then nothing will change.
Libby Wiets St. Albans, Me.
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|Title Annotation:||includes readership survey; socially responsible investing|
|Date:||Jun 1, 1994|
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