Faith Based Investing is an investment strategy that aligns a person’s investments with their faith values. Though it is not a new idea, many Christians are not aware that it is even an option.
The purpose of this post is to look at what Faith Based Investing is, the case for and against it and how to practically pursue it in today’s marketplace. This is by no means an exhaustive evaluation or critique, but hopefully provides food for thought as you consider whether this is appropriate for your investments.
How Does Faith Based Investing Work?
Faith Based Investing has been around since the 1800’s, and comes in several different forms. Sometimes it is referred to as Biblically Responsible Investing (BRI), Values Based Investing or Morally Responsible Investing.
Regardless of the name, it screens investments so that investment dollars are aligned with the investor’s faith convictions. Generally, it covers at least one, but oftentimes more, of three core areas:
1. Avoidance – historically, this has been the common approach. The investment manager will avoid certain industries that conflict with Biblical values such as alcohol, tobacco, pornography, abortion etc.
2. Advocacy – the investment manager utilizes their shareholder status to advocate for positive change in the various companies they hold shares.
3. Affirmation – rather than just avoiding companies that don’t align with Biblical values, the investment manager will focus on investing in those companies who are doing good in the world.
Each Faith Based Investment option has a different approach and methodology for how they will and will not invest. This variety provides different options for consideration based on how you want to approach investing. Regardless of the option(s) selected, it provides investors a way to positively impact the world for the Lord, by aligning their faith convictions with their investments.
The Arguments Side by Side
Over the years, Christians have had different opinions about this investment philosophy. Below are outlined some of the major points of discussion with both the pro and con sides of the arguments for you to weigh for yourself:
1. Does It Matter How Money is Made?
Pro: Deuteronomy 23:18 “You shall not bring the fee of a prostitute or the wages of a male prostitute into the house of the Lord your God in payment for any vow, for both of these are an abomination to the Lord your God.”
Money is not considered sinful, but how money is made, has a moral component to it. Much like we shouldn’t take a job at an abortion clinic encouraging women to have abortions, how we make money through investing matters too.
Con: Some Christians point to how Jesus willingly dined at Zacchaeus’s house (the chief tax collector, in Luke 19), even though he knew Zacchaeus was stealing from the Jews to provide the meal.
Or that Jesus allowed a “sinful” woman in Luke 7:36-50 to wash his feet using expensive perfume and her hair. It was evident to those present that this woman was a prostitute and used the proceeds of her sinful occupation to purchase the perfume that she used to wash Jesus’s feet. Yet Jesus does not stop her, even though he knows her sinful occupation.
Jesus focused on the heart of the person, not the money. This is not an encouragement to work in blatantly sinful industries, but a realization that earning money in a fallen world is tinged with sin.
Both sides wrestle with the fact that we are sinful people with sinful motives. Money is never made in a truly righteous fashion. How do you balance this in your vocation and your investing?
2. Are You Partnering With Evil?
Pro: When you purchase stock, you are a part owner of the company. If the company decides to pursue an anti-Biblical agenda, you are partly responsible for it as you have the ability to influence management. There are two warnings they point to from the Bible:
Ephesians 5:11 “Take no part in the unfruitful works of darkness, but instead expose them.”
2 Cor 6:14-18 talks about not being yoked to unbelievers. By being a part owner of a business that is actively working to undermine God, we are not being consistent with our faith values and are partnering with evil.
Though no company is perfect, our goal should be to avoid blatant sin and focus on using what economic influence we have to be a positive influence for the Lord. If enough Christians did this, the market would change in a positive way.
Con: We are called to be in the world, but not of it (1 John 2:15-17 and John 17:14-16). Since we live in a fallen world, if we are looking for a company that does everything 100% in accordance with what we believe, we would never invest money as those companies do not exist.
Companies are just like people, in that perfection does not exist on this side of heaven (besides Jesus). If you were to avoid all sin, we would need to “go out of the world” as Paul wrote in 1 Corinthians 5:9-11. In God’s eyes there is no gradation to sin, it is either sin or it isn’t.
Both sides agree that we live in a fallen world, but have different views on how to live in light of that reality.
3. Faith Based Investing is Expensive & Investment Performance Suffers
Pro: Yes, Faith Based Investing is more expensive, because it requires a great deal of research and monitoring on the various companies that are being invested in or considered for investment. Though it costs more, is that really a reason not to be obedient to the Lord?
According to a 2020 CIF study, Faith Based Investments did not underperform other investment alternatives. Even though expenses may be higher, that has not always negatively impacted investment performance.
Con: It is possible to construct a portfolio from only Faith Based Investments, but from a practical perspective, it leads to two problems. First, there are some parts of the market where Faith Based Investments underperform consistently (partly due to high costs). Second, the investment platform you use oftentimes has a limited number of available Faith Based Investments, making it difficult to create a portfolio.
Being a good steward means we need to be getting a good return on the funds God has entrusted to us. In the real world, your performance may suffer by pursuing this investment strategy. Is that a wise stewardship decision?
As you evaluate your options, how will you balance maximizing return on your investments with your faith convictions?
4. Does Faith Based Investing Really Make a Difference?
Pro: As businesses respond to customer demand, shareholder requests etc, they are a powerful source of change in our world.
For example, in 1971 the Episcopal Church filed a shareholder proposal encouraging GM to leave South Africa due to Apartheid. It took some time, but in 1986 GM announced they would leave South Africa. This ultimately led other companies to follow suit, and helped end Apartheid in the early 1990’s.
For many years more liberal shareholders have been advocating for change based on their worldview. There is an opportunity for Christians to have a greater impact on the world if we focus on making changes in the companies we invest in.
Con: By focusing on avoiding the stock of a company, it could have the reverse effect, by increasing investor interest in it. If enough people don’t invest in companies engaged in anti-Biblical activity, demand for the stock could decrease (and also the price). This can attract interest in the stock from other investors who see value in the lower stock price.
Rather than avoiding investing in companies you disagree with, not buying their product has a more direct impact. If enough people did that, then the company would have less profit, and less interest from investors.
Both points of view recognize that our financial decisions can have an impact. They differ on how to make that impact.
Points For Consideration
There are two points I would encourage you to consider:
A. Matter of Conviction
As you have read through this post, perhaps you are convicted on this particular issue in one way or the other. One area I hope we all can agree upon is that we are called to live in a fallen world and impact it for Christ. The way we may choose to do that is different for each one of us, but we need to be thinking through how it will look in our lives.
There is no command about investing in the Bible. Christians may arrive at different conclusions after seeing the same evidence/arguments, making this issue more a matter of conscience. In 1 Corinthians 8 Paul details a conscience issue regarding meat sacrificed to idols and how the Corinthians were to deal with it. For some, eating meat sacrificed to inanimate objects did not impact their conscience, and they could eat the meat without any qualms. For others who were saved out of a lifestyle of idol worship, they couldn’t eat the meat without thinking about the idols. Neither point of view was condemned by Paul, as he pointed out it was a matter of conscience. When instances like this arise, we are called to love one another, whether we agree with them or not, and yield to the weaker brother.
If the Lord has pricked your conscience and you feel that Faith Based Investing is the best way to honor Him, then find a solution to help you reach that goal. If you don’t understand why this is a concern, then continue to invest in a way that is consistent with your convictions.
It is helpful for us to listen to one another on this issue and sincerely consider their point of view and convictions.
B. Consistency
Oftentimes, we can get focused on one area of our life and neglect others when dealing with our convictions. If you are convicted about investing only in Faith Based Investment options, do those same principles govern your spending and employment decisions? For example, both Amazon and Disney do not pass faith based screens by some Faith Based Investment options for various reasons. If you choose to avoid investing in Amazon and Disney, should you keep your Amazon Prime or Disney+ accounts? Would you accept a job from them if it was offered?
Screening our investments for faith based options does not directly affect our daily lives as most of us hardly focus attention on our investments. However, how we spend money and who we choose to work for has a much more direct impact. It can be easy to focus on areas that have minimal impact on our lifestyle by separating our investment convictions from our spending and employment decisions, but that leads to hypocrisy.
This issue could consume our lives as we would need to spend a lot of time researching companies and their stances on many issues before buying their products. However, I would encourage you to start with what you already know and go from there. Perhaps the Lord has brought an area of inconsistency to mind in your life. What will you do about it?
How Can I Invest in Faith Based Investments?
If you are convicted and want to move forward with investing in Faith Based Investments, it has become much easier to do over the past 10 years.
The first step is to consider what type of screening is important to you.
- Should it include a ban on weapons?
- Do you want to screen for environmental and labor standards etc?
- Are you interested in just excluding companies?
- Do you want the investment company to engage with them for positive change?
Once you have determined what is most important to you, then determine how to screen your investment options. This is the main stumbling block that has limited investors in the past. Thankfully, technology has made this easier than ever before.
There are two ways to participate in Faith Based Investing:
Do It Yourself
You can purchase a subscription to a values-based screener such as:
This software will help you filter out companies you don’t want to invest in. However, you will need to pay attention to their screening methodology as they each work a little differently. For example, I would recommend using the Inspire Insight for individual stocks as the screening methodology is weighted to give Inspire investments the best score (thereby skewing their filter for mutual funds and Exchange Traded Funds (ETF’s)).
Based off your results you can build a portfolio of individual stocks, mutual funds or ETF’s yourself, monitor it regularly and make adjustments as necessary.
Below is a list of the major Faith Based Investment providers that are generally available to individual investors. This list can help you get started on understanding your options:
| Investment Provider | Mutual Funds | ETF’s | Notes |
|---|---|---|---|
| Ave Maria | Yes | No | Screened using Catholic values |
| Eventide | Yes | Yes | One of the most stringent screened options |
| Global X | No | Yes | Offers 2 Catholic values screened ETF’s |
| Guidestone | Yes | No | Part of the Southern Baptist Convention |
| Inspire | No | Yes | Fairly stringent, and largest ETF provider |
| Knights of Columbus | Yes | No | Screened using Catholic values |
| Praxis | Yes | No | Associated with the Mennonite church |
| Steward Funds | Yes | No | One of the older Faith Based Investment options |
| Timothy Plan | Yes | Yes | The oldest Faith Based Investment option |
You will want to check with your investment provider to see which of these investment options are available on their platform.
Hire an Advisor
You can hire a Christian financial advisor who can help create a portfolio of different faith based individual stocks, mutual fund/ETF’s. Since there are a variety of options and screening methods, it can be helpful to have someone who is knowledgeable in the different methods to help you sort through your options.
Parting Thoughts
1. Regardless of your convictions, there can be a tendency towards legalism (going beyond what the Bible says) or judgmentalism (looking down on others of differing convictions). We need to be careful to evaluate our motives, heart and relationship with the Lord as we deal with these issues.
2. Are your financial decisions consistent across your financial life? If not, what steps will you take to bring them into alignment?
3. Where we spend money and how we invest matter. Take the time to develop your convictions and align your financial decisions with your convictions.
4. Money is a tool that reflects our heart’s motivations. What does your use of money tell you about your heart?
