How can a religious institution or a diocese professionally manage an investment portfolio? Is it possible to know whether the companies or funds in which they invest are fully aligned with the Magisterium of the Church? To answer and help in these questions was born Altum Faithful Investing, a financial advisory firm that combines solid and stable wealth growth and the application of Catholic principles founded by Borja Barragán.
The idea was born out of Barragán's awareness of his own personal and marital vocation and, as he points out in this interview with Omnes, he was surprised to learn of the abusive commissions charged to religious for these services and the lack of alignment of some investments with the Social Doctrine of the Church.
How does a company like Altum Faithful Investing come into being?
-Seven or eight years ago, I was studying for a Master's Degree in Family Pastoral Ministry at the John Paul II Institute. For me, on a personal level, it was an absolute rediscovery of the vocation to marriage: God is once again at the center of your vocational married life... And, therefore, the rest of the things are also becoming more ordered.
Among the Master's students there were also religious men and women. They knew that I was involved in financial matters, because I have always worked in investment banking, financial markets, investment portfolios, etc., and they consulted me on these issues. In that regard, there were two things that really caught my attention. The first was the issue of commissions, the very high commissions charged to religious people. On the other hand, also, the lack of coherence between some of the portfolios of the religious and the professed faith. This was not due to bad intentions, but because they trusted those who had "advised" them.
I believe that one of the first aspects that we have to have before the logic of the gift, is to manage it in a correct way. Many religious institutions have a large part of their patrimony derived from donations made by the people and, given the gift received, you have the task of managing it well.
I noticed a void. There was no one who had the vocation and the will to try to manage this heritage in a manner consistent with the faith in order to help religious institutions in a professional manner. Because we are very clear that being "Catholic" does not exempt us, on the contrary, from being very professional.
From then on, there was a powerful discernment process. I spoke with my wife, with several priests and also in front of the Tabernacle, thinking about how to put my talents, what I am good at -financial management-, at the service of institutions that have been accompanying me throughout my life.
Until relatively recently, it was rare to hear the terms "investments - Church" combined. Do you think there is professionalism in this field or is there still a long way to go?
-I believe that the management of dioceses, religious institutions, etc., is done in the best way possible. The fact that there are trained bursars at the head of these institutions is already an achievement. It is true that there are very big cultural differences between the Anglo-Saxon or Central European world and the one that has existed for a long time in Spain.
The approach is completely different in Anglo-Saxon culture. For them, from the "gift received", for example, of wealth derives the obligation to manage and administer it in the best possible way, with professional people.
On the ethical side, the push has come in recent years. In 2018, the Congregation for Institutes of Consecrated Life and Societies of Apostolic Life published "Economy at the Service of Charism and Mission" and, also in 2018, the Congregation for the Doctrine of the Faith and the Dicastery for the Service of Integral Human Development published "Oeconomicae et Pecuniariae Quaestiones. Considerations for an ethical discernment on some aspects of the current economic and financial system". Those were the first major steps that were later developed in the recent document "....Mensuram Bonam".
Clearly the Church is realizing that there is a patrimony to manage well and it is not so that the religious can buy Ferraris. But because, in order to do good you need goods. It is necessary to see how to make these goods bear fruit in the best possible way.
The main difference with the Anglo-Saxon world is that they have been working for 300 years with the concept of endowment(in Spanish "fondo dotacional").
Before mounting Altum I went to Harvard for training. There I got to know in depth this concept of endowment. In the case of the university, for example, the patrimony is managed with the needs of students 50 years from now in mind, so that they will have the same opportunities as those of today. Something similar happens in the congregational and diocesan world: these assets are there to meet the needs of vocations in 50 years' time. In order to address such a long time horizon, risk tolerance must be greater.
If we look at which assets have performed the best, which have given the best returns, over the long term there is no doubt that the assets that have best supported inflation are equities, not bonds. That is where financial science comes in to help religious entities to have a balanced management of their assets. It is not saying that everything should go into equities and that all the risk should be taken, but that they should be able to take a risk appropriate to their own risk tolerance. Commensurate with their capacity and, above all, good for their time horizon.
If we are short-sighted and focus only on assuming risk-free portfolios, the objective of guaranteeing the same opportunities in 50 years will not be achieved. Inflation will simply eat up that wealth.
And is this idea of avoiding short-termism and taking risks catching on?
-Little by little. Our own customers tell us so. Many come from the "deposit world" before 2008. In 2008, with the great crisis, interest rates disappeared, nobody gives anything for the money. Now they can give a little more for these deposits, and the request they make to us is to see how to assume a little more risk to be able to look beyond 5 years.
Another thing we see is that, more and more, the people who are in charge of managing these types of institutions are looking to be prepared. They are asking for training to be able to have a conversation on an equal footing with the banks they sit with.
Don't you think that, even so, words like "risk" or "profit" in the Church give rise to some misgivings?
-The word risk In the Church it can be scary, but it is the missionaries, the religious, who have taken a bag and, without a euro in their pockets, have crossed the world to go to missions in hostile countries. For me that is a risk.
In any case, we should be more concerned, not so much if the Church institutions obtain some profit with the investments, because we know that this profit is to be invested in the conservation of temples, in aid to charity, etc., but how this profit is obtained and what it is being used for.
You have recently launched a system of certification of funds under criteria based on the Social Doctrine of the Church. How do you carry out this certification?
-You cannot analyze a company by the private life of its CEO or the behavior of its employees. To do it in an objective way - we are talking about investments - we have to look at two aspects.
The first thing is to know whether the activity carried out by the company conflicts with the Magisterium of the Church or not. The aim is for companies to be what they are. Not that they should be flying the cross and praying the Angelus, but that they should provide a series of goods, services, quality products, at affordable costs, that they should treat their employees well and pay them, etc. That is what is asked of a company. This is what we mean when we say that the activity it carries out does not conflict with the Magisterium. The second part refers to the practices that the company develops as a company and whether or not they conflict with the Social Doctrine of the Church. For example, we can invest in a company that makes tables; something that, at first glance, does not conflict with the Social Doctrine of the Church. But what happens if this company, as part of its philanthropic policy, makes large donations to Planned Parenthood? Does it make sense for me, as a Catholic, to be financing a company that donates to projects that are clearly contrary to the morals and Magisterium of the Church?
The first step is to analyze the companies, through a whole methodology that we have and the Altum investment guidelines, so that neither the practices nor the activities conflict with the Social Doctrine of the Church. We work mainly through direct dialogue with the companies, which in English is called engagement. In 2022 we made more than 600 engagements with companies to "walk in truth". When faced with controversial information from a company, we want to know your opinion. Not because we are the fairest but because, also in the methodology, we are guided by the see - judge - act that sustains the Social Doctrine of the Church. To judge and act, in our case, we must first see.
What points are important for an institution to consider when seeking investment advice?
-I think there are three key points.
The first is trust - independence. They have to have complete confidence in the person who is going to advise them. That trust has to come from independence. In many cases, financial advisors are paid by the banks, or in the case of non-independent entities, they are paid by the banks and the investment funds they place with the client, and a clear conflict of interest arises: What is offered to the client, what suits him best or what generates the most commissions for the bank or banker?
In addition to this, professionalism must be added to this first point. Any financial advisor must be an advisor regulated by the Comisión Nacional del Mercado de Valores (National Securities Market Commission) in the case of Spain.
Second, not everything goes. When the banker comes along and presents investment products, religious people are sold a lot on the investment socially responsiblebut the current approach that exists for the socially responsible investment may conflict with the Magisterium. For example, you can have a company that has a very good ESG (environmental, social and corporate governance) rating because it has no toxic emissions, the shareholder board is equal: 50% men and 50% women, and all stakeholders are delighted. But if that company is doing embryonic stem cell research, should we invest there? No. Not everything goes, and this is one of the reasons why investment fund managers have asked us for this rating.
Thirdly, real estate. In many cases, it is necessary to let go of the past in order to be able to look to the future. Houses or communities have to be closed to ensure the survival of the institute for the next 100 years. This management, in which we find assets that are complicated from an urban planning point of view, but also very juicy for investment funds, requires professional support, unless they are experts in real estate issues.
Perhaps less known but equally striking is his participation in a project such as Libres. A new patronage?
-Within large multinationals, there is the possibility of making Charityacts of donation. When I worked in banking, I always found that, when I wanted to donate to religious institutions, the answer was: "No". Why? Because they are religious. I thought that, when I had my company, I wanted to help religious life, which helps me so much.
At Altum we have the program Altum100x1As a company, the dividends that would be paid to the shareholders (I am the only one), are donated to evangelization projects that must have at least one of these three characteristics: promotion of prayer, promotion of mission and formation of vocations.
We have been supporting projects for several years now and in the case of Free was absolutely natural. From a seed, a production like this has come out. Free which makes known the lives of those people who, quietly, support us and is a way to promote all of this.
