Truly Ethical Investing: Finally, A Step Towards Making My Conscience Happier

Felipe Witchger
7 min readNov 23, 2018

It’s been weighing on me for 10 years.

RSF Social Finance

I’ve been frustrated with the lack of mainstream investment options that actually align with my values. So my response has been largely, “I’ll deal with this later”.

Finally, I’m at a point where I can do something about this. I realize I have to. Otherwise I’ll look back on my life and feel like a failure. The other night, I was laying in bed imagining my self in my 70s saying,

“I worked 9-to-5 to fight injustice and then put my money in places that created 5X more injustice, every day.”

Enough of that. I wrote about My Investing Turmoil here and since then, I’ve been reading and talking to lots of people about what can be done.

I’m also at a place where I can do something about this because:

(1) I’m actually starting to save some money, so it’s beginning to matter what I hire my money to do for me.

(2) I realize the future my kids will live in largely depends on the actions I take (and those of our generation & our parents).

(3) After writing, reading, and talking about this for the past 6 months, I’ve finally gotten connected to the right people and gone to a workshop that’s given me what I need to fully divest form the bad stuff, and given me real alternatives that I’m excited to invest in.

(4) I feel like I have enough bandwidth in my life where I can actually do this and share the journey with you; so I’m not doing this alone, but helping dozens of others make similar changes in their life.

Cnote — one of the places I invested in this week that I’d encourage you to explore as well.

What’s the Plan?

Over the upcoming year, I’m going to try to align all of my money with my values. I’m going to focus first on my non-retirement investments (i.e. my college savings for kids). Then I’m going to turn to my retirement investments. Then, I’m going to find an alternative online bank that gives me the convenience and flexibility I have with Capitol One 360 (formerly ING Direct), to really have successfully pulled all my money out of mainstream financial institutions and into community development financial institutions (CDFIs), credit unions, and entrepreneurs who I feel are really changing the world for the better.

Why Now?

(1) My Mindset has Shifted. First of all, I just went to a workshop that shifted a few important mindsets for me.

— I now feel like I don’t need 8% return (i.e. the long-term average of the S&P 500 over the last 70+years).

— I now feel like the non-financial returns might be as important to me as the financial returns.

— I now realize that most of the past 30–50 years of financial returns and global economic growth in GDP has likely come in significant part from burning through our “Natural Capital”; and the next 30 years are unlikely to be fueled by the same access to natural capital (i.e. clear cutting old growth forests to turn into lumber that can be sold). For more on this take a look at Marco Vangelisti: https://ek4t.com/talks/#subsection. You can watch/ skim this 15 min talk for a sense of it.

— Regenerative enterprise (farming & business) has become a much bigger priority for me.

(2) The stock market is falling. It’s been 10 years since our last big crash in 2008. Typically (looking back over the past 100 years) there have been roughly 10-year business cycles. The past few days feel like they could be the beginning of another stock-market crash. The basic implication: Your money in your Vanguard Index fund or other mutual funds (passive or active) have a significant amount of risk in them — just as other social investment vehicles that I’m going to share below.

Why am I sharing this?

Because many friends and family have expressed similar frustrations. Knowledge of what to do to align investments with your values feels sparse and hard to find. My hope is to share honestly about my practical struggles to divest and re-invest in hopes that my actions may actually be helpful to others.

Some Topics I Plan to Cover in Detail, with instructions & How To

· Self-directed IRAs (how to convert your old retirement accounts from previous employers into IRAs that you control: https://www.trustetc.com/self-directed-ira/what-is-it)

· Alternatives to keeping savings in your bank accounts: RSF Social Finance & CNote, which I’ll talk about below

· Peer-to-peer lending & micro Lending — like Kiva.org

· Slow Money loans — Community Investment Notes

· Equity Crowd-funding;Changes to SEC Rules, the JOBS Act, Reg A and Reg B and what it means for you and me

· Investing in Solar

· Credit Unions & the ones with the best online platforms to make Banking easy and convenient — the way it should be.

· Investment Clubs, Risk Assessments

· Buying down your mortgage: where does this fit?

· Community Capital; Cooperative Capital; & the Growing Movement

What can you do right now?

Step 1: Open up some good cash alternatives.

Take money out of some savings accounts and put it in to CNote and/or RSF Social Finance.

The first step is really easy. I did this week and it took me literally 10 minutes, while my kids were playing at my parents house. Just take a few minutes and get this process started for yourself.

Cnote

1st Step: CNote, 2.5% Return, Safe, Community Development Lending

Here’s how they describe themselves: “A better place to park your Cash”

CNote is a new way to invest where you earn 2.5% — that’s 30x more than traditional cash options — while funding women and minority-led businesses, building schools and affordable housing, and supporting economic development across America. Even better, our partners have not lost a single investor dollar. Ever.”

Basically, they lend your money out through Community Development Financial Institutions (CDFIs) that have proven track records and are approved and regulated by the US Treasury Department. While your money isn’t FDIC insured, they do a pretty good job of explaining how safe it is and how well it performs versus other money market or holding your money in cash-like investments.

If you use this link, you’ll get $10 (and so will I).

I highly recommend you open an account, even if with just a small amount of money, open it now, see the returns and then you can always come back and add more later:

https://www.mycnote.com/share/ByHYVJ1C7

2nd Recommendation: RSF Social Finance

If you have a bit more time, take a look at RSF Social Finance. 1% return, but the non-financial returns are really attractive.

“With an RSF Social Investment Fund Note, you’ll support enterprises working to create positive social and environmental change. Know where your money is working, engage with the community, and participate in quarterly interest rate conversations. $1,000 to open an account.”

Apparently the newsletter is really good (from some trusted folks who have told me about them). They’ve got a 20+ year track record, care about personal relationships and engagement. You can only get your cash out on a quarterly basis so it’s not as liquid, but the work they’re doing to fund Waldorf schools, transformational food hubs, and more is impressive. I just opened an account and moved money from a short term savings account.

https://rsfsocialfinance.org

This one takes a few extra minutes to fill out the fillable PDF via DocuSign, but the guy, Mark Herrera from RSF emailed me within a few days to confirm that the ACH transfer went through and that I’ve made my investment. I’m excited to have money money out of my Capital One “Short Term Savings” account and into somewhere where I know it’s doing good and getting a better return that I was in my savings account.

I don’t think you’ll be disappointed. By opening these accounts, we’re taking some first steps by putting our money in places we can come back to later and keep building on.

3rd Idea: Kiva.org

Finally, if you haven’t tried Kiva.org, I highly recommend it. You can give them away as Christmas presents. I especially like lending to people in Ecuador and El Salvador, countries I’ve visited and spent time. What I love about KIVA.org is that you’re helping people live. $25 loan can make a huge difference in their lives.

Give it a try.

They even have Domestic, US options. For example, in the co-working space I work at — ReCity in Durham — I sit next to Geraud Staton from Launch Durham who works with small entrepreneurs getting their businesses off the ground. I met Michael this way more than a year ago, and he now has more than 50 window-washing clients and he’s looking for a $5,000 loan to get better equipment to be able to reach higher and serve more small commercial clients. For me, by helping him grow his business with a small loan, I’m hoping develop providers that can serve the churches of the Community Purchasing Alliance — and in the process help build wealth and create jobs for a local, Durham-based small business.

Michael — he’s a great guy. He’s persistent, he works hard. He’s the kind of entrepreneur I’m super excited to support.

You can invest in Michael & WilSun Cleaning Services by lending him $25 right now:

https://www.kiva.org/lend/1629324

I hope you’ll join me.

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Felipe Witchger

Felipe unleashes Catholics & Impact Investors hungry for change. Building teams for a new economy, helping excluded communities organize & build wealth.