What do Shel Silverstein, philanthropy, and the environment have in common? And how do they relate to socially responsible investing and our very own Champion Funds newsletter service?
The answer to the first question lies in the pages of Silverstein's classic children's novel The Giving Tree. As the young boy in the story grows, his relationship with the tree changes from one of playing happily in its branches to one of merely wanting things from it -- its apples to sell, its limbs to build a house, and eventually its trunk to fashion a boat. When the boy returns as an old man, the tree has nothing left to offer but its stump for him to rest upon.
There are lots of lessons and possible interpretations tied up in this heart-rending parable, but one of the obvious messages is the dangers that lie in taking but never giving back. If the tree can serve as a metaphor for our environment -- not too much of a stretch, we dare say -- then we can begin to ponder the strain we often place on planet Earth without weighing the consequences of our actions. Will the planet, like the kind, faithful, and selfless tree, one day no longer be able to give us what we demand of it? Will we have used it up?
Corporate cooperation
That's what groups such as Co-op America want us to reflect upon. In an earlier article, we told you about the work Co-op is doing to give people the tools to live greener lives, from its comprehensive online Green Pages that help you find sustainable solutions for everyday dilemmas to its annual Green Festivals that bring this helpful information directly to you and me.
We also told you that Co-op is unlike some environmental organizations in that it focuses less on complaining about the problems our planet faces and more on what you and I can do to change things. Part of its proactive approach involves recognizing the important role that businesses play in modern life. So, rather than seeing Corporate America as the enemy, Co-op aims to harness the power of business to affect positive changes.
Social studies
That's where the answer to our second question comes in. Not only does Co-op strike up relationships with businesses that pledge to practice corporate social responsibility, but it also urges everyday people to support such businesses with their own investing dollars. Its Financial Planning Handbook helps people make informed decisions about what investments are socially responsible, and its Community Investing initiative gives people the tools to understand how to help their communities through simple actions, such as opening an account at a local community-development bank or credit union. Institutions such as these often help fund developments in underprivileged areas.
Co-op also recommends investing in companies that consider making a positive difference for the planet and its inhabitants as important as generating profits. The Fool looks regularly at the latest happenings in SRI, and we've even recommended a mutual fund that specializes in investing with a conscience: Neuberger Berman Socially Responsive (FUND:NBSRX), a highly concentrated fund that charges a dirt-cheap 0.95% expense ratio -- notable because actively managed SRI funds tend to charge almost twice as much.
SRI fan Shannon Zimmerman, who heads up our Champion Funds service, recommended the fund to investors in February 2005. Its five-year annualized return of 9.56% blows away the S&P's return of less than 4% over the same time period and places it comfortably in the top six funds in its category. Its total return of 29.53% since being recommended in Champion Funds outpaces the S&P's performance by a full 9 percentage points. And its holdings come from a variety of industries: Target (NYSE:TGT) in retail, Citigroup (NYSE:C) in finance, Scripps (NYSE:SSP) in media, 3M (NYSE:MMM) in technology, and BorgWarner (NYSE:BWA) in automotive supply.
The fund could, however, make for a bumpier-than-normal ride, since it's extremely concentrated -- it held just 33 stocks as of Oct. 31 -- but Shannon believes the fund's managers are top-flight. They don't have an unnecessarily black-and-white view of the markets, either. As one manager put it, "Good corporate citizenship is . a journey, not a destination. We've been working in this field for some time and know that the social records of most companies are written in shades of gray." That's an important point to keep in mind before you make any kind of investment in stocks or funds.
What you can do
So why are we telling you all of this? Because Co-op America and the Fool both have a challenge for you. Co-op is leading a "1% in Community Campaign" in which it challenges socially conscious investors to put at least 1% of their portfolio in community investments -- whether a community-investment bank, an SRI fund, or some other type of vehicle that helps give back to the community and the planet. As Co-op states on its site, "If all socially responsible investors -- people who invest with their values -- put 1% of their portfolios into community investments, it would triple the dollars put into rebuilding disadvantaged communities, from $5 billion in 2000 to $15 billion."
The Motley Fool, meanwhile, is in the midst of its 2006 Foolanthropy campaign. As we do every year, we've selected five charities from among your nominations that we believe best reflect the Foolish spirit of educating, amusing, and enriching. The finalists this year include Co-op America, along with fellow environmental charity Rare Conservation; Room to Read, which brings education and literacy resources to underprivileged parts of the world; Half the Sky, which provides support for orphaned children in China; and the National Foundation for Teaching Entrepreneurship, which helps to impart financial literacy.
Follow those links above to easily donate to any of the charities that you feel impassioned about. We know that your dollars may be stretched during this time of year, but we also know that there's something about the season that awakens the spirit of charity in all of us. Last year, we raised $289,597 for our charities, and we'd like to surpass that number in 2006. Can you help? Here's some extra incentive -- the charity that collects the most donations between now and Jan. 7 will earn an extra $10,000 Foolish bonus.
Can't give a lot? We understand. Don't reduce yourself to a stump -- after all, we want you to take care of yourself and keep giving as generously and wisely as you can. Even if you just post to our Foolish discussion boards, we'll add 2 cents to the Foolanthropy pot for every post we record this month. The grand total will be divided up among the four charities not winning the $10,000 bonus.
A final reflection
Have you decorated a tree for your home? When you're hanging the ornaments and affixing the star, think of another remarkable tree -- The Giving Tree -- and reflect on the joy you can find in both giving and receiving. Sure, you're being asked to give of yourself a lot right now, but think of the rewards. If you can set aside a small portion of your money for community investments, as Co-op America challenges you, then you can help others in need, as well as your own portfolio. What's more, if you can give to any of the charities in our 2006 Foolanthropy drive, you'll receive the satisfaction of knowing you've helped support a worthy cause -- and perhaps made the world a happier and healthier place for generations to come.
Interested in seeing what other funds Shannon Zimmerman has recommended for your portfolio? Check out his Champion Funds newsletter service free for 30 days.
Heidi Cope doesn't own shares of any of the companies mentioned in this story. Adrian Rush holds a position in Scripps. 3M is an Inside Value recommendation. BorgWarner is a Stock Advisor recommendation. The Fool's disclosure policy is the little voice inside of you that whispers all day long, "I feel that this is right for me; I know that this is wrong."
