Discovering Profitability, Integrity, and Social Impact in Modern Finance
Wall Street has historically been skeptical of faith-based investing. Many investors and shareholders follow Milton Friedman's philosophy, arguing that corporations' sole duty is to their shareholders, not society.
I believe shareholders have a broader responsibility—to their families, communities, and God—by using money to create positive impacts. Therefore, investing is not just a financial act but a moral and fiduciary duty. Shareholders must hold boards of directors and executives accountable through careful investment screening, voting proxies, and active engagement.
This fiduciary duty includes promoting accountability, transparency, and the well-being of the firm’s stakeholders. Without investor participation and collaboration, boards and executives may lack accountability, potentially undermining the moral integrity of investing.
Despite Friedman's influence on Wall Street, faith-based investing shows that companies embracing this approach are profitable and leaders in the financial sector. Running a business on a faith-based foundation can indeed be financially successful.
According to the World Economic Forum (WEF), faith-based, faith-related, or faith-inspired businesses contribute approximately $437 billion annually to the U.S. economy. When broader religious contributions are included, this figure rises to an estimated $1.2 trillion in socio-economic value each year in the U.S.
Moreover, faith-based companies are known not only for profitability but also as desirable workplaces. Michael Zigarelli, a professor at Messiah University, suggests that many of these businesses serve as model workplaces and corporate citizens, enhancing lives and communities while adhering to religious values.
Academic institutions such as Seattle Pacific University have integrated entrepreneurship with divinity studies, offering dual degree programs combining an MBA with theological studies.
Faith-based investing has gained momentum among shareholders. Robert Netzly, CEO of Inspire Investing, notes the increasing interest in biblically responsible investing. Christians align their investments with their values to support companies operating ethically and following biblical principles.
Billy Epperhart, an author and pastor, emphasizes that Christian businesses should generate profits while advancing God’s kingdom on Earth through integrity and ethical practices. He also highlights the "seven mountains of culture," identifying areas where businesses can positively impact society.
Successful examples like Pray.com, the leading app for daily prayer and Bible-based audio content, and Knights of Columbus, a $2.5 billion Catholic-based insurance company recognized by Forbes, illustrate the profitability and influence of faith-based approaches in business.
The faith-based market is significant and dynamic, with the global market for religious organizations projected to grow from $326 billion in 2021 to $351.33 billion in 2022. Chris McMahon, CEO of Aquinas Wealth Advisors, reports a notable increase in inquiries about faith-based investing, indicating a growing preference among investors to align their investments with their beliefs.
Surveys indicate that faith-based companies are perceived as more honest and transparent, with a substantial portion of adults open to supporting brands that uphold Christian principles. Don Barefoot of the Christian business network C12 underscores the trustworthiness and inspirational stories often associated with Christian companies.
In conclusion, corporations embracing faith-based principles hold a significant market share. While future growth is uncertain, current trends suggest that faith-based investing will continue to exert a substantial influence on investment portfolios.
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Reference:
Berger, R. (2023, January 25). Purpose-driven business models propel faith-based efforts. Forbes. https://www.forbes.com/sites/rodberger/2023/01/23/purpose-driven-business-models-propel-faith-based-efforts/
Zigarelli, M. (2023, September 6). What does it look like when a follower of Jesus goes to work? LinkedIn. https://www.linkedin.com/pulse/what-does-look-like-when-follower-jesus-goes-work-michael-zigarelli/?trackingId=7feh2u8C03tcQrw7UpmmVg%3D%3D
Netzly, R. (2023, May 16). Biblical investors burn brightly. Inspire Advisors. https://www.inspireadvisors.com/post/biblical-investors-burn-brightly