Biblically Responsible Investments at The Signatry

Thane Cleland is the CEO and founder of CWC Advisors, the team who manages the biblically responsible investment pools for The Signatry’s donor advised funds. We spoke with Thane about the heart and strategies behind biblically responsible investing.

Q: What is biblically responsible investing (BRI)?

A: When we’re investing, we are providing capital to businesses by buying their stocks. We are trying to do that in a manner that honors the tenets laid out in the Bible. We’re investing in—providing capital to—businesses that don’t conflict with the core tenets in the Bible and The Signatry’s statement of faith.

This can mean different things to different people. At CWC, when we’re building portfolios for The Signatry, we look at a company’s core business lines. If what they’re doing from a business standpoint conflicts with biblical principles, we will eliminate them from the portfolio.

Q: Why is BRI important?

A: As Christians, we are all working to live out our faith on a daily basis. It’s one thing to talk about it, and it’s one thing to act on it. One way of acting on your faith is to make sure your treasure—and the treasure you donated—is invested in businesses that align with the goals of the kingdom of God outlined in the scriptures.

Q: How do you apply BRI principles to The Signatry’s investment pools?

A: The balance we’re striking is between our job to provide superior, risk-adjusted returns to DAF funds and our call to do that in a way that is responsible to God’s kingdom.

Any time we add a new business to a portfolio, we run it through a screen. We look at their core business activities and at how other Christian investors have scored them. Different investors have different perspectives on this, but we will not eliminate a business because of ancillary activities that are not core to their business. Easy examples of businesses we exclude are alcohol manufacturers, tobacco manufacturers, and producers of explicit content.

We have eliminated a few companies from our core portfolios that we’ve run for 30 years. One was a large, well-known company where one of their business lines provide abortions and do stem cell testing on aborted fetuses. We felt that was a direct enough conflict that we would eliminate the company.

Q: How does performance compare between biblically responsible investments and “standard” investments?

A: With BRI, you’re eliminating some opportunities, but you’re also eliminating some risks. For example, with tobacco and alcohol companies, there are certain legislative risks. And fortunately, they are both now declining macro industries.

I think investing can be more difficult when you limit your opportunity set. But I also think if you understand that, you can try to replace some of that return stream with biblically responsible tangential businesses. All portfolio management involves understanding how and why different sectors are going to perform, outperform, and underperform. If you can see where a biblically responsible portfolio would be missing a characteristic, you can replace that with something that will perform under the same circumstances.

By learning how to fill those gaps, you can tend to balance out the returns. Frankly, the way we have put together our BRI portfolios hasn’t been a detriment to this point.

Q: The Signatry offers three different BRI pools (Conservative, Moderate, and Aggressive). Which one is right for me and my generosity goals?

A: CWC has six underlying portfolios that we manage: large cap growth, large cap value, small cap domestic equity, international equity, traditional bonds, and alternatives. We put those together in different percentages to create a return characteristic that fits different investment objectives, risk tolerances, timeframes, things like that.

In general, my advice for donors to The Signatry is to align your investment horizon with your granting horizon.

For example, if you contribute money that will stay in the DAF for at least five to seven years, then the Aggressive pool probably makes sense. It will have increased volatility, and it might suffer some losses in the short term, but it will have a higher expected return in the long run.

If you’re looking at three years or less, you should recommend either the conservative pool or the money market. You really don’t want volatility in that principle if you want to start recommending grants.

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See quarterly performance for each of The Signatry’s biblically responsible investment pools here: thesignatry.com/quarterlyperformance