How we spend and invest God’s money matters. Practicing good stewardship means we care for all He’s entrusted to us in a way that honors Him—and this includes our investments.
While most people often set and forget their investments like 401(k)s or other retirement accounts, investments pose a huge opportunity to build God’s kingdom. Many Christians are unaware of the additional opportunities they have with their investments. Conversely, they’re also unaware of some companies’ harmful practices—companies that they may be investing in now.
We want to help you be certain your values and finances align—and set up your portfolio to do the greatest good for God’s work in the world. This guide is designed to provide a framework for how to align your investments with your faith, audit and adjust your portfolio, consider the legacy you wish to leave behind, and ultimately ensure you’re putting your money where your heart is.
Understanding Values-Based Investing Through a Biblical Lens
Values-based investing (also called ethical, faithful, or faith-based investing) is a strategy that seeks to allocate capital toward companies that align with Biblical principles and values. It’s about shaping your portfolio to honor God and further His kingdom through the products, industries, and companies you choose to support, in a way that goes beyond the merely ethical or socially-responsible approach of Environmental, Social, and Governance (ESG) investing. It’s essentially challenging yourself to carefully and systematically consider whether your investments please the Lord, support your convictions, and proactively contribute to God’s good and holy work in the world. Someone utilizing ESG may invest in a business that promotes a service with a secular worldview but practices fair labor, while a faith-based investor may choose to support a specific social justice cause through a Christian lens.
Historically, the three pillars of Christian investment stewardship are:
- Avoiding harm. This involves screening your portfolio to filter out companies causing negative impact.
- Promoting good. Screening your portfolio to ensure you’re supporting organizations and products that promote flourishing for the causes and people close to your heart.
- Creating impact. Becoming highly intentional about investing in places that provide meaningful, proactive Kingdom impact in the world.
Our friends at Eventide Investments have distilled the three pillars mentioned above into a very practical roadmap, refreshing and evolving them into Avoid, Embrace and Engage, which we will unpack below.
Building a Faith-Aligned Investment Strategy
The roots of Christian investing go all the way back to the Old Testament. Israelites were instructed to give a tithe to support the priests and the Temple, and the idea of “almsgiving” developed as a way to follow Jesus’ teaching to give to those in need. Today, we can support an array of trustworthy organizations and businesses who are doing important work, through a faith-aligned strategy founded in careful, intentional screening.
Avoid. Negative Screening: Industries and Practices to Consider
Traditionally, a negative screen of one’s portfolio was meant to identify and exclude anything the Church historically considered immoral including alcohol, tobacco, or gambling. More modern considerations may include pornography, sanctity of life, predatory lending, environmental impact and stewardship, small arms, and labor and human rights issues, based on the individual’s convictions.
Embrace. Positive Screening: What to Look For
Conversely, positive screening allows an investor to consider publicly and privately-owned organizations they appreciate and want to advance. It’s the combination of promoting good and creating impact. Finding organizations you wish to support may require more time and analysis, but there are some very solid firms doing this important examination to uncover:
- Companies who are promoting human flourishing
- Environmental stewardship initiatives
- Businesses with fair labor practices that advance worker dignity
- Community development and support opportunities
- Family-friendly policies and practices
Engage. Add your Voice to the Conversation
In Eventide’s refreshed approach, this third way opens up a new opportunity to create impact—by challenging the leadership of a company to shift their practices in a positive direction. This applies to companies whose service or products you appreciate, but may have practices you deem antithetical to human flourishing and want to see changed. This may mean you commit to them beyond typical investing to become part of their proxy voting process, or attend shareholder meetings – engaging meaningfully as a means to inspire change.
The Impact on Portfolio Performance
Addressing Common Concerns
You may be wondering, “Why does it matter whether a company aligns with my values? Couldn’t I choose to invest where I can maximize my financial returns irrespective of their values, and then donate a charitable gift to an organization I can get behind?” We believe this presents something of a false choice. You don’t have to choose between returns or investment. The data shows it’s possible to employ a careful, intentional screening process and still have exceptional results, without sacrificing your convictions at any level.
According to a Christian Investment Forum Study that analyzed 44 Christian faith-based funds in both equity and bond categories over a 15 year period, the CIF Equity Fund Composite averaged an annualized return of 7.1%, outperforming its benchmark’s 6.3% return. Similarly, the CIF Bond Fund Composite achieved a 4.2% annualized return compared to the benchmark of 3.8%
In another example, the Hennessy Cornerstone Mid Cap 30 Fund has outperformed the S&P 500 over two decades by employing a straightforward four-part filtering process. Their strategy involves screening companies based on market capitalization, price-to-sales ratio, annual earnings growth, and positive stock price momentum. By systematically applying these criteria, the fund reduces thousands of stocks down to about 30 finalists, leading to stable growth opportunities. While this example doesn’t speak specifically to faith-based criteria, it serves to prove how heavy filtering doesn’t have to equal suppressed results, in fact, it can actually provide exceptional, or even superior ones.
It should be noted that while holding to a rigorous screening process may produce varying performance year over year, we’re confident a long position will provide similar returns overall, and is actually a biblical approach. to Proverbs 21:5, “The plans of the diligent lead to profit as surely as haste leads to poverty.”
Benefits Beyond Returns
While everything we do at Avena is focused on providing our clients wise counsel for investing and making gains, we believe a truly Christian perspective is about more than fixating on financial returns. Rather than simply compounding capital through price appreciation and dividend distribution, we should consider the total return on our investments, knowing God is measuring that too. As His steward we must consider, “Am I faithfully maximizing the returns the Lord cares about, as opposed to the returns on my personal balance sheet?” Faith-based investing creates Biblically desirable outcomes like mobilizing blessing in the lives of people and families, or advancing creation care through the businesses you support. It also means you get to live true to your convictions, make an eternal impact, and enjoy a sense of peace—all things that can’t be quantified in numbers.
Additionally, as temporary owners of the resources God has entrusted to us, stewardship means we think about the impact we’re making now, and into the future. What is the legacy you wish to leave behind for your loved ones and the Kingdom causes you care about?
Practical Implementation Steps
Evaluating Your Current Portfolio
Now that we’ve established a foundation for why it’s important to think about our portfolios with Kingdom values in mind, how does one do it? If you’re interested in exploring this on your own, we recommend these three steps:
- Assess. Begin by taking an assessment of where you’re currently investing, and investigate how your portfolio screens. We recommend using Inspire Insight to see what you own, or with a free trial of eVALUEator’s Biblical investing tool. You simply enter your data and can uncover how your holdings rate.
- Address. If you find information you’re not pleased with, begin learning about companies that may be a better fit for your values. Go straight to the companies that bill themselves as faith-driven or biblically investing companies and survey their offerings to see what aligns with your heart.
- Ascertain. As a word of caution, there are a number of companies (who, despite their self representation as being faith-driven or aligned, when you look closely), are not immensely more screened than the Generic Index Fund you may find anywhere. This could carry you into some portfolio recommendations that aren’t as screened as you think. On the flip side, it also leaves aside a vast number of exceptional portfolio managers who aren’t necessarily characterizing their offerings as faith-aligned but according to their actual holdings, are every bit as committed as the companies branding themselves that way. As a result, you could discover a universe of exceptional, potential managers who can recommend your best, most authentic fits.
Working with a Faith-Focused Advisor
The final section above outlines specifically why we recommend working with a professional rather than attempting to DIY sweeping changes to your investment portfolio. It requires nuance, strategy, and time to locate the right companies. Other benefits of seeking professional guidance include:
- Expertise, experience and special certifications to help you avoid common pitfalls or chase trends, plus they know how to help you properly manage risk and diversify.
- Personalization. Your advisor knows how to tailor your portfolio to your goals, risk tolerance, and timeline. Christian advisors like Avena speak the language of faith and family, and can direct you to companies that will align with your values because they understand what drives you on a heart-level.
- Tax and time efficiency. Advisors help you optimize strategies and minimize tax liabilities, save time, and conduct research for you.
- Proximity. Advisors live in this world every day and are familiar with active and adaptive strategies and competencies that can get you better results.
Next Steps in Your Journey
Get Started with Us
Avena is here to help you begin aligning your investments with your values, so you can make a meaningful, eternal impact. Here’s how to get started:
- Download our Values Screening Checklist to get an initial idea of how your portfolio stacks up and identify opportunities.
- Schedule a portfolio review to meet with a member of our team one-on-one.
- Begin documenting your investment values. Identify the values and causes dear to your heart so together we can find the types of organizations that are right for your investment strategy. Download our Values Assessment Worksheet if you’d like some help.
- Consider your legacy goals in terms of leaving a Kingdom impact, and what you wish to pass along to the next generation.
If this is the first time you’ve encountered the idea of faith-based investing, it may take some time to wrap your head around this counter-cultural approach, especially when society is so consumed with financial returns. Considering your portfolio with a long-term, Kingdom impact in mind will likely require some re-framing too, and that’s okay. You may find it helpful to pray the words of David from Psalm 139: 23-24, “Search me, O God, and know my heart; Try me and know my anxious thoughts; And see if there be any hurtful way in me, And lead me in the everlasting way.” We’ve also designed a Biblical investment Principles Guide to give you practical insights while building on this new foundation.
Become an Engine for Good
As believers, we’re called to live with integrity, where God’s character informs every aspect of our lives. If we are to take this admonition seriously, we can leave no stone unturned. We must consider the sincerity of our motivations, the consequences of our actions, and the way we steward the time and resources God has given to us. Proverbs 3:27-28 says “Do not withhold good from those to whom it is due, when it is in your power to act,” and faith-based investing is a practical and effective way to act justly.
Let’s turn your portfolio into an engine for good. Contact us for a free consultation.