Faith Based Investing – A Potpourri of Strategies

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We will be spending some time in the coming days analyzing the concept of Faith Based Investing, and specifically the ways in which it has developed into nuanced areas of specialization over the past few decades.

Without delving into a historical review of Faith Based Investing (something we’ll tackle in the near future), the modern day version (1970+) of Faith Based Investing is more of an off-spring of Socially Responsible Investing (SRI). Interestingly, the genesis of SRI had little correlation with traditional religious doctrine; at least in the way we now commonly refer to “Faith Based Investing”. The movement to end Apartheid is generally cited as the beginning of the formal Socially Responsible Investing Movement. Interestingly, while not a pure religious issue, the Episcopal Church was a prominent leader in this movement.

SRI had a powerful following among varied groups, not the least of which were religious entities that took note of both the availability and the efficacy of impacting change and/or moral conviction in the daily management of one’s resources. Through the continued development of technology, both positive and negative screening of holdings became more cost effective and commonplace among investment managers.

Ultimately, the religious community began to take note of the success of the SRI community in aligning organizational principles with investment discipline.

Returning to the focus of this commentary, however, the broader religious community learned from the success of Socially Responsible Investing and applied the process and procedures to create what is now known as Faith Based Investing. The primary difference between the two strategies focuses on the ultimate goals – SRI may incorporate environmental, political, cultural, or economic goals. Faith Based Investing, while certainly not excluding these areas of focus, typically incorporate religious areas of focus as well, such as areas of conflict with scripture and denomination-specific doctrine. Abortion, firearms, pornography, usury, and alcohol are common examples.


Yet as the illustration above shows (click to enlarge), the Religious Investor of today has a plethora of tools at their disposal in aligning faith and finances. Following the development and continued refinement of Faith Based Investing, sub-sections developed focusing on shareholder activism and positive screening. Interestingly, the concept of Community Investing has gained significant momentum in the past few years among both religious and secular investors.

A further development in the process of Faith Based Investing is the emergence of Biblically Responsible Investing (BRI). Similar to Faith Based Investing, BRI analyzes the actions of individual companies and measures their compliance with the principles of the Bible.

We will take a deeper look at each of these tools in the coming days. Today’s religious investor benefits from customization and implementation flexibility; yet the options continue to demonstrate complexity and potential confusion. We hope our analysis and commentary adds clarity and guidance in this critically important area.

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