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Lent: Impact Investing and Endowments

Impact investing for the church
by Faith+Lead | March 8, 2021

Adapted from We Aren’t Broke: Uncovering Hidden Resources for Mission and Ministry by Mark Elsdon ©2021 (Wm. B. Eerdmans Publishing Co.) Reprinted by permission of the publisher.

What if the church had billions of dollars to put to work serving the needs of our communities and addressing the problems facing our world? What if we could engage people who have found the church irrelevant with the good news of Christ through new expressions of mission and ministry? We could improve disparities in health and educational outcomes between racial and ethnic communities by proving stable living environments in affordable housing. We could shift the trajectory of climate change by investing in a social enterprise that saves more rainforest trees as the business grows. We could eliminate food deserts in our most struggling neighborhoods by offering a resident owned grocery co-op. If only we had enough money in the church to do this sort of work! How amazing would that be?! 

It turns out that we do. And we can.

As a pastor and nonprofit leader I know that many Christian churches and related organizations are facing an imminent crisis or are at least struggling. Attendance is down. Funding is harder to come by. Churches are closing, and buildings are being sold. Climate change, wealth inequality, and racial tension are massive problems facing our communities that the church is struggling to respond to. People are no longer drawn to traditional church services and programming in the ways they once were. The COVID-19 pandemic has only exacerbated most of these issues. We often feel broke and powerless to do much about it all. We continually try to do more with less. Fewer people. Fewer dollars. Fewer churches.

But the church is not broke. 

In the mainline church ecosystem, and in many parts of the wider big C “Church,” we have a lot of assets. A lot of capital. Incredibly valuable property in A-plus locations. Buildings. And massive endowments. We are not broke. In fact, the member organizations of the Interfaith Center on Corporate Responsibility (ICCR) have more than $400 billion of invested assets under management (that is billion, with a capital B). It is simply not true that there is no money in the church. It is just that most of our capital is invested in big corporations like Facebook, Apple, Amazon and others. 

We give the bulk of our capital to those companies. They use it to grow their business. And they pay us a percentage back with dividends and increasing stock value. Sometimes we give those earnings away for mission. More often we use it to keep our churches and institutions open. Sometimes we just put it back into our endowments and foundations like the rich fool in Jesus’ parable who builds larger and larger barns to save up for a future that never comes. 

For the most part we have invested our endowments to earn the highest rate of financial return with the lowest risk—building bigger and bigger barns. But is that really the highest and best use of church capital? Isn’t the money we have been entrusted to by God meant to be used for redemptive and restorative work and not just to make the most money at the lowest risk? 

There is another way.

Our investment capital (the full 100% of what we own, not just the 5% financial return) could be used within the church and the communities our churches serve to change lives in the form of impact investments. Impact investing has come to mean a particular kind of investing where money is proactively invested to produce social impact as well as financial returns. Companies and social enterprises using impact investment return a blended value to investors in the form of both financial returns and social and environmental impact.

Impact investing is more than just negatively screening out investments that are deemed harmful. And it is not giving money away, as in philanthropy. Impact investing is somewhere in the middle—it is both/and. It is both an investment that generates financial return and an attempt to make an intentional, positive impact in the world with capital. It is putting our billions of dollars to work building affordable housing, investing in the future of our planet, and creating grocery co-ops.

Individuals and organizations looking to get into impact investing can do so in a variety of ways:

  1. Ask investment advisors to seek positive impact investments in sectors that you are committed to supporting such as clean energy or wellness. Go beyond simply screening out companies and look to make intentional investments where you want to make a difference.
  2. Diversify some portion of an endowment into a different type of fund outside the traditional stock and bond investments. One example is Working Capital for Community Needs, an impact investing fund started by churches 30 years ago to provide microfinance funding to the working poor in Latin America. Funds like WCCN allow organizations to get into impact investing without having to do all the due diligence and research themselves directly. 
  3. Make a very targeted investment in a church-affiliated social enterprise such as affordable housing, co-working, or some other venture. I have been intimately involved in just such a project for the past sixteen years at Pres House at the University of Wisconsin-Madison. We built a seven story, $17 million student housing facility for 240 students right in the heart of the University of Wisconsin-Madison on church-owned land. The PCUSA Synod of Lakes and Prairies provided some of the financing for the project by moving one quarter of their $10 million endowment out of traditional investments and into an impact investment in Pres House. Their investment provides us with stable capital, while we provide them with a return on their investment that they in turn use for their programming. And thousands of students at the University of Wisconsin have been served by the church. It has been a win-win-win. Their impact investment produces a triple-bottom-line return.
  4. Create an investment or loan fund to support local entrepreneurs in your community or further a cause for justice that is meaningful to you. One example would be to set aside 10% of an endowment to invest solely in businesses or enterprises owned or led by people of color. For organizations whose endowments are connected to slavery or the theft of indigenous land, a decison like this could serve as a limited form of reparations. 

This last suggestion brings forth an important point. Impact investing and traditional investing are not mutually exclusive. You can do both. Many organizations begin their foray into impact investing by starting with a percentage of their total portfolio, such as 10% (but take note, many endowments that start down this road end up eventually moving 100% of their capital into impact investments!). What is most important is that we start somewhere. 

Yes, this use of our capital will require thinking differently. It may involve taking greater risks with our endowments. But it has the potential to radically transform our communities. There is no better time for us to dream big and take some risks. The needs are great, the opportunities, even greater. And the resources are there. 

Your Turn

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About the Author
Mark Elsdon lives and works at the intersection of money and meaning as an entrepreneur, pastor, and author. He is executive director at Pres House, a campus ministry center that used church owned property and impact investment to build transformative, purposeful student housing at the University of Wisconsin-Madison. He is also co-founder of RootedGood which helps congregations and social entrepreneurs with tools and training to make more good in the world.  

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