Introduction Awareness of socially responsible investing (SRI), applying social as well as financial criteria to investments, is on the rise. Major financial publications and TV news programs have carried stories on the subject, stockbrokers and financial planners now recognize the concept, and press coverage of divestment in South Africa has brought the issue to the public's attention. The Social Investment Forum, the field's national trade association, found that by April, 1985, $40 billion of investments had been screened using social criteria. Now over $300 billion has been socially screened and the number is growing fast. The purpose of this publication is to help novice investors (or investors new to SRI) manage their financial resources according to their values. Interviews and articles by experts cover the full range of socially responsible investment opportunities. The first article is an interview with three of the best known experts in the area of socially responsible investing: Joan Bavaria, Amy Domini, and Chuck Matthei. They answer some of the basic questions about SRI and examine its direction. Jerome Dodson, president of the Parnassus Fund, explains how a mutual fund works and what is involved in using social criteria to make investment decisions. The "Socially Responsible Investment Funds Guide" provides an overview of the social and financial performances of socially-screened money market and mutual funds. Many people do not have the time or interest to manage their investments and prefer to work with a financial advisor. Kathleen Kendziorski, a registered investment advisor in Seattle, Washington, discusses the basics of financial planning and how to choose a financial planner. Community investing has the potential for a more direct impact on society than traditional investments. Chuck Matthei, a leading advocate of community investing, explains the value of directing investments into underfunded programs such as low-income housing and worker-owned businesses. The South Shore Bank of Chicago has become profitable by making loans in the low-income area in which it is located. In "Socially Responsible Banking" we look at the national model of a community development bank. Churches, primarily at the national level, have been active in SRI. Darrell Reeck looks at that activity and explains how churches can get involved. Finally, there is a list of resources—directories, newsletters, and research organizations—for those seeking more specific information. The underlying theme of the socially responsible investment movement is the demand for ways to invest money consistent with one's values. Baby boomers, whose values were crystalized in the 1960s and early 1970s, are now advancing in their professions and have money to invest. As this generation, as well as those in other age groups, looks at how its money is invested, including pension funds, and college and church endowment funds, there will be the potential for a dramatic change in the way capital is used in the U.S. economy. 4 Glossary Bond: Debt in which a government agency or corporation agrees to pay a specified interest and repay the principal over a designated period of time. Capital Gain: Profit from the sale of a stock (or other asset) at a higher price than for which it was purchased. Commission: A broker's fee for buying or selling securities. A mutual fund commission is often called a load. Dividend: Payment from the profits of a corporation to its shareholders. Mutual Fund: An investment company that offers shares of its portfolio of stocks and bonds with gains or losses distributed to shareholders. The individual investor gets the advantages of diversified investments and professional management. Prospectus: A legal document that must be given to every investor who purchases registered securities. Revolving Loan Fund: A nonprofit organization that takes loans from investors and makes loans to community programs, such as low-income housing or worker-owned businesses. Securities and Exchange Commission (SEC): Organization created by Congress to enforce securities laws and protect investors. Stock: Ownership (equity) shares of a corporation. Page 3
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