free pension alternative. They have a very broad employee base and the employees and shareholders gave them a lot of trouble. There are a lot of other small anecdotes. One of the funnier ones is that we at Insight [Franklin's newsletter] write up companies and recommend buying or selling a stock. We wrote up Pitney-Bowes [maker of office equipment] at one point as a buy. Then it became very expensive and faded away. Pitney-Bowes called us up and said, "What did we do?" We have a lot of interchanges like that. CUE: What would you suggest for the small individual investor? BAVARIA: When you are just starting to save money you naturally start at a bank, and it gradually becomes big enough until you think of more creative investments. You might think about credit unions rather than the international bank. Credit unions are by definition neighborhood organizations that keep capital in the same neighborhood. There are some banks that are neighborhood-oriented. When you have several thousand dollars, the next step is a mutual fund. Unless you have $100,000 or closer to a quarter of a million it's very difficult to be an investor in the stock market. CUE: How can people dealing with a board of trustees convince them to shift investments for which they are responsible? BAVARIA: If they are trying to convince a board or individual trustee, one of the first parameters is to remember that the money doesn't belong to the trustees—it belongs to you or to a church or to a pension. The ownership is really not with the board, the board is to serve the owner. If you're convinced of that, you will go a long way. They are usually concerned that they will be sued for negligence by someAmy Domini one down the line or that they aren't going to meet their income requirements. You need to show them the records of existing social investment funds, and say this isn't true. We can prove that you can do just as well with social screens applied to a portfolio. You need to provide them with the data that they need to feel that they are not taking undue risk, and let them know that you are the owner and you have rights, too. We are beginning to see mainstream interest. It's not just on the fringes. CUE: Another option for socially responsible investors are community loan funds. How do they work? MATTHEI: Over the last six years almost 200 investors, individual and institutional, have committed a total of almost $4 million to our loan fund on a variety of terms. We have taken that money and made about 150 loans to community development projects in 20 states, and wonder of wonders, we haven't had a single loan loss yet and we've never been a day late in payment to a lender. The social performance has been just as exciting. We did a brief survey of our housing loans. We found that in $500,000 of housing loans, we've leveraged at a rate of five to one. That means that for every dollar that we put directly into those projects more than $5 comes from conventional sources that would not have flowed unless we came up with the missing piece of the financing package. Who benefits from that housing? Look at the complexion of deep poverty in the United States; we are Joan Bavaria Page 5
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