I met parishioner, Kyle Playford, at St. John’s anti-racism classes during the summer of 2020. Kyle suggested several resources regarding racism in our economy. From our conversations it was clear Kyle had done a lot of reading and was passionate about dismantling systemic racism.
Since the training Kyle and his wife, Christi, welcomed their first child and bought a new home. These blessings have not slowed Kyles’s learning and advocacy.
Kyle has inspired me to look for and make small changes in my money management that support justice for all. I invited Kyle to share his learnings and resources with you to help us align our finances and our values.
I still cannot bring myself to watch the video to this day. George Floyd was murdered by Derek Chauvin, over a year ago, yet his death is scarred into my brain like a branding iron on cattle. It happened 15 minutes away from where I live. I felt shock, dismay, anger when I read the news articles and saw the coverage on TV. Whenever I thought about the image of Derek Chauvin kneeling on George Floyd’s neck, a simple phrase would repeat itself in my mind: “It’s not right, it’s not right, it’s not right.” I wasn’t alone in my outrage.
The world erupted in protest, and suddenly I saw diversity, equity, and inclusion (DEI) statements on most organization’s websites. I noticed that industries could not turn a blind eye anymore to the injustice happening around them. Many commitments were made in the aftermath of this tragedy. I committed to educating myself and reflecting on what I was learning.
Within our own church, St. John the Evangelist held anti-racism training in 2020. When my wife and I heard about the training, we were excited that the church was taking a proactive, anti-racist, educational response to the events happening around us. We knew from documentaries like 13th and Jim Crow of the North that the racist, prejudiced rhetoric was the metaphorical current we swam in. We wanted to unlearn these beliefs and work to fight against them in our daily lives.
My wife and I joined other white people over the blue light computer screens of Zoom. In those meetings, we became aware of our privilege, aware of systemic and institutionalized racism, and aware of our blindness to these realities so far. This training sparked an interest in me to see where systemic racism could be found in my own industry, of finance and specifically asset management.
After seeking out voices in my industry that were speaking about these topics, I have identified 3 major structures that contribute to systemic racism: Fund manager due diligence, investment policy statements, and our actual investment holdings themselves. In this article, I want to share these learnings with you. Not everyone has the time or industry knowledge to do this research for themselves. I would like us all to become aware of the impact our money management has on perpetuating racism. With this knowledge we can more fully live into our baptismal covenant and do our part to push back against systemic injustice.
Fund manager due diligence is a complex topic and requires some initial background. As an example, let’s start with you. You may be privileged enough to have the option of contributing some of your compensation at work to a retirement plan. This could be an Individual Retirement Account (IRA), a 401(k) plan, or a company pension.
When you deposit money in these plans, where does it go? Typically, the money is invested into an index or target date mutual fund, or perhaps an annuity.
Who manages these assets? According to a recent study by the Knight Foundation, only 1.3% of 69 trillion dollars is being managed by firms owned by women or minorities.
How could such an inequality come to exist? The issue stems from the due diligence process that fund managers go through to get their index or other investment funds available to people with money to invest (like you or I).
The due diligence standards typically exclude managers with less than 3 years of experience and less than $200 million dollars of assets that they already manage. These standards, while hailed as being in your best interest, heavily favor established individuals and firms. Because women and people of color have not traditionally worked in this industry these standards create a significant barrier to entry.
New due diligence standards are needed to allow more diverse fund managers into the financial investment industry. You can read more about this issue at duediligencecommitment.com. I hope the spirit moves you to join me in signing the pledge.
If you are fortunate enough to work with an investment advisor or financial planner, like myself, you most likely have signed an investment policy statement (IPS). Most endowments, including St. John the Evangelist Endowment Fund (Cornerstone Trust), have an IPS as well. This statement directs your advisor on how to invest your funds.
The standard considerations when developing an IPS are typically “How can I get the highest return?” or “How risky do I want to be?” or “am I adequately diversified?” Many times, the answers to these questions are: Invest in private prisons. Invest in large oil companies. Buy into municipal bonds that invest in already wealthy communities.
The question is rarely, if ever, asked: “does what I’m investing in reflect my personal values or faith?” When I asked this question of myself, I realized that I was investing for the highest percentage return, and not considering how my dollars were reflecting my values. I don’t want to be invested in an unjust penal system or support the pollution of God’s beautiful creation.
Wash yourselves; make yourselves clean;
Isaiah 1:16-17
remove the evil of your doings
from before my eyes;
cease to do evil,
learn to do good;
seek justice,
rescue the oppressed,
defend the orphan,
plead for the widow.
I researched and found a company called Adasina Social Capital. Their Social Justice Index ETF is a fund that I believe aligns my desire for a high return with my personal values and faith. As I reflected and discerned on this topic, I realized I wasn’t comfortable earning additional returns if my holdings have contributed to systemic racism and environmental harm. If you feel equally conflicted, I urge you to talk to your investment advisor and ask them to work up a plan to align your dollars with your values.
Finally, the mutual funds that you are invested in may be diversified, or even labeled ESG (Environmental, Sustainable, and Governance), but in practice it can mean that the actual stocks or bonds are difficult to pinpoint. For example, the largest mutual fund VTSAX (Vanguard Total Stock Market Index Fund) has over 3,500 individual stocks in it. How can you be sure you know what the impact of this fund is on ending systemic racism? On fighting climate change?
The name of the fund can also be misleading, since mutual funds must only match 80% of the actual investments with the fund name.
I found this tool to help me grade investments on issues that matter to me so I can make informed decisions, asyousow.org. Educating myself to reduce my blindness to the realities of racism helps me better live in harmony with my faith and values.
After Derek Chauvin was convicted, I felt relief. However, the work of ending racial injustice is far from over. An often-ignored area of our lives are our financial investments, yet one of the biggest impacts we can have on racism is to change the financial systems that perpetuate it. As the prophet Jeremiah warns, let’s not declare peace until we have explored all the ways we can help bring justice to all God’s people.
Therefore I will give their wives to others
Jeremiah 8:10-11
and their fields to conquerors,
because from the least to the greatest
everyone is greedy for unjust gain;
from prophet to priest
everyone deals falsely.
They have treated the wound of my people carelessly,
saying, ‘Peace, peace’,
when there is no peace.
I encourage you to examine your holdings and take action to move your dollars towards investments that are aligned with your values. There is peace when our actions reflect our faith.
Thank you Kyle, not just for sharing these learnings and resources but, for all the work you are doing to help dismantle systemic racism.
Are you aware of systemic injustice in our financial practices? Have you made adjustments to your money management to avoid perpetuating injustice? We would love to hear your stories. Please contact Executive Administrator, Sarah Dull.
