COMMENTARY: To ensure a Catholic portfolio is truly Catholic often takes more due diligence than simply putting the organization’s investments into a fund that claims to avoid the suggested guidelines.

Religious organizations work hard to balance numerous items including  mission and money. Resources are often tight, and dollars need to stretch as far as they possibly can. As if balancing the budget wasn’t enough, CFOs, COOs, executive directors, boards and finance committees of Catholic organizations are tasked with constructing portfolios with a morally responsible component to them, while also hitting their investment objectives.

For Catholic organizations, the U.S. Conference of Conference Bishops (USCCB) guidelines are a helpful starting point for creating a morally responsible portfolio. The USCCB first issued guidance on investing in 1991, and just updated the guidelines in the fall of 2021. In the guidelines the bishops take a strong stance on avoiding investing in areas of pornography, human embryonic stem cells, access to certain pharmaceuticals, protecting our earth, and social issues such as abortion.

It may seem simple to avoid conflict and scandal while constructing a Catholic portfolio, however the reality is that it is more like peeling back the layers of an onion — it can get a little messy at times. 

To ensure a Catholic portfolio is truly Catholic often takes more due diligence than simply putting the organization’s investments into a fund that claims to avoid the suggested guidelines. In reality when dollars are being invested in equities, bonds, and alternatives, asking questions that peel back the layers of the onion is truly critical to assuring that the portfolio is respecting Catholic moral teaching on every level. 

Let’s continue with the analogy of the onion. The shell, or outer layer, of the process begins by defining the screening criteria that the organization wants to take into consideration. Should the USCCB guidelines be strictly followed, or will there be exceptions? 

Once the criteria are defined, it is best to identify the revenue threshold that will be tolerated by the investment committee of the religious organization. For example, a 0% revenue threshold on abortion would limit investing in any company who generates a single dollar from abortion procedures. 

Here are seven additional layers to peel back to get to the core of building a truly morally conscious portfolio: 

1.  Make sure the consultant demonstrates a robust process. A strong, institutional approach starts with recommending investment products that are compelling from a qualitative and quantitative standpoint. These traits would include a solid team, philosophy, a reasonable amount of assets under management, a long-term track record, and absolute and relative performance. Once the …….

Source: https://www.ncregister.com/commentaries/7-ways-to-build-a-morally-conscious-investment-portfolio