Investing by the Book

A quiet revolution has taken place over the past 30 years in corporate America. Driven by such groups as the pro-gay Human Rights Campaign and the pro-abortion Planned Parenthood, large corporations such as JP Morgan Chase and Bank of America have become major funders of liberal social action. And since 1973's Roe v. Wade decision, more and more healthcare companies are directly involved in the abortion industry.

My frequent WORLD co-writer Howard "Rusty" Leonard, whose investment firm Stewardship Partners is one leader in the field of Biblically Responsible Investing (BRI), estimates that 20 percent to 30 percent of large-cap companies engage in activities that evangelicals would find objectionable.

"This is all relatively new," Leonard said. "Unfortunately, Christians have been slow to adjust their investing habits to this new reality. That's why you'll find Christians preaching against abortion, pornography, homosexuality, gambling, or human-rights abuses on Sunday, but on Monday they'll invest in companies-often unknowingly-that engage in all these activities. We're engaged in a culture war, but we're unwittingly funding our own enemies."

Leonard is part of a small but growing BRI industry that is beginning to be taken seriously because of the growth of so-called Socially Responsible Investing (SRI). There has been some form of SRI in the United States for centuries. In 1758, the Quakers of Philadelphia prohibited their members from doing business with companies involved in the slave trade. In the 19th century, John Wesley warned against engaging in business practices that "harmed your neighbor" and specifically criticized the tanning and chemical industries.

However, Socially Responsible Investing didn't really become its own asset class until the 1960s, when anti-war activists focused on the defense industry. Meeting with some success, the effort expanded. Mutual funds and other investment tools sprang up to implement the goals of SRI, which usually involved military spending, environmental issues, human-rights abuses, alcohol, tobacco, and gambling. In 2007, according to the Social Investment Forum, more than $2.7 trillion was invested in SRI financial instruments.

Biblically Responsible Investing is a much smaller industry-with no more than a dozen options and assets under management of less than $2 billion. But the industry is slowly growing. Art Ally is founder of The Timothy Plan, which was perhaps the first true BRI mutual fund. He said BRI funds have held up better during the economic downturn because they tend to be more conservative, and because most financial industry stocks-which were hit the hardest by the downturn-were already screened out of most BRI funds due to those companies' involvement in abortion, homosexual rights, and human-rights abuses. "When your security is in the almighty dollar and not in the Almighty, you'll behave like people of the world, not like people of the Word," Ally said. "But this economic downturn has motivated some Christians to return to their core values."

One of the major objections to BRI is that it doesn't deliver good returns. However, Leonard said the opposite has been true for Stewardship Partners and others in the BRI field. The Eventide Gilead Fund, a new BRI mutual fund, was recently named the top performing U.S. mid-cap core fund out of 359 ranked. People think that because they have fewer companies to invest in, performance will suffer, Leonard said: "They forget that both God's laws and market forces tend to reward admirable companies and punish evil-doers over time."

What is Biblically Responsible Investing? BRI means investing according to biblical principles. Not all BRI funds are the same, but in general BRI eliminates or "screens out" companies that are involved in or support abortion, pornography, homosexual behavior, gambling, tobacco, alcohol, and human-rights violations. These screens eliminate 20 percent to 30 percent of the Fortune 500 companies, but only about 5 percent of all investment-grade companies.

Who are the major players? Eventide Gilead, Stewardship Partners, The Timothy Plan, Ave Maria Mutual Funds (Catholic)

What's the latest? Kingdom Advisors, the nation's largest network of Christian financial advisors, now has a BRI focus group. A growing number of the giant "wirehouses" such as Merrill Lynch have recently added BRI options for clients.