On February 27th, I had the opportunity to hear Leonard English, Investment Manager for the General Board of Pension and Health Benefits of the United Methodist Church, talk about the organization’s community investments through their Positive Social Purpose Investment Program (PSPI).

One point in particular jumped out at me, and that was a number: 6.5%.

The annualized performance of PSPI loans held in the organization’s Domestic Bond Fund (as of 12/31/2007) has been 6.5% since inception (07/31/1990). Which is an impressive number and in line with their benchmark performance, as well as competitive market rates of return.

This despite the fact that the fund’s primary objective is social justice and community development.

So what is their secret?

In a word, faith- but of a more secular kind. Faith that disadvantaged people (I believe the favored term is “underbanked”) can and do pay off their loans and can make for very reliable borrowers, as can projects aimed at enhancing the community, including assisted living facilities, homeless shelters and charter schools.

The General Board of the United Methodist Church sees community investing not just as a moral imperative dictated by the faith they represent, but as a smart investing strategy by which the General Board adds to the diversification of its investments.

With the competitive rates that they have earned they are certainly achieving both goals.

Those of us in the field of responsible or sustainable investing are often asked about the impact on financial returns of what we do. I think the General Board’s community investing program is an excellent example of what can be achieved (and at the very least, what isn’t sacrificed) through the integration of faith and finance.