Biblically Responsible Investing (or “BRI” for short) is a form of faith-based investing. BRI focuses on the Christian faith, though there is a large degree of nuance across various denominations and philosophies. BRI is also considered to be part of the Socially Responsible Investing movement. However, BRI often varies significantly from a secular Socially Responsible Investing approach. In fact, of the $17 trillion total Socially Responsible assets, less than 1% fits BRI criteria.
What is Biblically Responsible Investing?
Biblically Responsible Investing is a means of aligning investment decisions with Christian values as reflected in the Bible. Otherwise stated, BRI represents an opportunity to live out the verse, “Honor the Lord with your wealth (Proverbs 3:9; NIV).”
From a more technical standpoint, Biblically Responsible Investing, like any form of Socially Responsible Investing, revolves around deciding in which entities/companies to invest. Investors using a BRI approach are selective in where their money goes and what they support. For charitable organizations, implementing faith-based investing can generate positive feelings from like-minded donors. Given the scrutiny placed on some Christian organizations, another benefit of a BRI investment program is the reduction in headline risk.
It is important to note that as in other forms of socially responsible investing, there is variety within the BRI world. Protestant and Catholic approaches create one line of delineation. Even within the Protestant category, many denominations have their own nuances just as there are differences in biblical interpretation. In many cases, an organization may need to aim for a good fit rather than a perfect fit.
Biblically Responsible Investing Options
There are three primary approaches which a Biblically Responsible Investing program can pursue.
- Negative screen. The first, a negative screen, is the most common. Negative screening involves excluding investments which are deemed contrary to the charity’s mission or values. The leading example of a negative screening approach is avoiding “sin stocks” in an investment portfolio. The investor is able to identify the screening criteria that are most important.
- Positive screen. A positive screen represents the pursuit of virtuous investments. However, this approach represents a difficult option for faith-based nonprofits. Given the generally secular mission of public companies, few will be strong candidates for a positive screening approach. As an alternative, organizations may pursue private investments such as Christian private equity funds. These funds are somewhat rare and require higher minimum investments and a degree of illiquidity (i.e. the cash used for the investment is “locked up” for a period of time).
- Advocacy: A third avenue toward BRI is advocacy. As the first step, an advocacy approach involves investing in companies engaged in problematic activities. The second and key step is using the investment to gain a “seat at the table” and request that the company change its ways. Again, the use of advocacy is somewhat limited in public market vehicles.
Implementing Biblically Responsible Investing
While faith-based investing and therefore Biblically Responsible Investing is a more narrow playing field than secular investing, there are a few ways in which a charity can implement BRI.
- Screened mutual funds and exchange-traded funds (ETFs). Several fund families exist that specifically cater to BRI-focused investors. These companies offer investment products that can be purchased “off the shelf” in a traditional brokerage account. The various fund families have different focuses. Protestant-focused mutual funds and exchange-traded funds are most commonly available, though some Catholic and Mennonite/Anabaptist options can be found. In some cases, non-faith-based companies may offer screened funds that generally comply with a BRI philosophy.
- Separately Managed Accounts (SMAs). Separately managed accounts allow an investor to own a portfolio of actively-managed stocks or bonds directly. This is in contrast to a mutual fund or ETF, which provides indirect ownership of the stocks or bonds. With an SMA, the investor can give the asset manager specific guidance on industries or companies to avoid. SMAs often have lower fees than actively-managed mutual funds but require higher minimum investment amounts.
- Direct indexing. Direct indexing is a newer form of investing. It involves directly purchasing the stocks or bonds within an index like the S&P 500 or Russell 1000. As with a separately managed account, the investor can select which of the index’s holdings to include or exclude based on the investor’s evaluation of a company’s overall alignment with biblical values.
Biblically Responsible Investing Decisions
Charities should thoughtfully consider whether to implement a faith-based investment program. BRI represents a key investment philosophy decision that impacts all of the organization’s investment assets.
An organization that places emphasis on its values is a stronger candidate for using BRI. A BRI approach may also be appealing to liked-minded donors and other stakeholders. As mentioned earlier, the use of Biblically Responsible Investing may reduce the potential for negative headlines.
Conversely, Biblically Responsible Investing may create some challenges. One is cost. In many cases, a BRI investment product costs more than a leading comparable secular product. The second potential challenge is product availability. Not every sub-asset class an investor desires may be covered by a BRI investment product.
Given the importance of the Biblically Responsible Investing decision, Investment Committee members should carefully weigh values alignment, investment merits, and means of implementing a BRI program. The evaluation process may require a great deal of thought, but the exercise will bring the benefit of additional clarity to the organization’s investment program. While extra care is necessary, employing a BRI investment program is absolutely feasible.
Is your organization interested in exploring a Biblically Responsible Investing program? We can help. You can learn more about our investment consulting services, and feel free to contact us for more information!
 US SIF Foundation’s Biennial “Trends Report” published November 16, 2020.