Though some people may feel religious about their savings, the worlds of financial institutions and faith-based organizations rarely cross. However, just like a myriad of other consumer preferences, a person’s faith can hold a great deal of sway over where they decide to give their business – and that includes where they choose to conduct their banking.
Financial institutions are conforming to the changing demographics of religious groups in an effort to cater their services to these faithful customers. Here are a few examples of financial institutions that offer financial products that comply with religious beliefs and principles.
Christian Community Credit Union (CCCU)
The Christian population is very loyal to their faith and community and the Christian Community Credit Union supports their religion and beliefs by using the deposits from members to fund donations and projects. The credit union offers certificates of deposits where the funds are specifically targeted towards the construction of churches and ministries seeking to grow and expand their faith.
The CCCU also provides debit cards and credit cards to their members with the option to use their rewards earnings towards their choice of charities, missions projects, and ministries. Since it is a non-profit institution, the credit union also donates the merchant fees that it collects when members swipe their cards. A recent successful campaign by the CCCU led to the funding of $232,500 towards the “Launch a Village” project, which was a development program to help the poor and remote villages in Northern Thailand.
The bible preaches good financial management and encourages Christians to remain debt-free. The CCCU supports the holy text by offering a free program that consists of counseling on topics such as money management, debt reduction, and credit advise along with a finance education program.
America’s Christian Credit Union (ACCU)
The ACCU offers much of the same services as CCCU but it does hold a strong position in ministry planning and construction. The credit union has partnered with a team of ministry and banking professionals that provide strategic financial planning, site selection and design & construction consulting for ministries.
The unique financial product available at ACCU is the adoption loan. Many Christians firmly believe that they were adopted into God’s family and, therefore, have a solemn perspective on adoption. ACCU believes that most financial institutions do not understand this gracious act and hopes that their adoptions loans will play a special role in helping to build Christian families.
University Islamic Financial Corp. (UIFC)
Devout Muslims are followers of the Islamic law (Sharia), which is based on the religious text of the Qur’an. While the implementation of Islamic Sharia law is not a very common practice in the U.S. financial industry, it has become more widespread in Europe due to a growth in the concentration of Islamic populations in some European countries. Sharia prohibits the charging and paying of interest and the investment in businesses that provide goods and services forbidden by the Qur’an such as gambling or the consumption of alcohol and pork.
Perhaps the most unique difference in Sharia banking is that it forbids “usury,” or what is considered excessive interest. Therefore, the UIFC offers a profit-sharing deposit account that does not give the customary fixed interest. Instead, the bank agrees to share a portion of their profits, which is variable, from their other financial products with their customers. Conversely, for example, if an entrepreneur sought financing for a new business, the bank would collect on the business’ profits.
The term “mortgage” also cannot be used for home financing, since it has “interest” all over it. UIFC offers two home financing programs: an installment sale or a redeemable lease. In an installment sale, the bank buys the property for you and then sells it to you above the purchase price, which you pay for in installments. In a redeemable lease, the bank buys and retains ownership of the property while allowing you to rent it. Ownership is transferred once the bank has collected the amount of payments equal to the purchase price.
Is Faith A Good Investment Strategy?
Since the financial crisis, faith-based banking has gained interest beyond just the religious world, as its principles seem to be far removed from the seemingly corrupt and unethical practices that caused problems on Wall Street this year. There could be some truth to the fact that investors who are banking and investing according to the principles of their religions and beliefs are more likely to project higher confidence in their investments than those who rely on the advice from financial professionals.
There also appears to be a glimpse of divine intervention in faith-based investments that adhere to Sharia or Christian mandates, such as no interest lending and non-involvement in gambling and sex-related trades, as some of them have outperformed secular funds. Certainly, there is a pool of investors, that need not have religious beliefs, who have the affinity for socially-responsible banking and investing.
Here are a few funds that invest according to religious principles:
The Timothy Plan Funds
The Timothy Plan family of mutual funds were the earliest to adopt biblical guidance for screening their investment selection process. They are strictly focused on steering away from morally irresponsible and sinful securities from companies that are linked with abortion, pornography, anti-family entertainment, alternative lifestyles, alcohol, tobacco, and gambling.
Amana Mutual Funds Trust
The Amana Funds invest strategically to comply with Sharia. The Amana Growth Fund (AMAGX) focuses on long-term capital growth without investing in businesses related with “liquor, wine, casinos, pornography, insurance, gambling, pork processing, and interest-based banks or finance associations”. The Amanda Income Fund (AMANX) focuses on current income and capital preservation through dividend paying investments. Since dividends are considered a distribution of a company’s earnings to its stockholders, it does not fall in the same category as interest paying securities such as bonds.
If religious followers worldwide place the same amount of trust in their faith-based financial vehicles as they do in other aspects of their religion, it could make religious banking and investing one market sector that will weather the financial crisis.