Catholic investment funds are increasingly investing in projects in emerging economies and earning a return while also doing good.
After decades of giving to charity, a growing number of Catholics are starting to put their philanthropic billions into profitable investments instead – a new aid model, backed by Pope Francis, that experts say could help end poverty.
Catholic investment funds, which manage capital from hundreds of faith-based organisations, are increasingly investing in projects in emerging economies and earning a return while also doing good, experts say.
“Although it’s easy to raise money for humanitarian emergencies, it’s getting more difficult to raise money in long-term development, particularly in countries that now have middle income status,” said Nicholas Colloff of Argidius Foundation.
“There’s definitely an increased level of interest for Catholic based organisations … in impact investing,” said the head of the Swiss foundation, which is directed by Catholic teachings about social justice and giving dignity to the poor.
Impact investing – which seeks to make a profit while also generating social and environmental benefits – is growing in popularity among investors who want to support development goals such as clean energy, education and healthcare.
Some $228 billion was managed in impact investments worldwide in 2017, double that of 2016, amid growing interest from millennials and pension funds, according to the Global Impact Investing Network (GIIN), which promotes the sector.
Charismatic Argentine Pope Francis, who has championed the poor since he took the helm of the 1.3 billion-strong church in 2013, is a key driver of the new investment trend.
At the first of three conferences hosted by the Vatican on impact investing in 2014, he said it was important that ethics play its part in finance, and that markets should serve the interests of people and the common good of humanity.
“This call from the top to encourage us as institutions to look at new ways (to use finance) was really helpful,” said Matthew Zieger, the first national director of impact investing with Catholic Charities USA.
“The Pope has said it quite well – the economy needs to be centred around the human person and there’s a lot of ways to do that better, both as institutions and as individuals.”
Zieger said impact investing to fund affordable housing and job creation was growing at his network, which represents more than 160 Catholic agencies worth about $50 million.
Another organisation spearheading the new mission is Catholic Relief Services (CRS), the church’s U.S.-based humanitarian agency and joint host of the Vatican conferences to explore how the faithful can harness capital to help the poor.
CRS has lent $1 million to banks in El Salvador that lend on to city authorities and cooperatives to spend improving and expanding their erratic, poorly maintained water services.
It aims to give 300,000 people reliable water access in the next three years while also earning “single digit returns” from the loans, said John Simon of Total Impact Capital, which is managing the investment on behalf of CRS.
“There hasn’t been a late payment yet,” he said.
Other big Catholic institutions, such as Ascension Health, the largest non profit health system in the United States, and Georgetown University are also impact investing, according to Amit Bouri, chief executive of GIIN.
Bouri said he had noticed a shift at the Vatican conferences he attended from educating the faithful about the potential of impact investing towards allocating capital to projects.
“There were many more institutional investors present and a much more finance driven discussion, which I think will set the stage for much more impact investment activity amongst Catholic institutions,” he said.
By Lee Mannion @leemannion; Editing by Katy Migiro