It's not a "nice thing!"
The importance of community development investing to faith-based investors
Editor’s note: This article was originally published in the Nov. 2022 GreenMoney eJournal and is reprinted with permission.
One of the most frequent comments I get following any presentation on the real-world impact possible through one of the five Praxis mutual funds, is how “nice” it is that we’ve decided to commit 1% of each of these funds to community investing. While I appreciate the appreciation, in my head I’m usually screaming “It’s not a ‘nice thing!’” The allocation of concessionary, catalytic capital to marginalized people and communities is — or should be — much, much more, especially for people of faith.
For too long, community investing has been seen as an act of charity, equated with largesse or evidence of excess resources in one’s economic life. Charity — financial gifts drawn from excess finances and given to causes and organizations that require such support to do their good work (disaster recovery, the arts, crisis food and shelter, ministry support, etc.) — can be an important aspect of one’s faith and worship life. But community investing fulfills a different function. Far from just a “nice thing,” community investing is something altogether different.
But before we explore some of the deeper motivations community investing has for people of faith, particularly those in the Judeo-Christian tradition, perhaps a definition is in order. Community investing — or community development investing (CDI) as we frequently call it at Praxis — is distinguished from other good/responsible/social/faith-based/ESG investing by the primary intent of the investment. That intent is to help deliver the benefit of economic opportunity for others even at the cost of a competitive return for the investor. This intentionally concessionary capital can take many forms but it plays a critical — catalytic — role between truly charitable contributions (or grants), which are frequently limited, and the scale of impact offered through more traditional, market-rate, socially oriented investments.
Arguably, there appears to be a clear contradiction between an “investment” and a deliberately concessionary rate of return (a conversation I and my colleagues have regularly had with SEC examiners!). It seems to defy convention and the common understanding of investing to begin with. Yet therein lies our belief of the true power of community investing — and its importance for faith-based investors.
Community investing combines the rigor, prudent management and economic sustainability of traditional investments with a deep vision and understanding for the special challenges faced by organizations seeking to bring opportunity and long-term financial viability to individuals and institutions on the margins of our society. Where charity seeks to do good work, community investing seeks to leverage an organization’s charitable and inherent community resources to expand that “good work” by multiples.
So why then is this unique — and powerful — niche of impact investing so important to Christian faith-based and other values-driven investors? And why are faith-based, values-driven investors so important to community investment-oriented organizations? As the concessionary nature of many community investments continues to confound most investment consultants and mainstream financial professionals, the support and involvement of investors with the faith- or values-orientation to see first the benefits to underserved communities is more important than ever.
If community investing is not just a “nice thing” for faith-based investors, what is it and where does it fit?
It’s a “good thing” — For starters, we have ample evidence of the incredibly important role that catalytic capital — and the investors that provide it — plays in sustaining and expanding economic opportunity to those who would otherwise not have access. The success of such efforts have been addressed by previous community investment leaders such as Debra Schwartz, Tim Fruendlich and Dana Bezerra in previous issues of Green Money Journal. Investors today can understand the vital role their community investments have in lifting up the underserved in local and global communities.
It’s a “sustainability thing” — People of faith are routinely called through holy texts to care deeply for the people and created world around them. Passages in both the Old and New Testaments speak frequently to our responsibility to be responsible. The concept of sustainability inherent in community investing reflects not only the support and empowerment of those left on the margins, but also the desire to see all people included in productive, sustainable economic relationships that bring lasting hope for a life of wholeness and well-being.
It’s a “justice thing” — Themes of justice (and condemnation for those who fail to be concerned) abound throughout Judeo-Christian scripture. Some of Christ’s harshest critiques were focused on people of power and privilege who routinely ignored faith’s call to care for those around them deeply and sacrificially. Meeting society’s rites and standards were not enough if the needs of the poor, the widow, the orphan, and the outcast remained unaddressed.
It’s a “faith thing” — Fundamentally, particularly for Christians, the intentional inclusion of the marginalized in our financial decision-making is inextricably linked to the concept of stewardship. Stewardship is the prudent management of resources on behalf of the owner of those resources. This includes the productive use of those resources, as well as the general interests/instructions of the owner. For Christians, the true owner of all is God. As Christian stewards, we should be both productive and deeply aligned with God’s will and vision for wholeness (shalom) in this world. The intentionality and impact of community investing mirror these fundamental faith commitments.
It’s a “relationship thing” — Probably one of the most important, but often overlooked (or under-implemented), teachings within Christian scripture is the primacy of relationships — our relationship to God and our relationship to those around us. This concept is made clear in the Greatest Commandment, documented in Matthew 22:34-40, where Jesus, quoting the Old Testament, tells us to, “Love the Lord your God with all your heart and with all your soul and with all your mind” and, “Love your neighbor as yourself.” (NIV) It is our understanding of these two fundamental relationships that should undergird all our choices — financial and otherwise.
It’s a “transformational thing” — This is where community investing really shines — for me personally as a Christian and for my values- and faith-driven organization. Community investing provides both the opportunity and the challenge to bring us into direct relationship and a deeper understanding of those who have been shut out of our economic system for a wide range of reasons. This is one reason Praxis works to support organizations like the national Christian Community Development Association and the fledgling Anabaptist Community Development Network, which serves our own faith community. Their on-the-ground work strengthens community development organizations and their impact and connects us with challenges and realities we might not fully understand.
As people of faith, community investing helps us understand our own privilege and the world’s needs in new ways. It connects us with new partners for this good work. It opens doors of response in meeting real human needs, often in lasting and sustainable ways. It expands our reach — many of us have more to “invest” (in a safe, if concessionary, manner) than we have to “give.” Perhaps most importantly, community investing has the power to transform us as Believers, seeking to live out our most deeply held values, responding to a world in need with hope and opportunity.