Episcopal Church Foundation Vestry Papers - for leading congregations

This is the first in a two-part series on the different approaches Episcopal Church Foundation (ECF) Endowment Management clients have taken to responsible investing.

When the Rev. April Berends arrived as rector of Grace Episcopal Church in Chattanooga, Tennessee, in late 2017, one of her first questions at an endowment committee meeting was whether ECF/State Street offered a socially responsible investment option. At the time, the answer was “not yet.” Responsible investing options were still in development.

Over the next several years, the endowment committee stayed in conversation with ECF as responsible investing options developed. Much of their discussion focused on comparing investment returns, while also thoughtfully considering how their financial decisions reflected their faith and values. Eventually, they decided to invest their entire endowment in a portfolio that screens investments based on environmental, social, and governance criteria.

Several hundred miles north, Christ Church in Oberlin, Ohio, approached the question differently. With a congregation shaped by a long history of social justice engagement, the church chose a blended approach: a portfolio that combines active and passive investing with ESG screens, rather than moving to a fully ESG-screened portfolio.

Two churches. Two approaches. One shared conviction that how an endowment is invested matters, not just financially, but as an expression of who a community is and what it cares about.

What is Responsible Investing?

Responsible investing refers to investment strategies that consider environmental, social, and governance factors alongside financial performance. You may also hear it called ESG (Environmental, Social, and Governance) investing, mission-aligned investing, or socially responsible investing. While there are differences between these approaches, they all seek to incorporate factors beyond financial returns alone into investment decisions. Throughout this post, we use "responsible investing" as an umbrella term, noting where specific portfolio options bear the ESG designation.

Wanting a church’s investments to reflect its values is one thing. Deciding what that looks like in practice is another. Endowment committees must weigh questions about returns, risk tolerance, governance, and process before deciding what approach makes sense for their church.

What Grace Episcopal Chattanooga and Christ Church Oberlin offer are two examples of how two different committees worked through those questions to suit their churches' circumstances and needs.

Christ Church, Oberlin, OH: Continuing a Long Tradition

To understand Christ Church’s decision, it helps to start with Oberlin itself. Oberlin and Oberlin College were founded in 1833. Oberlin College was the first in the country to adopt a race-blind admissions policy and the first to invite women to enroll. The town was an important stop on the Underground Railroad. For Christ Church, with its longstanding concern for social justice issues, responsible investing felt less like a departure than a continuation.

The impact of the church’s largest endowment fund is felt across parish life, from worship and music to Oberlin Weekday Community Meals, which serves hot meals four days a week.

When the committee began exploring options, its goal was straightforward. Diane Follet, a vestry member who serves on the Finance Commission and Endowment & Investment Committee, said they wanted “the best possible return on our investment while remaining true to our history of concern for social justice issues.”

The blended approach they chose fit their risk tolerance and investment goals while incorporating a responsible investing component that the congregation supported. Information about the endowment is shared with the congregation in semi-annual reports, and Follet notes it is, “always well-received and lets the congregation know that our endowment reflects our mission.”

For other churches considering a similar path, Follet’s advice is practical: “Talk to ECF and examine State Street’s offerings. Everyone we have worked with at both institutions has been helpful, from explaining investment strategies to evaluating risk versus reward.”

Grace Episcopal, Chattanooga, TN: Starting with One Question

We spoke with the Rev. April Berends, Rector; Nan Fortiner, Treasurer; Richard Hyatt, Endowment Committee Chair; and Jim Harris, Finance Committee Chair. The responses below reflect their collective input.

Grace Episcopal’s journey began with Rev. Berends’ question at the first endowment committee meeting about responsible investing options, and it unfolded gradually over several years. The committee’s conversations with ECF, including regular quarterly meetings with Brad Roberts and Aline Sun, built the foundation of trust that led to the eventual decision.

When the committee finally moved to a fully ESG portfolio, they brought the congregation with them. They announced the decision in writing and at the Annual Parish Meeting. The response was overwhelmingly positive. For a congregation with a longstanding environmental ministry, a commitment to welcome and inclusion, and deep roots in urban community service, the move to an all ESG portfolio felt right.

The committee sees the ESG approach not just as an investment strategy but as a way to align their investments with the values Grace Episcopal seeks to live out in the world: caring for the environment, serving neighbors with dignity, and investing in the community around them. Responsible investing, they noted, has helped build trust with donors, because investments screened for social, environmental, and governance criteria help potential donors understand that giving is a form of ministry that will help to sustain mission for years to come.

Their advice to churches just beginning to ask these questions: start the conversation, look honestly at the fund comparisons, and bring your vestry and clergy into the room.

“We have only had positive feedback around the shift to socially responsible investing. It is a way to provide for future needs in ways that align with our concerns for the environment and respect for human dignity,” said Richard Hyatt, Endowment Committee Chair.

Finding the Right Approach

Deciding to invest in a socially responsible portfolio is not one decision; it’s a series of conversations about what your congregation values, what your endowment is for, what level of risk is appropriate, and which options are available through your investment manager. According to Susan McDowell, Managing Director of ECF's Endowment Management team, "There is no single approach to responsible investing. We value the opportunity to walk alongside churches as they explore the path that is right for their mission and ministry."

Both Christ Church Oberlin and Grace Episcopal Chattanooga found that ECF was an essential partner in those conversations, not just for the investment options it offers but for the relationship and guidance it provides along the way.

For many churches, the first step in their journey to responsible investing is simply beginning the conversation.

If you’re ready to begin the conversation about what responsible investing could look like at your church or diocese, please contact ECF’s Endowment Management team at [email protected].