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?"
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.
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.
make this more vivid, here is my current investment picture:
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.
rest of my investments look like this:
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.
in two privately-held corporations.
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.
(7%) I am currently invested in the publication of a book
and the production of two educational videos.
(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%.
(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.
In each of the last three years, I have given about 16%
of my after-tax income to philanthropy.
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