Solutions

Faith-driven impact investment: Setting goals, measuring progress

So, whether you eat or drink, or whatever you do, do all to the glory of God (1 Corinthians 10:31).

As I’ve meditated on this verse, I’ve been prompted to ask myself, “Is it really possible to use investing for the glory of God?” It’s certainly something worth wrestling through, but I believe the answer is yes. Here’s why.

We have the opportunity to use our investment assets to bless communities that God loves. The Christian investor community has actually been doing this for multiple decades in various forms, ranging from microfinance, negative-screening in public equity portfolios, to business as mission (BAM) initiatives.  In recent years, the Christian investor community has also taken a notice of a rapidly growing impact investing ecosystem.

Although a gospel-centered perspective has been largely missing in this ecosystem, I’m seeing a tectonic shift among the Christian investor community to get involved and actively help shape the direction of this growing industry.  We have the opportunity to use our investments to improve the quality of lives in underprivileged communities and share the love of Christ.

As a Christian community, we have a unique message to share about Jesus and a perspective that shapes our approach to impact investing.

So, how does the Christian faith influence our impact investing strategy?  In short, it shapes both our objectives and our measurement approach.

Our unique advantage as believers is that we have access to an all-knowing, sovereign, and sacrificially loving Christ who is eager to share with us his desires. We can seek after God’s heart for the communities we invest in. We can seek to understand his profound plan and align our goals and measurement processes with his vision.


Redefining success

In the winter of 2016, my wife and I visited Greece on a mission trip to serve refugees. My heart broke when I saw their living conditions and heard about their journeys to Athens. One woman from Iraq had been 15 years without a home, separated from her family. As I heard stories like this, I was deeply saddened and couldn’t muster any words of comfort.

However, the tragic nature of this refugee crisis was not the only thing God wanted me to see. Through Paul, an Afghan brother I met there, God opened my eyes to the miraculous and powerful work he was orchestrating through the crisis. Paul was a refugee too, and he was introduced to the gospel while living on streets of Athens. Despite the strong opposition from his family, he became a Christian and started serving at a local church, encouraging fellow refugees to have hope in Christ.

My heart was moved when Paul shared with me his vision to serve the church and some of his favorite words from Scripture: I count everything as loss because of the surpassing worth of knowing Christ Jesus my Lord (Philippians 3:8).

Paul’s transformation is just one of many miraculous stories God is writing in Greece and the rest of Europe today. Thousands of refugees from Afghanistan, Iraq, and Syria are coming to know Christ. Moved by Jesus’ love for them, they are planting churches and ministering to both fellow refugees and Europeans as they find new homes in different parts of Europe.

God’s vision should guide how we define success.

While my sights were set on meeting refugees’ practical needs, God’s heart was not limited only to this. He was caring for their spiritual needs too. His plan was to bring revival in the Middle East and Europe through the largest migration we’ve seen since WWII.

This experience made me rethink things. God’s vision should guide how we define success.


Our faith informs the way we manage impact measurement

Is it possible to measure the spiritual impact of an investment?  How can we monitor what we cannot measure? These are important questions. While it’s difficult to address all of these questions at once, below are three needs I’ve recognized in the past 10 years through my journey in impact investing.

1. Close collaboration

To deeply understand issues facing a community, impact investors need to intimately collaborate with cross-sector leaders from the community – business, civic, religious, government, etc. Only then can investors begin to understand the holistic context and the complexity of issues that surround the community that investors want to serve. Cross-sector collaboration will help investors prioritize issues that investments can most effectively address.

Without close collaboration, investment capital may be misplaced or wasted. Worse than that, it may create unintended consequences that harm the communities. Relationships are key – investors need to spend time and build relationships in communities that they want to invest in and serve.

2. A focus on monitoring “measurable” activities

There are many outcomes that cannot be measured. While we need to surrender such outcomes to God, we should focus on things we can measure.

Every business is uniquely positioned to bless its community. A business needs to discern who it is uniquely positioned to serve and how it can most effectively serve them. These questions will help a business develop measurable activities and strategies to create change.

At a high level, there are two groups that a business can serve:

  • External stakeholders (e.g. customers, 3rd party vendors, local communities):

A business can bless its customers through its products and services. For example, an owner of affordable housing properties has the opportunity to improve the quality of its tenants’ lives by providing practical help (e.g. financial literacy classes, free health check-up sessions). The property owner can also partner with local churches to deliver the tenant programs and create ministry opportunities. While the property owner and the partnering churches may not be able to consistently report the number of salvations, they can absolutely measure the level of effort towards serving the tenants.

  • Internal stakeholders (e.g. employees, suppliers, shareholders):

A business has a massive opportunity to love its employees. For example, there are many ways to care for employees beyond simply providing jobs. A business can establish corporate chaplaincy to care for and pray for employees going through personal struggles. Leadership teams can provide generous stock option packages to all employees, so that employees from low-income communities can participate in the equity upside in the same way that leadership benefits. These are all measurable and quantifiable strategies that uplift communities in need.

Once a business gains a deep understanding of the who and how it can uniquely serve, it can develop a set of metrics that monitor the progress of the measurable impact strategies.

3. Consistent Evaluation Criteria

Many impact investors want to compare the potential impact of one investment with another as a part of investment diligence. However, it is often difficult to compare one with the other, since each investment has its own unique impact strategy. One method is for each investor to define a set of evaluation criteria and apply it consistently across all opportunities. Each investor should determine what’s most important to him or her. For some investors, it may be the ability to serve as many people as possible around the world (e.g. scalability). For others, it may be the ability to serve the poorest of the poor in a local region – two very different goals.

After identifying and prioritizing a set of evaluation factors, an investor can rate each investment opportunity against each of the prioritized evaluation factors (e.g. 10 = high potential for impact, 1 = low potential for impact). Then, these ratings can be used to produce the overall impact score for each opportunity.

While this method may not be perfect, many investors have appreciated the consistency and customization this process allows when evaluating and comparing the impact potential among various investment opportunities.


What’s Next?

The faith-driven impact investing ecosystem needs to develop a set of most-widely used, standardized metrics backed by research, evidence, and practical implementation guidance. A common set of nomenclature and metrics will bring transparency and accountability to this ecosystem, resulting in a more efficient flow of capital into the ecosystem.

A group of passionate people with backgrounds in theology, academia, business, and non-profit, led by several faith-driven institutional investors, is collaborating to develop a faith-driven impact accounting system that fosters transparency, credibility, and consistency in how spiritual impact is defined and reported.

Another exciting trend is the growing interest of secular peers’ in understanding the Christian perspectives in impact investing. In fact, Global Impact Investing Network (GIIN) has invited some of the leading faith-driven impact investors into a larger ecosystem-wide conversation, so that the rest of the community can learn more about our perspectives.

In today’s culture where Christianity is predominantly known for what it stands against, we have the opportunity to articulate what we stand for, with the full breadth of our Christian faith. We can share about the love of Christ and how his love compels us to use our investment assets to serve communities in need. What an opportunity!

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