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Tips on gay-friendly investing

by Rich Taylor

When investing — consider Citizens Value Fund, which screens out companies that don’t respect sexual orientation.

In the last 20 years, there has been a rapidly growing interest in “socially responsible” investing. Many people, including me, are reluctant to grow wealthy off companies that are polluting our environment, undermining public health, or treating their workers poorly.
So investment companies developed a new category of mutual funds, Socially Responsible Funds, that “screen out” companies they object to.

There are various approaches. Some refuse to invest in companies that manufacture or sell tobacco, alcohol or military equipment, for example. Others take a more aggressive stance and actively try to acquire enough shares in a company to force its governing board to change course, for instance the Unitarian Universalist Association.

What used to be a niche interest is now a $2.5 trillion enterprise, with dozens of funds. But to my knowledge, there is no mutual fund that invests specifically around gay issues. There was, at one point, a specialist mutual fund (Meyers Pride Value Fund) that did just this, investing only in companies with “stated progressive policies regarding gays and lesbians.” 

Meyers Pride Value Fund did not cease to exist, but in 2001 it was bought by Citizens Advisors, Inc., who renamed the fund Citizens Value Fund. Citizens continues to screen out companies that don’t respect sexual orientation, among other things:

“A growing number of studies have shown that greater diversity among employees and management is associated with better financial performance. A 1998 study by Hillman, Harris, Cannella and Bellinger found that S&P 500 companies with more diversity had better stock returns with less risk of loss to shareholders. The companies with the most women and minority directors produced gains 21 percent higher than companies with no diversity. After a company passes Citizens’ initial diversity review, our social research analysts evaluate a company’s management diversity as well as a company’s policies and practices to promote greater employee diversity.

• We seek to avoid companies with a pattern of discrimination based on age, gender, religion, race, disability or sexual orientation.

• We favor companies that promote equal opportunity and that actively recruit, hire and promote individuals in order to create a diverse workforce.”

Metro Weekly, an LGBT news magazine for Washington, D.C., did a story a few years back on gay-friendly investing, entitled “Making a Statement.”

“Along with Citizens Value, several established socially responsible funds — Domini Social Equity, Calvert Social Equity and Dreyfus Third Century — also screen out companies with discriminatory practices.

“However, these funds have a broader mission than making corporate America more gay-friendly. These funds also screen out companies that promote tobacco and alcohol use or cause pollution.”

So the bad news is, there is no single place to put your investment money and know that it is going solely to gay-friendly companies and causes. But the good news is: the Socially Responsible Investing (SRI) movement is gaining ground and for many of these funds, sexual orientation is one of the key criteria in evaluating a company.

You should also be aware that Socially Responsible Investing has its critics and not just people who think it’s stupid to mix money and morals. Some argue that socially responsible mutual funds usually allow far more bad behavior than they generally admit, and on top of that often have poorer performance than other managed funds.

I tend to think that some social conscience is better than none. I don’t need my heroes to be larger-than-life perfect super-people, and I don’t require my investments to have all the answers. Many companies now include domestic partner benefits solely because of investor pressure, and the rest will follow in a matter of time. If my investments can do some good for gay rights and provide me financial security at the same time, I’m a happy man.

— Rich Taylor is an executive at a global financial services firm, in charge of the corporation’s education division. He speaks frequently at conferences and institutes and has been featured in trade journals like Chief Learning Officer and Training Magazine. Rich can be reached at rich@queercents.com

The website www.queercents.com originated the concept of the lesbian, gay, bisexual, and transgender personal finance blog. Financial tips and insights are aggregated daily from the distinct writings of several money bloggers.


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