Managing Financial Margin: For Those of Us Who Have It, Don’t Waste It
by Luke Roush, Co-Founder, Sovereigns Capital
It takes about $200,000 in income and $1 million in stored wealth to be among the top 1%, globally. The Bible has a LOT to say about money, with specific caution around our hearts’ propensity towards the love of money. While this kind of margin is not something we should feel guilty about, it IS something we should steward with a great deal of prayer and counsel. If we believe that God owns it all—not just our tithe, but also our treasure—then the ways we as Believers manage margin should look different than the rest of the world. It is a short walk from ‘comfort’ to ‘complacency,’ so each of us must be bold in leaning in to our calling toward stewardship of the margin God has placed in our lives.
For the purposes of this article, I’ll focus on margin that God has not yet called us to philanthropically give away to the church or other operating charities. While that is where much of it is headed eventually, there is a pacing and cadence to how we give thoughtfully over time. Thanks to tax-advantaged vehicles like foundations, supported organizations, and donor advised funds, we are able to relinquish personal ownership over margin, while maintaining a measure of control over how it is managed. Our hope and expectation is that what begins as one talent will become many more talents to be given, while also having impact along the way. (Matthew 25:14-30)
Margin Management
So what does margin management look like for me, with margin that exists in my own donor advised fund or bank account? Several ideas come to mind:
Evaluation Framework: My historical evaluation framework needs to evolve to include a heavier weighting on things like the missional potential (ref. WeldenField BAM Fund) of a company or fund and impact areas that the Holy Spirit has put on our family members’ hearts. More margin should enable more creative thinking in this area.
First-Mover Risk: I need to experiment more. This doesn’t mean becoming foolish, but I want to take more “first mover” risk. There were first movers who took a risk on Sovereign’s in 2012, and I want to do the same with the emerging concepts of 2023. More margin needs to enable more of this behavior in my own personal stewardship.
Investing in Community: For the limited investing I do outside of our fund complex at Sovereign’s, I want to co-invest with others who are feeling called in a similar direction. Part of this collaboration should involve inviting others into visibility on my personal portfolio and creating access into interesting investments that are available based on our last ten years of work in this arena. Using collective margin can help us push further and faster into the key issues of our time. More margin plus trusted communities like Christian Economic Forum enable collective action and impact at scale.
Stewarding Capital on Behalf of Others
What does this look like for the capital I/we steward on behalf of others (e.g., Funds, SPV’s, etc.)? Two ideas for consideration:
Consent: When we’re stewarding capital on behalf of others, we need to be clear on the front-end about what values we will be representing as we go about our work. If we say, “This is what we are going to do,” then we need to do that (or get written consent if anything different). The broader ESG movement has gotten itself in trouble because there isn’t clarity or consent on the part of investors whose capital and influence are being stewarded by intermediaries in a manner inconsistent with the ultimate owners’ values. That isn’t working well. However, as faith-driven asset managers, we have an opportunity before a relationship begins to be bold with the vision we cast. We need to be OK with a conversation that challenges some of the clients we haven’t yet engaged with. We should have those conversations in a winsome manner, but simply “taking orders” at the asset management drive-thru window isn’t going to cut it if we want to be a faithful and value-added partner to our clients in managing the margin that God has given us and them.
Sober Clarity: While investing personal margin can be fluid and evolutionary, investing margin on behalf of others requires focus and discipline. For those who are asset managers, staying within our thesis and maintaining clear communication along the way are imperative to ensuring alignment with our partners. We must resist the urge to conform to some of the behaviors that are so common in our industry—exaggeration, bravado, over optimism, and a catering to the emotions that so often drive action in the investing world, like fear and greed. I know I can do better in this area.
What might this look like for us as delegates? Two ideas we should embrace together are:
Collaboration Groups: There are likely market-based approaches to many of the problems being addressed in the collaboration groups. Might we deploy some collective margin toward those challenges? Deploying margin to meet the needs of Afghani and Ukrainian refugees is one of the recent highlights of what this can look like for our community. Are there creative market-based solutions to scale that initiative? Launch Capital’s work to create sustainable refugee housing in Louisville, Kentucky, is a great example of this.
Best Practices from Delegates: The Grove is a concept pioneered by Katherine and Alan Barnhart, which is a collective giving organization tied to Barnhart Crane and Rigging. Having learned a bit more about it in the last year, it’s been a HUGE encouragement to me. Might there be some opportunities to learn from that example? Illuminations is another collective giving effort which has helped to drive collaboration amongst the Bible translators toward speedier fulfillment of the Great Commission. What lessons could that work over the last 10+ years teach us?
Descriptive Not Prescriptive
As we engage with this topic, it’s important not to be prescriptive but, rather, descriptive of what solutions might look like. As we think about what market-based solutions for margin stewardship look like, the Marks of a Faith Driven Investor have been summarized in good working form. I believe the best work in this space will invite Believers into something to be FOR, rather than criticizing activities that we are against. In terms of attracting the next generation into our mission, a focus on positive screening will almost certainly be the more productive approach.
Iron Sharpening Iron
Because of the financial margin that God has blessed many of us with, it gets harder and harder for us to hear the truth. There are two reasons for this:
When we have margin, we don’t need others as much, so we stop listening. (Note that this same risk exists with explicitly or implicitly behaving as though we don’t need God.)
Many others in our communities want something from us, and, therefore, they aren’t as likely to tell us the truth.
In the last year, by God’s grace, I have had two delegates ask me questions that prompted deeper thinking into issues I needed to address in my life and our work at Sovereign’s. I’m grateful for their prodding, which was done in a winsome way. To be provocative, I think most of us are FAR too polite. We worry too much about what others might think, and we don’t say what we are thinking. There are ways to speak truth in love, and we need to do more of that proactively in our next 10 years together.
We need to BELIEVE what the Bible says in Proverbs 27:6 – “Wounds from a friend can be trusted, but an enemy multiplies kisses.” Offering thoughtful feedback to a brother or sister in Christ is one of the best ways we have to love them. We need to get past some of our politeness and actively invite feedback from folks who love Jesus, care about our mission, and can challenge us on how we are using the margin God entrusted to us.
In closure, I don’t want to look back in another 10 years and wish I would have taken more risk. I want to max out how I deploy the margin that God has entrusted to me. I want the collective margin that God has given all of us to be deployed toward solving some of the world’s greatest problems—not on our own power and knowledge but with God’s power and knowledge. That’s why we’re here—because we want to do this in community.
Article originally hosted and shared with permission by The Christian Economic Forum, a global network of leaders who join together to collaborate and introduce strategic ideas for the spread of God’s economic principles and the goodness of Jesus Christ. This article was from a collection of White Papers compiled for attendees of the CEF’s 2019 Global Event.