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Investing with virtue

Personal Finance | How to be in the world but not of it as we grow our money

Issue: "Unify and conquer," June 14, 2008

One of the issues I am most frequently asked to address with Christian clients deals with investments from a moral standpoint. Many wonder if so-called "virtue" funds or "socially responsible" funds provide Christian investors with security that their investments are compatible with their value system.

We must not paint with too broad a brush, as these so-called funds do not all look or function the same. Many "socially responsible" funds simply focus on environmentally friendly companies, and my research has led me to conclude that the vast majority of "socially responsible" funds are simply disguised "green" funds.

Indeed, one of the very tricky parts of this whole subject is defining what is "virtuous" and what is "socially responsible." Many Christians may choose to avoid stocks that deal with alcohol, while the consciences of others would not feel burdened by such an issue. I want to lay out the principle that Paul called "being in the world, not of the world."

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We cannot deny that we have residency here on planet Earth. Indeed, God has called us to occupy and inherit the world, "making disciples of all the nations" (Matthew 28:19). In Paul's exhortation, the clear inference is that contact and association with the world is (to a large degree) impossible to avoid. We need to live differently, being of the Spirit and not of the flesh (Galatians 5:16-18).

However, when a Christian proposes that believers are not to own a stock or bond from a company that may have some involvement in things we do not believe in, a very difficult proposition is being implied. It essentially calls for Christians to flee the world altogether, for certainly this view of commerce is impossible to apply apart from a complete tribal separation from the very marketplace itself.

For example, suppose a Christian finds ABC company, which he believes has policies and values that are compatible with his criteria for investing. Is that Christian investor aware of all the vendors ABC company purchases from? Is he to be aware of the policies and values of all their customers, partners, shareholders, and banks? What if ABC company works with XYZ company, and XYZ company works with 123 company, and 123 company works with a bank that has policies and values outside of that investor's preferences? My point is this: It is not possible to vet these considerations the way many Christians feel that they should, even if they wanted to.

None of this is to suggest that Christians should invest in any vehicle they desire, without restriction. Romans 14 is clear that doubt and conscience must be considered. However, I believe an informed conscience will recognize the practicality of "moral proximity." If a local strip club owner asks you to invest with him, it is something as proximate as can be that you can (and must) decline to do.

However, if you own a 401(k) plan that owns a mutual fund that owns 1 percent of the stock of Amazon.com, and Amazon has books for sale that you find objectionable, there is a large enough gap between your investment and the undesirable activity that it seems very reasonable and permissible (some may call it "degrees of separation").

I am often confused by the logic that states Christians cannot invest in certain companies but they may patronize them as consumers. When you own stock in a company, you are not giving money to the company itself-you bought it from another private party who owned it. However, when you buy a cheeseburger from McDonald's, the money goes straight into their cash register. Are we to say the latter is acceptable, but the former is not?

I believe that virtuous investing avoids legalism and impossible expectations. If specific stocks and bonds bind your conscience, they can certainly be avoided. But along the way, remember that we are "in the world, though not of it." This reminder was given us by Paul for a reason, and we must apply it with the wisdom that is from above.

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