What role does faith have in impact investment?
Over the course of history, religious organisations have been involved in the financial endorsement of projects seeking a positive impact. The concept of investing according to a set of religious beliefs is by no means new, but over the last few decades, faith-aligned impact investing has become more established. The number of faith-based investors has increased over recent years, inviting questions about the role that faith has to play in investment decisions and impact investing.
Impact investing aims to achieve a positive social and/or environmental impact often pursuing investment into activities that mitigate climate change, improve the lives of disadvantaged individuals, and support and empower communities. Across the whole sector, these objectives are driven by a number of motivations including institutional mandates, humanitarian values, beliefs about sustainability as well as the values held by various faiths.
The growing interest in impact investing from faith-based investors underlines the suitability of this type of investing for those with a faith. Institutions and individuals of faith generally hold a set of values that can include environmental stewardship, social justice and community-building. Wellers Impact believes that the suitability of impact investing for faith-led investors is grounded in the alignment of values between the two.
The rise in faith-based investors choosing impact investing above other investment methods is particularly worth noting. In 2019, The Global Impact Investing Network found that 35 of the fund managers they studied targeted faith-based investors, and many others stated that they had raised capital from this type of investor without targeting them in particular. The majority of fund managers claimed to expect substantial growth from faith-based investors in impact investing.
Not only does this highlight confidence in the potential of faith-based investing as a growing source of capital for impact investors, but also the confidence of faith-based investors in impact investing and the belief in the alignment of their values.
Wellers Impact works with a number of local East African not-for-profit organisations (NFPs) that serve the most vulnerable members of society. Our pilot development on CMS-Africa’s land has enabled the expansion of essential business training programmes that help poorer members of the community earn a living and manage their money well. This project has also helped build the community by bringing individuals together to support one another. Several of the investors into this project made the decision to invest based on the alignment of their values, driven by their faith, with the core purpose of the project – long term financial sustainability of an essential organisation which endeavours to build empowered families and communities.
While socially responsible and ESG based investing attracts many faith-based investors, our experience suggests that impact investing is arguably the most effective way to align with the values held by faith-based investors. This is because of the direct and intentional nature of impact creation through impact investing compared to divestment or screening strategies.
Our work within Africa has revealed that faith permeates every aspect of society. In Kenya, for example, many schools are faith-based and communities find their foundation in faith. Across East Africa, Christian and Muslim social institutions are perceived to be more reliable than state organisations, which have a reputation for greater corruption and self-interest.  Given the prevalence of faith, religion is not as contentious a topic as it is in the Western world. However, as in the West, many faith-led organisations and individuals are performing crucial work within their communities, which could be multiplied and deepened through investment. They employ values and pursue goals that align with Sustainable Development Goals and therefore play a vital role in the development of their communities.
Wellers Impact does not discriminate between organisations of faith and those without. However, many of Wellers Impact’s land-owning not-for-profit partners are faith-based organisations. Wellers Impact is most concerned with the values that these organisations uphold, including community building, empowerment, independence and financial sustainability. These values appeal to both faith-based and secular investors and offer them a good grounding for investment. Wellers Impact’s past experience has shown that there is particularly good alignment with faith-led investors who look to further align their core values in all of their activities, including investment decisions.
Wellers Impact is a UK-based, FCA-Regulated Impact Investment Manager who works to unlock community-focused impact through SDG-focused impact investing. Through innovative investment models that utilise fair economics, Wellers Impact originates investment opportunities across three core business activities; real estate developments in partnership with local land-owning not-for-profits in East Africa, financial support for agriculture firms and supply chains globally through sustainable development finance and direct investment into private water, sanitation and plastics recycling firms globally. Investment involves risk. Suitable for Sophisticated, Professional and High Net Worth Investors only.