Guidelines for episcopal investments: Too much of a good thing?
The United States Conference of Catholic Bishops has updated its Socially Responsible Investment Guidelines, renewing the bishops’ commitment to investments in companies and initiatives which have a positive impact on the common good, while avoiding any and all investments in companies directly involved in abortion, euthanasia, human cloning, contraception, and embryonic stem-cell research. The guidelines acknowledge the complexity of responsible investing, given that many companies promote the common good in some ways while undermining it in others, and that some companies may be more easily influenced by the concerns of investors than others.
The Guidelines are worth skimming for Catholics and others actively considering the morality of their own investments, and the difficulty of balancing the impact of investment on the common good against the need for a reasonable rate of return. While it is possible to combine particular goods with financial return on investment, for most of us the first step is to avoid investing in companies that are actively involved in grave evil. Unfortunately, the possibility of cooperation with evil through investments has been increased substantially in recent years by a steady shift in values of major corporate leaders, who have become strong proponents of the “woke” culture, using their financial influence to punish political leaders, voters and other businesses which (for example) resist the rising tide of gender ideology.
And not only gender. The various strains of the dictatorship of relativism embodied in the “woke” narrative tend to reduce issues to a common denominator. It is just as popular among Western academic and corporate elites to reduce all social inequality to the abuse of power based on racial dominance (i.e., critical race theory) as it is to reduce all sexual morality to fear of others (i.e., homophobia). Examples of how these ideological narratives influence corporate behavior are not difficult to find, but I will offer just two:
- For years, those determined to be seen in the right light by the dominant culture pressed hard for the Washington Redskins football team to change its name, despite the fact that repeated polls of Native Americans overwhelmingly supported the name (we are talking about 9 out of 10 Native Americans being in favor of it), and the fact that some predominately Native American high schools use “Redskins” as the name for their own teams. To the ideological thought processes of the privileged classes in the United States, the assumption was that the word “Redskins” for Native Americans was analogous to the word “Niggers” for Blacks, which was overwhelmingly not the case. But note that the pressure for a name change did not succeed until about two years ago, when corporate America took up this fashionable cause. The companies with the biggest sponsorship influence on what is now temporarily called “The Washington Football Team” threatened to withdraw their advertising support if the name were not changed.
- Over the past five years, whenever State governments have tried to derail any aspect of gender ideology—for example, by restricting restrooms to those of the same biological sex—corporate America has stamped both feet, threatening to ensure significant loss of income to people in those jurisdictions by boycotting these states when it comes to major events, corporate meetings and conventions. The poster child for this sort of corporate abuse was North Carolina, but similar threats and actual boycotts have been directed against Alabama, Arkansas, Indiana and others. In some cases the trigger issue has involved restrooms, in others transgender “counseling” and “medical” procedures.
USCCB investment policies envision a comprehensive analysis of corporate behavior, though in practice it is unclear what this will mean—and, of course, this is a very difficult subject. No corporation is pure as the driven snow if you apply a moral analysis to not only core business practices but official corporate advocacy, and not only corporate advocacy but the personal advocacy of officers and board members, and not only personal advocacy but other investments held by these people, along with their own “spiritual affiliations” or behavior. Obviously there is an important element of prudence in assessing how best to handle the complexities of investing on a minority (non-controlling) basis.
For most modest family-oriented investors (those of us who use investments to provide for our own retirement and/or to pass something along to our children), it is very difficult to escape “investment taint” altogether. In general, IRA contributions are invested through a financial advisor at a desired risk level in broad funds managed by an investment company. Each of these funds contain a large number of particular stocks and bonds, which the fund managers buy and sell continuously, adjusting the entire portfolio regularly to maintain the expected rate of return.
This is pretty much a fact of modern economic life. Most small investors have neither the time nor the expertise to properly evaluate this process, though there are some companies established precisely to provide “socially responsible” investing—and even some, such as Ave Maria, which define “socially responsible” in specifically Catholic terms. As a general rule, however, an investor must have substantial funds to invest and the ability to devote significant time and attention to those investments before he or she can become personally (and effectively) involved in moral money management.
Obviously, the American bishops fall into this category, and that is why Catholic moral principles are so important, especially the distinctions among active, passive, proximate and remote cooperation with evil. The USCCB guidelines make it clear that not only moral analysis but prudence must be involved in the assessment. For example, in addition to the genuine moral responsibility of investing in trustworthy ways that produce a reasonable rate of return (for, after all, the invested funds originate with the faithful), there is this:
The Conference should exercise ethical and social stewardship in its investments. Socially responsible investment involves investment strategies based on Catholic moral principles. These strategies are based on the moral demands posed by the virtues of prudence and justice. They recognize the reality that socially beneficial activities and socially undesirable or even immoral activities are often inextricably linked in the products produced and the policies followed by individual corporations. Nevertheless, by prudently applying traditional Catholic moral teaching, and employing traditional principles on cooperation and toleration, as well as the duty to avoid scandal, the Conference can invest wisely and ethically.
I note also that the emphasis on avoiding scandal is mentioned four times in the document. For example, the potential for scandal may be in itself a good reason for the bishops to divest themselves of a particular investment, even if that investment is not, strictly speaking, sinful in itself.
In terms of their management of funds, the bishops are rather in the position of Caesar’s wife (or, more accurately, servants of Jesus Christ). Since the funds originate from the pious sacrifices of the faithful, any misuse of those funds in the effort for financial growth is (or ought to be) an extremely serious issue. This is one of several causes (though by no means the most important) for the discouragement experienced by good Catholics when even worse moral abuses lead to significant punitive financial settlements. The Church ought never to view her financial resources as “her own”, not even in the limited sense that a family’s financial resources might in some sense be regarded as the “possession” of the head of the household. Everything we have is allotted to us for stewardship in some degree, even in the case of what we call “ownership”—and that degree is supreme in the activities of the Church herself.
There are, of course, degrees of failure. What I mean by this is perhaps best illustrated by the long-standing difficulty of purging all immoral purposes from a closely related category of episcopal financial activity: The grants allocated through the American bishops’ Catholic Campaign for Human Development. Often the problems here involve the granting of funds for a particular good purpose to an organization which also engages in one or more highly evil purposes (such as promoting abortion). In any case, neither the American bishops nor even Catholic Charities or Catholic Relief Services have succeeded in preventing all abuse in the use of their funds. They have too many administrators and work through too many other organizations for that to be possible. And in an era in which so many who bear the Catholic name do not possess a strongly Catholic moral sense, abuses will be more difficult to avoid.
Investing in “human development”, of course, is not precisely the same as investing in stocks or bonds or securities. Still, the USCCB’s investment guidelines themselves mention the Catholic Campaign for Human Development as being the best episcopal mechanism for the “investment” of funds which will not bring the reasonable return which non-charitable investments have as their legitimate purpose (especially when using other people’s money). There is a difference between investing and charity. Therefore, despite the desire of the bishops to undertake investments which might do great good without producing a reasonable rate of return, the guidelines quite rightly state the following:
Given the purpose of the funds which the Conference holds, and, in some cases, its fiduciary responsibilities, opportunities for investing in community development initiatives with lower rates of return will probably be limited to CCHD’s efforts or other special initiatives.
But my larger point here is that the difficulties of avoiding scandalous mistakes in the CCHD are analogous to the difficulties of avoiding scandalous mistakes in investments to grow wealth. If there are difficulties with the former, there will likely be difficulties (and debates) with the latter. And no matter what degree of care is exercised, such difficulties will remain for at least three reasons: (a) Because the analysis itself may be difficult; (b) Because the admixture of good and evil purposes may not be obvious; and (c) Because this admixture of good and evil may change over time.
Should the Church even have investments?
A legitimate question can be raised: Should the Church have investments at all? Ideally, or so I suppose, the Church would collect contributions more or less continuously for its Catholic spiritual and material purposes, and regularly use up all it collects for these purposes. One does not make investments, after all, unless one has a surplus, and there is an important sense in which the Church ought not to have a surplus. She does not need to provide for a future period of “no longer working” the way individual wage-earners do.
Indeed, one is reminded of the third century Roman deacon, St. Lawrence, who was in charge of the Church’s financial management. According to St. Ambrose of Milan, when Lawrence was ordered to turn over the Church’s wealth to the Roman Emperor during a persecution in 258 AD, he agreed to do so, and then gathered the poor together and presented them as “the wealth of the Church”. He declared:
Behold in these poor persons the treasures which I promised to show you; to which I will add pearls and precious stones, those widows and consecrated virgins, which are the Church’s crown.
St. Lawrence notwithstanding, I would not go so far as to rule out ecclesiastical investments. After all, it is sometimes necessary to save over a period of time in order to undertake certain projects, and we would not want the Master to wonder why we did not use the interval to enhance the funding through a reasonable return on investment. At the same time, in the parable I have in mind, Our Lord was really referring to the abilities given to each person, whereas financial investments carry with them always the risk that others will regard the Church as far too concerned about “riches”. Moreover, such investments also present many temptations to those who have charge of them—as we are seeing yet again in current prosecutions for dodgy investments involving members of the Roman Curia itself.
First and foremost, I suspect, not just bishops but all of us need to be more wary of a preference for investment over direct and immediate charity. Nonetheless, personal/familial investments can certainly be moral, and it seems clear that ecclesiastical financial investments are also morally permissible in the right circumstances. Therefore, we also need to understand that, despite the best efforts to develop sound guidelines, the investment of Church funds is an extraordinarily complex and even dangerous practice—far more complex and with far more cooks to spoil the broth than our own personal and family investments, which are quite complex enough.
In the context of an investment-oriented financial plan, I found the Socially Responsible Investment Guidelines for the United States Conference of Catholic Bishops to be a good reminder of these difficulties. In our increasingly non-local, complex, and financially interconnected world, we need to think about the principles, and particularly the prohibitions, supplied in this text. And in recognizing the entire range of dangers, we need also at least to raise the following question, for ourselves and our families as well as for the Church: Where investments are concerned, can there be too much of a good thing?
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