More Than Money
Issue #10

Learning From Each Other

Table of Contents

“Why Hold Back?”

What is it with socially responsible investing? How come among the well-off people I know, even those with strong social values rarely invest 100% "socially responsibly?"

My guess is that two factors are at work. First, people assume that socially responsible investing (SRI) means conventional investing (that is, the buying of securities or mutual funds) with the addition of social screens, when really, it can be much broader than this. Secondly, they still assume that "financial return" is the key way to measure investments--minimizing the value of "social return" which may be more valuable.

I think about all my investments in three ways: financial return, social return, and risk. For instance, buying shares in an SRI mutual fund ranks pretty moderate on all three. Investing in a privately-held corporation doing pioneering work ranks potentially high on all three. By having my checking and savings accounts at a bank committed to community investment, I have lost nothing in financial return and gained considerably in social return. While community loan funds have low financial return, their social return is powerful, and there is very little risk. (My philanthropy, which I consider a type of investing, has no financial return, of course, but a high social return.) Thus, I can piece together a "portfolio" that uses my full creativity and wholly reflects my values.

To make this more vivid, here is my current investment picture:

Several years ago I converted my wholly-owned business into a worker cooperative in exchange for a note collectible over a 20-year period. This is by far my largest social investment, representing 66% of my investable assets. Since the business is now a cooperative, it cannot take on outside investors, nor can any worker/member own more than one share. Hypothetically, this is a high risk investment.

The rest of my investments look like this:

Mutual funds with social screens (45%) These are several different accounts in Calvert, about 3/4 in my IRA. Personal and small business loans to friends. (26%) I currently have seven such loans out. I receive 6.5% to 8% per annum interest, and in the 8-10 years I have been investing this way, I have never had a default.

Stock in two privately-held corporations. (13%) One of these companies is developing room-temperature super-conducting batteries. This technology will be of great social value in the production of non-polluting vehicles. The other company imports and processes sustainably-forested timber for use by architects, designers, and woodworkers.

Partnerships. (7%) I am currently invested in the publication of a book and the production of two educational videos.

Community Loan Fund. (5%) This revolving fund lends to low-income and special-needs housing projects, and to small, democratically managed businesses which often have great difficulty borrowing from conventional sources. As typical of community loan funds, I was able to choose the interest I wished to receive between 0-3%. I chose 2%.

Community Bank. (4%) Although I live on the west coast, I bank by mail at the Shore Bank in Chicago, which invests exclusively in community development and provides local banking services for the low-income neighborhood where it is located. When the Community Bank of the Bay opens this year in Oakland, CA I will transfer my accounts there.

Philanthropy . In each of the last three years, I have given about 16% of my after-tax income to philanthropy.


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