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FCNL’s Socially Responsible Investment Guidelines

October 14, 2010

“May we look upon our treasure,
the furniture of our houses, and our garments,
and try whether the seeds of war
have nourishment in our possessions.”

John Woolman, 1774

Arthur Meyer Boyd, Associate Executive Secretary

With this statement Woolman does not demand that we banish these goods from our possession, but instead suggests that inquiry is the first step towards leading a just life. He gestures towards the way that Quakers seek to conduct their financial affairs—humbly seeking alignment of our resources with our principles but never brazenly staking claim on the moral high ground.

I have held an active interest in socially responsible investment (SRI) since college, and was glad to learn about FCNL’s Socially Responsible Investment Guidelines through a conversation with Associate Executive Secretary Arthur Boyd.

My interest in socially responsible investment (SRI) was piqued during my freshman year at Macalester College when I attended a workshop about how financial institutions historically have under-served low-income minority neighborhoods, and how some banks have developed strategies to reverse the problem. I spent the next four years advocating for a community banking initiative and a Sudan divestment policy for the college’s endowment.  I later served on the board of the Responsible Endowments Coalition, a national organization that mentors university students engaging in this type of activism on their campuses.  I am no expert, but I have found that the SRI movement invites unlikely suspects to discuss the nuts and bolts of radical change in our economic system.

FCNL draws a very small portion of its operating funds from an endowment that is handled by an outside investment manager. FCNL’s Socially Responsible Investment Guidelines provide a framework from which our manager gauges what investments fit our criteria.  The Guidelines were developed by FCNL’s Finance Committee, who reviews the manager’s performance on an annual basis. This is a plus for FCNL’s contributors, who can rest assured that their dollars will not nurture the likes of weapons manufacturers or tobacco companies. FCNL’s guidelines are among the more rigorous statements I have seen, particularly with regard to respecting developing nations’ cultures and in avoiding US Treasury bonds (which may support military spending).

“Socially responsible investment” is a broad term for financial resource stewardship that keeps social and environmental concerns in mind. Generally speaking, SRI can be done in three ways:

  • Divestment avoids lending resources towards a company that acts against one’s principles (i.e. companies complicit in South African Apartheid).
  • Shareholder advocacy influences offending companies from the inside, often by participating in “proxies,” or shareholder votes on certain management decisions like greenhouse gas policies, affirmative action hiring, etc.
  • Active investment puts resources into sectors that have positive social or environmental outcomes like renewable energy, fair trade cooperatives, or local minority businesses.

As I learned from Arthur, FCNL seeks to utilize all three of these strategies.  Many other non-profit endowments are first invested in a large swath of companies like the S&P 500, and responsibility concerns are addressed as they arise. FCNL’s financial  manager instead researches each company before buying stock. The number of companies that receive FCNL investment is relatively low, enabling him to keep track of each one’s activities.  The manager votes on shareholder proxies according to our principles, and seeks out “corporations whose economic behavior reflects elements of our vision of a better world.”

Do these restrictions reduce the returns on our investments?

“Many of the socially screened mutual funds are top performers in their class,” says Arthur, “and our invested funds have exceeded the performance of both the S&P 500 and NASDAQ consistently over the years.”

Some organizations intentionally buy stock in offending companies in order to swing their weight as shareholders. Amnesty International, for example, bought stock in Chevron and submitted a resolution calling on the company to report on the health and environmental consequences of its drilling sites in Ecuador.  Arthur acknowledged that this may be a good change strategy, but said FCNL has decided that this tactic falls outside of our mission.

FCNL’s guidelines are unusually candid about the challenge of monitoring companies:

“Anyone will encounter some difficulty in acquiring all the necessary detailed information in order to apply our guidelines, and the amount of staff and committee resources available is limited. For all of these reasons, it is unlikely that FCNL social responsibility goals in investments will ever be totally accomplished. However, we are committed to continued progress toward these goals.”

Even in his discussion with me, Arthur invited my thoughts and suggestions on our SRI policy. Our organization is in a continual process of discernment about how best to practice social responsibility.  FCNL claims not perfection, but rather a focus on spirit-led inquiry on how our resources can help us seek a world without war, a just society and an earth restored.

3 Comments leave one →
  1. Helen Bruner permalink
    October 15, 2010 9:21 pm

    I would like to hear more particulars about what you are investing in and what kind of returns you are getting. Because my broker has me in funds, even though he knows my interests, some amt. gets into oil, the military, etc. because it’s impossible to track it all. I’m open to recommendations – invest it all with FCNL?! Helen

  2. Philip Ratcliff permalink
    October 15, 2010 10:01 pm

    I inherited a mutual fund that invests in some of the worst corporate villains. I’m going to sell this fund, and want to know about some of the good mutual funds in which to invest.

  3. Sandy permalink
    October 20, 2010 9:23 pm

    Thank you for your interest in socially responsible investment. We’re happy to provide our statement on SRI, but we’re not in the business of providing investment advice and it would be unwise for us to get into it. SRI is interpreted and practiced in many different ways, and we encourage you to research SRI firms to see which might be a good fit for your values and financial needs.

    The Social Investment Forum ( has many useful resources, including a list of socially responsible mutual funds and charts that compare SRI funds by performance and by screening practices.

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