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Should Businesses be Social Activists?

8/12/2014

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Do businesses have a soul or a conscience? Can a business express a belief and if so, who determines that belief? These questions and more come to mind when Hobby Lobby refuses contraception coverage or Pepsi gives to a homosexual cause.

First, as Christians, God instructs us (people) to serve others, to give and to be fair in our dealings. But, does the Bible say anything to business entities? Does God hold businesses or people accountable? What is a business entity and what makes some types of businesses different? These are the questions I began asking myself over the last year, as more and more businesses on both sides of the issues find themselves struggling to serve their markets without alienating substantial portions of their market.

Perhaps the most important element for us to consider is the legal structure of the business and how that impacts a business' social activism. Businesses can be organized in any number of formats, but at the end of the day, one factor seems to draw a distinction in whether or not a company can legitimately and fairly express itself in the social arena. That is who owns the business? In its simplest form, a business could be a sole-proprietor, LLC, or even corporation, that is owned by a single person. A slightly more complex company might be owned by a family or a smaller group of associated people. On the more complex side, you would have companies that are owned by large groups of stockholders, or perhaps even other companies.

In the simplest of those business forms, it would be fairly easy for a business owner to make a moral decision regarding his company - it is, after all, 100% his company, his values, and his risk.  One such example might be a local baker that chooses not to cater homosexual weddings, or another that elects to refuse service to a local company that isn't considered environmentally-friendly. In the middle you have a company that, while its ownership pool is a little wider, could still reasonably make decisions base on its ownership's values - think Hobby Lobby, which is family owned. On the far end of the spectrum, however, we have companies that typically have thousands of shareholders (owners); companies like Apple, whose CEO, Tim Cook, recently said, "We want to leave the world better than we found it." That is certainly a nice soundbite, but according to whose standards? His? Shareholder #213,549? Who decides how Apple makes the world better? Can companies like Apple reasonably reflect the values of all their shareholders (owners)?

Here is my bottom line. I don't think a publicly-traded company can have a values system. Values are a creation of the mind, heart and soul, not an assembly line. Values are human and should always be expressed by humans. Economist Milton Friedman famously said in 1970, "There is one and only one social responsibility of business -- to use its resources and engage in activities designed to increase its profits." Companies should generate their profits, return them to the shareholders and allow the individuals to make decisions about how and what they will support with their profits. Publicly-traded companies that do otherwise are robbing owners of their possessions and their right to determine what those possessions support.  

Publicly-traded companies would do themselves (and their bottom lines) a major favor by refusing to become activists (on either side) and avoiding alienation of potential buyers. This is what they owe their ownership (you). On the other hand, when privately-held (closely-held) companies want to stray into those waters, that is within their rights. After all, they own 100% of the company and assume all the risks of activism. 

I'd love to hear from you. What are your thoughts? 

If corporate activism concerns you, then you should learn what the companies your mutual funds and retirement accounts are supporting. Visit www.StorehouseAdvisors.com to learn the details. 
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Abortion on Wall Street, Part 2

10/5/2011

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Unfortunately, abortion is alive and well on Wall Street. And, many pro-life investors are unwittingly making a killing from this killing business.

While Planned Parenthood and other women’s rights groups have been extremely successful in a campaign to draw support from America’s corporations, Wall Street support for abortion comes in a variety of formats. 

Some companies, such as Pediatrix, are direct participants in the abortion business. Some, such as Stericycle, indirectly provide critical services needed by the industry (Stericycle contracts with PP clinics to dispose of aborted babies). Danco Labs, and similar companies, manufacture abortion inducing drugs. Yet others, like Starbucks, provide financial support through corporate giving to organizations like Planned Parenthood - America's largest provider of abortion services.

So, you ask, “What’s a pro-life investor to do?” In short, the same thing liberal investors have been doing for years - participate in a Values-Based Investing (VBI) program - specifically a Biblically-Responsible Investing (BRI) program. 

Until recently, VBI funds have been dominated by socially- liberal causes. Now, however, conservative-minded investors can take advantage of this concept. Many Christian financial advisors now have tools to screen companies and mutual funds that contradict biblical values.
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Abortion on Wall Street, Part 1

10/5/2011

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There's a moral dilemma facing many Christian investors. The question surrounds the concept of moral investing. Where does a Christian investor draw the line? We are sometimes encouraged to forego purchases by boycotting companies that engage in anti-Christian behavior. And, while the intent is noble, I would suggest that there is an even greater (and more important) consideration.

Certainly, there is Biblical support for avoiding (where possible) doing business with such companies, but what about OWNING such a company? Should a Christian OWN a company that produces pornography or participates in the abortion industry? 

As stockholders in such companies, Christians ARE owners. Each share of stock represents a proportional ownership interest in the company. Shareholders in a company have bought that company's stock because they have expressed an interest in profiting from the company's business activities. 

So, I ask again. Should a Christian OWN stock in such a company? Is it possible to own stock in the porn or casino industries, and at the same time genuinely pray for an end to porn and gambling? What about a company in the abortion business? Can we OWN it and pray for an end to the holocaust that makes it profitable? 

You say, "But I just own mutual funds or a variable annuity." Guess what... ownership of shares in a mutual fund or variable annuity represents proportional interest in the underlying stocks - so we remain stockholders in every company that mutual fund holds in it's portfolio. Do you know what you OWN? 
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Worldy or Wordly: Comparing Two Health Corporations

9/13/2011

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The Storehouse Advisor: Steve Arnold ([email protected])

You are a Christian investor - investing what the Lord has entrusted to your care.  Which of the following health care corporations would you prefer to own and profit from?  Where would the Lord prefer His money be placed?  Let's hear your thoughts... 

Lifepoint Hospitals (LPNT), based in Brentwood, TN, operates 52 facilities in 17 states, employing almost 17,000.  Lifepoint is driven by its High Five guiding principles, which “guide our actions and decision making and define what communities can expect from us as a healthcare partner.”  Aside from its outstanding record of satisfaction and care, Lifepoint is also civic minded.  In response to Haiti’s earthquake disaster, Lifepoint founded the national Hope for Haiti campaign, which has proven to be one of the most important contributors to Haiti relief efforts.  Lifepoint’s CEO even finds time to serve his church as worship leader.  

Stericycle (SRCL) is a $7 Billion corporation providing medical waste services in nine countries.   According to sources, Stericycle maintains contracts with more than 500 Planned Parenthood clinics, and hundreds more abortion facilities around the US and the world.  Under these contracts, Stericycle agrees to dispose of the medical waste generated by these facilities.  Of course, abortion procedures produce aborted babies, which Stericycle must incinerate under the terms of its contracts.  Among the larger mutual fund families to hold Stericycle are American Funds, Fidelity, Vanguard and Morgan Stanley.  Contact Storehouse Advisory Group to see if your mutual fund or 401(k) is holding Stericycle, and therefore subjecting you to profit from abortion-related businesses.

Send comments to: [email protected]




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More Games at the FDIC...

6/23/2011

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It appears the FDIC is playing games again...

In this recent Press Release from the FDIC, Director Sheila Bair pointedly touts the banking industry's strong profitability in the first quarter of 2011.  She then goes on to explain the reason banks were showing those profits.

Bair reported that bank profits for the quarter were $29 billion, or $11.6 billion over the same period a year earlier.  Sounds pretty strong, right?  Here is Bair's explanation for the spike in profitability.

"The industry shows continuing signs of improvement, though there is a limit to how far reductions in loan-loss provisions can boost industry earnings."

How did they do it?  A reduction in their loan-loss requirements - that is the  amount of money banks set aside to cover bad loans - from $51.6 billion in the first quarter of 2010 to just $20.7 billion - a decrease of $30.9 billion.  This decrease in loan-loss provisions returns banks to pre-2008 levels.  Is anybody honestly naive enough to believe loan defaults are back at 2007 levels?

ALL of the industry's first quarter 2011 profitability is directly attributable to this reduction in loan-loss provisions.  In fact, absent this balance sheet gimic, the industry would have lost almost $2 billion for the quarter - compared to a $17.4 billion profit a year ago.  Actual revenue fell by 3.2%.  This marks just the second time in 27 years that bank revenues have seen a decrease.

What's worse, each of those banks now face increased risk, with less than half the reserve to cover those losses.  As defaults pick up again, banks will have significantly less in reserve to cover those losses, creating an even greater rate of bank failure and... you guessed it - more bailouts.

More from the FDIC

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    Stephen R. Arnold
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    About the author...

    Stephen Arnold is the Founder of Storehouse Advisory Group, a Tennessee-based financial planning and investment advisory firm specializing in Biblically-Responsible Investing. 

    Storehouse Advisory Group is registered with the Securities Division of the Tennessee Department of Commerce and Insurance.

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