Layout Image

Investing the Quaker Way

By Norval Reece

I grew up in the Midwest, one of five kids of Glenn A. Reece and Velma Leonard Reece. Dad was raised in a Quaker family on a horse ranch in Western Kansas; Mom was the daughter of Quaker wheat farmers near Pratt, Kansas. They met at Friends Bible College and married. Dad became pastor of Friends Churches in Oklahoma, Kansas, Nebraska, Indiana and Ohio. He then served as Superintendent of several Yearly Meetings and as General Secretary of Five Years Meeting (now FUM).

Back then, we had little money. By necessity, we kids learned early in life how to earn and save money. But how to invest money was a “whole ‘nother kettle of fish,” as Dad would say. I learned about the ethics and options involved in investing only when I had to — after selling in 1999 the international cable television company I had founded.

After the sale, I had more money than I needed — “extra money.” An “endowment” if you will. Where should I put it? To what end? In a savings account? Money Market funds? Stocks? Bonds? Private equity? Hedge Funds? Under the mattress?

Each of us is a steward of our Friends churches, meetings, schools, colleges, retirement communities and other organizations and their endowment funds. How do we “pay it forward” in the most effective and beneficial way for our Friends institutions and their missions while remaining true to our Quaker values? We all know the field of investment is so risky. Is there a Quaker way to invest funds with little risk?

One group, Friends Fiduciary Corporation (FFC), says “Absolutely!” Created by Friends for Friends in Philadelphia in 1898, the not-for-profit manager of over $290 million for 300 Friends churches, meetings, schools and organizations has an impressive history of following Quaker values and principles in its financial management. Friends Fiduciary does not manage money for individual investors like me, but it does an outstanding job for Friends’ organizations, trusts and endowments.
I was talking to a Friend recently and mentioned that I had joined the Board of Directors of Friends Fiduciary Corporation. He asked me, “Why would a nice guy like you want to do a thing like that?”

I said, “For pretty much the same reason I wanted to serve on the Board of the Earlham School of Religion – to do what I can to help an outstanding Quaker organization shape a robust future for the Society of Friends.”

Earlham School of Religion (ESR) does what it does better than any other school of religion I know (having graduated from Yale Divinity School and being familiar with several others). ESR provides excellent, inspirational and practical training for people called to leadership and ministry in Friends Churches and organizations — a service much needed for a robust Religious Society of Friends.

Friends Fiduciary Corporation (FFC) also does what it does better than any financial institution or manager I know (having worked with and been a client of several major ones). FFC invests the money of Friends’ organizations according to Friends’ values in a professional, efficient, low-cost manner with excellent results (+18.56% last year) — a service much needed for a robust Religious Society of Friends.

Friends Fiduciary Corporation was started 115 years ago by Friends to do precisely what Quakers have been bringing to the business world since the late 1600’s.

Forbes 85th Anniversary issue included an article about Quakers and their out-sized impact on the business world.

“Look past today’s scandals and you’ll find that capitalism has always been founded on trust, honesty and decency. That’s the only way it works.

Initially their success was built around the benefits Quakers got from trading with one another. Because they dissented from the Church of England, members of the sect were barred from the professions and as a result gravitated toward business. When Quakers went looking for credit or for trade, then, they found it easy to partner with fellow believers. Their common faith facilitated trust, allowing a Quaker tradesman in London to ship goods across the ocean and be certain that he would be paid when they arrived in Philadelphia.

Quaker prosperity did not go unnoticed by the outside world. They were well known already for their personal emphasis on absolute honesty, and as businessmen they were famously rigorous and careful in their recordkeeping. They also introduced innovations like fixed prices, which stressed transparency over sharp dealing. All of this clean living, as it were, paid off. Soon, people outside the sect began to seek out Quakers as trading partners, suppliers and sellers. And as Quaker prosperity grew, people drew a connection between that prosperity and the sect’s reputation for reliability and trustworthiness. In the long run, observant businessmen came to see, being trustworthy was more lucrative than being Machiavellian. Honesty was the best policy.” Forbes Magazine, 12.23.02, A Virtuous Cycle by James Surowiecki

What Quakers have been bringing to the corporate business world for 300 years is what Friends Fiduciary Corporation is bringing to the business of investing. Friends Fiduciary stands rock-solid in the great Quaker tradition of doing business based on Quaker values.

What does this mean in practical terms? Just as 18th century Quaker-owned ironworks in England refused to make cannons, Friends Fiduciary has stringent environmental, social and governance screens (ESG). It excludes investments in companies producing weapons, alcohol, tobacco, firearms, those running gambling operations and for-profit prisons, and those with histories of poor environmental and employment practices. In good Quaker fashion, it also is actively engaged as a shareholder with companies with regarding issues of concern to the Society of Friends.

Quaker Green Fund

The latest exciting FFC’s response to a changing world is the Quaker Green Fund (QGF) begun on January 1, 2014. Fossil-fuel free with a proactive investment in “clean tech” companies, QGF joins FFC’s flagship balanced Consolidated Fund, the Quaker Index Fund for larger endowments, and the Short Term Investment Fund for clients with needs for ready cash. The Quaker Green Fund’s allocation to clean tech companies incorporates investments across nine positive environmental themes: advancements in sustainable use of agriculture resources, alternative and renewable energy, efficient transportation, energy conservation, water filtration and conservation, low carbon finance, and cutting-edge clean technologies. Jeff Perkins, FFC Executive Director, calls this “a ‘smart strategy’ which will increase the impact while reducing the risk of this part of the QGF portfolio.”

Summary

In short, there is a “Quaker Way” to invest money according to Friends Fiduciary and I’m pleased to be a part of it. They’ve been doing since 1898 what I knew nothing about as a Quaker kid growing up in Indiana. And the more I learn about their tough screens, detailed analyses and careful shareholder activity on matters of importance to Quakers, the more impressed I am.

So, while this writer may still need to monitor his personal investments, it’s comforting to know that a smart, dedicated group of Quaker professional money managers are taking good care of some of the Quaker organizations to which I donate. As a business person and as a Friend this is important to me. My own Newtown Monthly Meeting, Newtown, PA, for example, is happily invested in the FFC Consolidated Fund and the new Quaker Green Fund.

As I mentioned to my inquisitive Friend, I wish all Quaker organizations would put their endowment funds to work with Friends Fiduciary Corporation. It provides big-time leverage for Quaker impact in the corporate world, and Friends Fiduciary is proving you can have excellent long term market performance without sacrificing Quaker values. That’s not only comforting. That’s impressive!

Norval D. Reece is a birthright Friend, member of Newtown Friends Meeting (PA), cable television international entrepreneur, on the Board of Trustees of Friends Fiduciary Corporation, George School, and the Haverford College Corporation, and formerly served as Chair of the Advisory Board of Earlham School of Religion, Board of Directors of AFSC, and Pennsylvania Secretary of Commerce. He is a graduate of DePauw University and Yale Divinity School.

Leave a Reply