Make Your Money Work for You or Save the World – Why Choose?

I’m a big believer in helping people and in safety nets.  I am.  And certainly with so many still struggling in our country more needs to be done.  But I don’t think turning that job over to the government (our wasteful, bloated government) is the best way to go.  I believe much of that job belongs to us, as citizens and neighbors.  We can do it more efficiently and deliver it with compassion and love.  That motivates me to seek out  ways to contribute to a solution, things that we can do on a personal level or by using our influence globally and in our communities.  The socially responsible investing movement is growing in popularity for the same reasons.  Socially responsible investing, or SRI for short, is all about making money while making a difference.

It’s so easy to become overwhelmed by the bombardment of bad news we see every day, and feel like the little we can do can’t possibly make a difference.  And while the problems of poverty and environmental sustainability are huge, it is heartening to hear the good things, the measures that corporations, non-profits, and even the military are taking to make a difference.  It’s especially heartening to know we can be a part of it; by the way we use our money.  By strategically investing money- money we were investing already anyway- we can support companies that are doing the right things and provide funds for organizations to reach out to the community.  But what does that look like, specifically?

The most common and simplest way to get started in socially responsible investing (also referred to as impact investing, green investing, mission based investing, or faith based investing) is with mutual funds.  If your passion is supporting a green economy, you may wish to choose a fund that invests in companies that are developing alternative energy sources, or one that invests in companies using sustainable business practices.  Sustainable businesses seek to minimize their use of resources through conservation, recycling, growing their own food, or developing new technologies.  For instance, Dell has been switching from foam and plastic packaging to bamboo, and has now developed mushroom based packaging to ship their servers.  Starwood Hotels has also made sustainability a priority, with an internal sustainable practices website and tracking of resource use for employees and guests alike.  Working with Clean the World, leftover soaps and shampoo bottles are recycled, sanitized, and distributed in the US as well as Haiti, Japan, Zimbabwe, Uganda, Mexico and India.  According to Clean the World, 9,000 children die every day from diseases that can be prevented by washing with soap.  Other green funds support efforts to provide clean water or advocating for fair access to water.

The flip side to investing to support causes you believe in is choosing not to invest in things you don’t believe in or do not want to support.  There are SRI funds that specifically exclude companies in the tobacco industry for example, or depending on which side of the fence your beliefs fall, either excluding companies that do not provide benefits for domestic partners or same sex partners, or excluding those that do.

Beyond mutual fund investing, you can choose on a personal level to do business with corporations that are doing what you consider to be positive things, while avoiding those that engage in activities that are harmful.  For instance, without much fanfare, McDonalds has made animal welfare and sustainable food sources a priority.  Just recently, Frito Lay opened a “near net zero” plant in Casa Grande, Arizona, meaning they use very little water and energy that they don’t reuse, and create near zero waste.  Those are the kinds of companies I want to support.  On the other hand, I do not want to support the exploitative payday lending industry, and would not do so knowingly.  But I learned that there are several major banks with payday lending arms.  I will be sure to avoid providing those banks with any of my business now that I know better.

“Breaking up with your bank” is an idea that is gaining traction.  Putting money on deposit with local financial institutions keeps those funds in your local community rather than adding to the bottom line of big banks.  Putting money on deposit with community development financial institutions (CDFI’s) can multiply that goodwill; through these banks and credit unions your capital provides for job creation, loans for affordable housing, banking for underserved populations, start-up loans for entrepreneurs, and community redevelopment, all with competitive interest rates and federal deposit insurance.  Self Help and Hope Federal Credit Union are examples of CDFI’s with money market accounts available to out of state depositors.  Self Help also offers a Green CD that supports the green economy by lending for recycling and sustainable agriculture, and the building and financing energy efficient homes.

For larger deposits, community investment notes are available in many states.  These notes are traded in brokerage accounts, like bonds or brokered CD’s, and come in various maturities and interest rates.  These are not federally insured, and therefore carry risk.  The entire amount of your investment is typically lent out for community development projects such as job-creating microenterprises or affordable housing units.  The non-profit Calvert Foundation is the most well-known issuer of community investment notes (this is not an investment recommendation).

Locally, and more directly, we can support businesses that are using sustainable practices, such as restaurants that grow their own food or companies striving to reduce their carbon footprint.  We can shop local, and for those products we do need to purchase from major corporations, we can do some homework ahead of time and support those with values similar to our own.  I’ve learned that so many corporations are doing good things, and not just for the PR.  In fact, it can be hard to know who is doing business this way, as they are not publicizing it. and are great sources of information for choosing businesses that promote social and environmental justice.  We support our favorite causes through our words, contributions, and volunteer activities; leveraging our support through our investments adds to the impact, doing even greater good.

We’ve got a lot of work to do.  Better get going.

photo by: Julien Harneis

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Part 2A & B of Form ADV: Firm Brochure