Socially responsible Jewish investing on rise

NEW YORK-In the same manner that she shops for locally grown produce, Abigail Weinberg chose to sidestep the bank behemoths and instead open an account at a small, local bank that invests in her Ann Arbor, Mich., community.

“I consider myself someone who wants to be socially and environmentally responsible in all areas of my life,” she says.

Weinberg applies the philosophy to her investment portfolio, too. She invests directly in community development financial institutions and has money in a socially responsible index fund. And when the Jewish Funds for Justice (JFSJ) launched its Community Investment Initiative, a socially responsible investment program aimed at modest investors, less than two years ago, Weinberg was one of the first investors.

Her $2,000 investment may not have been “a huge amount of money,” says Weinberg, who used to work at the Shefa Fund before it merged with the Jewish Funds for Justice. But “it was invested with intentionality as an expression of the Jewish value of tikkun olam,” or repairing the world.

As the green movement continues to gain ground within the Jewish community, many investors are re-examining their investment portfolios with an eye toward not only financial gains but also social impact. The same people who frequent farmers’ markets and have switched their light bulbs to CFLs are bringing that passion to their portfolios.

Until recently, however, only Jews of high-net worth or institutional investors like the Reform Pension Board, federations and family foundations had access to uniquely Jewish avenues for ethical investing. This left individual social justice activists and even Jewish communal professionals like Jeremy Burton, senior vice president of philanthropic initiatives at the Jewish Funds for Justice, out in the cold.

For more than a decade, JFSJ has leveraged more than $30 million in loans through the Tzedec Economic Development Fund. Tzedec offers mission-minded investors the opportunity to earn a modest interest rate while supporting job creation and community development in low-income areas such as Baltimore, Md., the Gulf Region, Los Angeles, Philadelphia, South Florida and Washington.

Tzedec currently manages $11.5 million in investments — more than doubling the amount in the last five years.

The minimum investment is $18,000, but as demand for socially responsible investment options increases, Jews of more modest means now can invest to achieve social impact in a Jewish way.

In 2008, JFSJ partnered with the Calvert Foundation to launch the Jewish Funds for Justice Community Investment Initiative, which allows American Jews to participate in community investment by lending as little as $1,000.

More than $120,000 has already been invested through this program.

“It’s nascent, but it has a lot of potential as a vehicle for smaller investors,” Burton says, adding that he has invested his own money in the fund.

Socially responsible investing, also known as ethical investing, has seen a boon in recent years.

One of every $9 under professional financial management in the United States is involved now in socially responsible investing — investments that take into consideration not just the financials but also the social and environmental consequences of investments.

Within the faith-based world, socially responsible investing dates back more than 200 years, with Quaker immigrants arguing against investing in war and the Methodists managing their money using what is known in modern investment lingo as “social screens.”

Religious mutual funds today have $26 billion in collective assets, according to the Social Investment Forum Foundation. Most of these funds screen out or avoid investing in businesses that make money from tobacco, gambling and other “sin stocks” that violate their religious values.

Ave Maria’s Catholic Values Fund was started at the insistence of Tom Monaghan, the owner of Domino’s Pizza and a devout Catholic. The fund screens out companies involved in activities that the Catholic Church is against, such as abortion and pornography.

The Amana Fund invests according to Islamic principles, avoiding firms that derive more than 5 percent of revenues from pork, alcohol, gambling, pornography or tobacco.

No corresponding Jewish SRI fund exists, says Jared Pfeifer, a doctoral candidate at Cornell University whose work focuses on the intersection of finance and religion.

Yet Mark Schwartz, associate professor of law, governance and ethics at York University, believes that one may come onto the scene in the near future.

The Jewish community, however, has been an active force in the world of community investing, a form of SRI in which investors lend funds, often at a below-market interest rate, to support affordable housing and other initiatives that benefit traditionally underserved communities.

In 1997, the Union for Reform Judaism began actively promoting ethical investing among its membership. And, more recently, the URJ has encouraged congregations to join the Chai Investment Program by

investing 1.8 percent (a play on the numerical value of “chai,” or life, which is 18) of its assets in community development.

In addition, the Reform Pension Board, which serves professionals in the Reform movement, was the first Jewish organization to join the Interfaith Center for Corporate Responsibility.

“The awareness of our financial industry’s relationship to real people on the ground is heightened in a way it hasn’t been in years,” Burton said. “Suddenly, people are viewing banks not just as the place where they happen to have a checking account. They want to see how that money creates jobs and makes a difference for real families locally.”

In light of the stock market losses of 2008 and the Madoff affair, individual investors are increasingly open to the idea of measuring their returns in ways that are not solely financial.

“There’s a lot more interest in what we call a triple-bottom line: financial profits, social impact and environmental responsibility,” Burton says.