Moral Bottom Line Luring Young Investors

In the same manner that she shops for locally grown produce, Abigail Weinberg chose to sidestep the bank behemoths and instead open an account at a small, local bank that invests in the Ann Arbor, Mich., community in which she lives. “I consider myself someone who wants to be socially and environmentally responsible in all areas of my life,” she says.

This philosophy is one Weinberg applies to her investment portfolio, as well. She invests directly in community development financial institutions and has money in a socially responsible index fund. And when the Jewish Funds for Justice launched its Community Investment Initiative, a socially responsible investment program aimed at modest investors, less than two years ago, Weinberg was one of the first investors.

Her $2,000 investment in the fund may not have been “a huge amount of money,” says Weinberg, who used to work at the Shefa Fund before it merged with the Jewish Funds for Justice. But, “it was invested with intentionality as an expression of the Jewish value of tikkun olam,” or repairing the world.

As the green movement continues to gain ground within the Jewish community, many investors are re-examining their investment portfolios with an eye toward not only financial gains, but also social impact. The same people who frequent farmers markets and have switched all of their light bulbs to CFLs are bringing that passion to their portfolios.

In light of the stock market losses of 2008 and the Madoff affair, investors are increasingly open to the idea of measuring their returns in ways that are not solely financial.

“There’s a lot more interest in what we call a triple-bottom line: financial profits, social impact and environmental responsibility,” says Jeremy Burton, senior vice president of philanthropic initiatives at the Jewish Funds for Justice (JFSJ).

Until recently, however, only Jews of high-net worth or institutional investors like the Reform Pension Board, federations, and family foundations had access to uniquely Jewish avenues for ethical investing. This left individual social justice activists and even Jewish communal professionals like Burton out in the cold.

For over a decade, JFSJ has leveraged more than $30 million in loans through the TZEDEC Economic Development Fund. TZEDEC offers mission-minded investors the opportunity to earn a modest interest rate while supporting job creation and community development in low-income areas such as Baltimore, Md., the Gulf Region, Los Angeles, Philadelphia, South Florida, and Washington, D.C. TZEDEC currently manages $11.5 million in investments, an increase of more than double in the last five years.

The minimum investment, though, is $18,000 — quite a hefty sum.

But as demand for socially responsible investment options increases, even Jews of more modest means can invest their money to achieve social impact in a very Jewish way.

In 2008, JFSJ partnered with the Calvert Foundation to launch the Jewish Funds for Justice Community Investment Initiative, which allows American Jews to participate in community investment by lending as little as $1,000. More than $120,000 has already been invested through this program. “It’s nascent, but it has a lot of potential as a vehicle for smaller investors,” Burton says, adding that he has invested his own money in the fund.

As the economy begins to rebound from the Great Recession, investors are slowly rethinking their investment options as they begin to move money back into the stock market. Only now, thanks to the clarion call of the eco-friendly and social justice movements, as well as tough lessons learned from the Madoff debacle, investors are more open than ever to exploring investment options that yield a blend of both financial and social returns.

Socially Responsible Investing (SRI), also known as Ethical Investing, has seen a boon in recent years. Currently, one out of every nine dollars under professional financial management in the United States is involved in socially responsible investing — investments that take into consideration not just the financials but also the social and environmental consequences of investments.

“The awareness of our financial industry’s relationship to real people on the ground is heightened in a way it hasn’t been in years,” says Burton. “Suddenly, people are viewing banks not just as the place where they happen to have a checking account. They want to see how that money creates jobs and makes a difference for real families locally.”

Within the faith-based world, Socially Responsible Investing dates back more than 200 years, with Quaker immigrants arguing against investing in war and the Methodists managing their money using what is known in modern investment lingo as “social screens.” Today, religious mutual funds have $26 billion in collective assets, according to the Social Investment Forum Foundation. Most of these funds screen out, or avoid investing in, businesses that make money from tobacco, gambling and other “sin stocks” that violate their religious values.

The Timothy Plan, for example, is a Christian mutual fund that bills itself as “America’s first pro-life, pro-family, biblically-based mutual fund group.” Ave Maria’s Catholic Values Fund was started at the insistence of Tom Monaghan, the owner of Dominos Pizza and a devout Catholic. The fund screens out companies involved in activities that the Catholic Church is against, such as abortion and pornography. And the Amana Fund invests according to Islamic principles, avoiding firms that derive more than 5 percent of revenues from pork, alcohol, gambling, pornography or tobacco.

No corresponding Jewish SRI fund exists, says Jared Pfeifer, a doctoral candidate at Cornell University whose work focuses on the intersection of finance and religion. Yet Mark Schwartz, associate professor of law, governance and ethics at York University, believes that one may come onto the scene in the near future. However, there will be many challenges to be overcome, such as who will be on any screening committee for the Jewish mutual fund, what their qualifications would be and whether their qualifications will be accepted by the majority of Jews.

“This is particularly the case in the Jewish community where there is great diversity of beliefs regarding many matters, including acceptable investment practices,” Schwartz says.

The Jewish community, however, has been an active force in the world of community investing, a form of SRI in which investors loan funds, often at a below-market interest rate, to support affordable housing and other initiatives that benefit traditionally underserved communities. In 1997, the Union for Reform Judaism began actively promoting ethical investing among its membership. “For the Reform Jewish Movement, devoted as it is to tikkun olam, socially responsible investing policies and practices are not an optional commitment,” read the 1997 resolution. “They are an organic expression of our core beliefs.” In addition, the Reform Pension Board, which serves professionals in the Reform movement, was the first Jewish organization to join the Interfaith Center for Corporate Responsibility. In recent years, the URJ has encouraged congregations to join the Chai Investment Program by investing 1.8 percent (a play on the numerical value of “chai,” or life, which is 18) of its assets in community development.

For individuals, however, the Jewish Funds for Justice Community Investment Initiative, offered through the Calvert Foundation, is a welcome option that has been a long time coming. That’s because while many Jews are already investing in socially responsible funds, “they do it from a place of Jewish values but don’t necessarily do it with a public Jewish face,” says Burton.

The JFSJ is trying to change that. “Making it visible that Jews are participating in social change as a Jewish community is what we do at the Jewish Funds for Justice,” Burton says. “Vehicles like ours help make it more transparent.”

Though she would invest in community development anyway, the fact that there’s now a Jewish vehicle for modest investors is cause for celebration, Weinberg says. “This is a trustworthy way to help people through the gate into this world of community investing,” she says. n

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E-mail: Tamar@jewishweek.org.