Making Money with Morals - Ethical Banking

by Chris Sheldon
Posted on 1st April 2008

Q: I've heard about ethical investments. What are they, and how can I go about investing in Christian projects? I'm particularly keen to support missions. Where do I start?

A: I'm glad you asked. Many people don't think twice about what their money is doing while it's in their account. But it's important to consider how your God-given financial resources are being used by the institutions you've entrusted them to, and to equip yourself for wise decision-making when it comes to money matters.

In fact, you don't need stocks and shares to be an investor. Any money you have in an account makes you an investor. Even if it's not earning interest, your cash is still being lent out by your bank or building society - that's how they make a profit, by charging interest to borrowers. However, unbeknown to many people with ordinary high-street accounts, their savings could be buying guns and tanks, or supporting regimes around the world which abuse human rights. If this idea doesn't sit comfortably with your faith, it's important to find out what is happening to your money. Some banks keep very quiet about what they actually do with their customers' savings.

The so-called 'ethical' banks are different. They are regulated by the same authorities as traditional banks and have to abide by the same rules, but they are transparent about the projects they finance, be they social or environmental in nature. Each of the ethical banks has a set of guidelines about the projects they will lend to, with some barring tobacco producers, and others shunning companies which practise animal testing, for example. If you keep your cash in an ethical bank account then you can be confident that your money isn't being used to fund activities you'd prefer not to support.

However, ethical banking isn't just about avoiding 'negative' investments. It's also about making positive choices to do good things with your money. Again, the banks' guidelines specify the types of projects in which they invest. Some seek to lend only (or primarily) to a specific sector, such as churches and Christian projects, while others are more general in their lending and support a wide range of charities and businesses. (Environmental concerns are particularly popular with the secular ethical banks, for instance.) The definition of 'ethical' varies a little between financial institutions. It is important to find out exactly what is meant by the companies with whom you plan to invest, taking the time to check how your money will be used and ensuring it matches your expectations.

"using your funds to help grow the kingdom of God"

It's great that you're specifically interested in supporting missions with your money. While ethical banking is a good step up from using banks with no ethical commitments, Christian banking and investing goes even further, and can provide an assurance of explicitly Christian financial management and a commitment to using your funds to help grow the kingdom of God.

When it comes to investing in Christian projects and missions, there are two main options available. The first is to hand pick, for example, a local social action project yourself. This carries a very high risk and requires a level of skill and expertise that is beyond most investors. Your money can also be difficult to withdraw.

The second option is to choose a Christian bank which manages a fund on your behalf, and invests in a range of projects, which might range from big-name international mission organisations to local churches and church-run projects. Christian banks have a clear Christian focus throughout their entire operation and remove the hassle of the day-to-day operation of your funds. Good banks will be happy to provide details of their accounts, including the sorts of investments they make, so you can evaluate the projects with which they are involved. You might like to check these, too, for wise financial management and transparent accounting, so you can get to grips with where you money might go at the real 'grass roots' level. Again, do examine as much of the small print as you can. It really is worthwhile.

When looking a bank's investment scheme, things to look out for are the percentage of its portfolio which is composed of the types of projects you're interested in supporting. This should be as high as possible, ideally with 100 per cent of funds being lent only to the specified causes. Look for a fund that matches your own ideas closely. Check what the financial institution does with their profits, too. Do they tithe? The giving of 10 per cent to the church is a key indicator that the bank is operating along biblical guidelines. They may also give additional donations to the same kinds of charitable organisations, another sign that they have concerns beyond the balance sheet.

Using a bank that tithes and gives to charity should not have a negative impact on your returns. Ethical investment could be both a sound moral choice and a wise financial one too. Well-run companies with strong ethical principles are less likely to be negatively influenced by a fickle market. There's no reason to sacrifice performance for ethics - a good, well-managed ethical fund can have excellent results.

For more help in making your decision, you might like to speak to someone from the Association of Christian Financial Advisors (AFCA), remembering to ensure they are registered with the Financial Services Authority. Visit to find one near you.

Chris Sheldon is Chief Executive of Kingdom Bank, a UK-based independent Christian bank with a 50-year heritage, providing a range of financial services to suit individuals as well as charities, businesses, associations and trusts. For further details, see