October 27, 2026
When we think about investing, we often focus on financial returns, retirement security, and building wealth. But as Christians, should we also be asking another question: What are our investments actually accomplishing in the world?
Show Notes
In this episode we welcome Tim Macready of Brightlight to explore how faith-driven investing can help Christians align their financial resources with biblical values while making a meaningful difference.
With more than 20 years of experience in Christian investing, Tim shares how investments can do more than generate financial returns. They can also help improve lives, strengthen communities, and support causes that reflect God's purposes.
Moving Beyond Traditional Investing
For many Christians, financial stewardship involves giving generously, spending wisely, and saving responsibly for retirement. But investing is often treated separately, with the primary goal of maximizing returns. Tim challenges that approach.
During his years managing investments for Christian Super, an Australian pension fund, Tim and his team began examining how their investments could better reflect the faith of the people they served.
Initially, this meant avoiding industries and business practices that conflicted with Christian values, including gambling, tobacco, and exploitative labor practices. But members began asking an important question: What good is our money actually doing? That question helped shift their focus from simply avoiding harmful investments to actively seeking opportunities to make a positive difference.
How Impact Investing Can Change Lives
Impact investing seeks to generate positive social outcomes alongside financial returns. For Christian investors, this creates opportunities to support initiatives that promote human dignity, economic opportunity, and human flourishing.
One of the most powerful examples Tim shared involved an investment that helped vulnerable children remain safely with their families. His team partnered with a Christian nonprofit in Australia that provided parenting education, family support, and assistance for mothers leaving abusive relationships.
Over five years, the initiative helped several hundred children remain with or return to their families while generating an 11% financial return, according to Tim. This example demonstrates how investments can potentially achieve both financial and meaningful social outcomes.
Tim also discussed investments supporting small businesses in developing countries and shareholder advocacy efforts addressing issues such as human trafficking and workplace exploitation. These examples challenge us to consider how our financial resources might serve others beyond simply growing our portfolios.
Balancing Biblical Values and Financial Responsibility
While the opportunities are exciting, Tim emphasized that impact investing requires careful research and discernment. A worthy cause does not automatically make something a wise investment. Investors must still evaluate financial risks, potential returns, and whether an investment can realistically accomplish its intended purpose.
Tim also acknowledged that aligning investments with Christian convictions isn't always straightforward. Every company has strengths and weaknesses, and believers may reach different conclusions about particular industries.
Rather than pursuing perfect alignment, Christians can seek meaningful progress toward investments that better reflect their values. The goal is to pursue both responsible financial stewardship and opportunities to make a positive impact.
How Our Investments Shape Our Hearts
One of the most thought-provoking moments of the conversation came when Tim reflected on Jesus' words in Matthew 6:21:
"For where your treasure is, there your heart will be also."
We often understand this verse to mean that our financial decisions reveal what we value. But Tim suggested something equally important: where we place our money can also shape what we come to value.
When we intentionally invest in causes that reflect God's heart, those decisions can deepen our concern for the people and communities being served.
Ultimately, faithful stewardship isn't simply about accumulating wealth or achieving financial independence. It's about managing everything God has entrusted to us in ways that honor Him and serve others.
Our investments are another opportunity to live out that calling.
Five Questions to Consider
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Episode Transcript
Austin
Welcome back to the Second Half Stewardship Podcast. Today, we're thrilled to have Tim Macready join us to talk more about Impact Investments. Welcome, Tim.
Tim
Austin, great to be with you. It's been so good to see you again.
Austin
Tim, it's been an absolute pleasure to work with you and your team over at Bright Light so that whenever we have a client who has surplus resources or wants to deploy resources to kingdom causes, we turn to you and your team, and you provide incredible due diligence to let us know what are the opportunities, what are the risks,
what are the potential impact investments that clients could make? It's really a crucial partnership for us as we explore how to be generous stewards of these resources that God has placed in our lives. For those of you who've never met Tim before, he moved to the States in 2022 after spending decades in Australia running a Christian pension fund and then doing impact investments in private markets, due diligence, investing in public markets, screening, engagement, all sorts of things across Australia.
So to tell us how did you first get into the investment management landscape?
Tim
Yeah, so I knew that I loved working with numbers when I was in high school. I kind of knew that at college I wanted to study something numerically difficult. Actuarial science certainly fits into that category, and I enjoyed that study. But most kind of graduates from actuarial science go into insurance or into kind of those kinds of fields.
I'd actually worked in pensions consulting on my while I was going through college and then after college, and I enjoyed in the pensions world, the sense of contributing to people's retirement savings, of being part of them, being able to enjoy a retirement. But I found in the secular world that a lot of the consulting work I was being asked to do was for the very wealthy people.
And so I'd reached out, actually reached out to a former boss while I was at college. I'd also done some legal research work. I started out as a double major legal and actuarial studies, and then dropped the law to focus on the on the actuarial side of things and kind of God's hand of I've reached out to a former boss who I'd done legal research for.
I said, look, I'm loving my work, but I just don't feel like it has a lot of purpose to it. I think I want to become an economics teacher. And he said, no, don't do that. I'm on the board of a Christian pension fund. We'd love to have you. We're just about to hire a first investment person.
I think you should apply. And so that was how I got into this space and then have just loved while I was working with the pension fund, getting to continue to contribute to the retirement savings of ordinary Christians in Australia, but then to really start deeply wrestling with what is our faith say about the way that we invest?
How can we invest in ways that support human flourishing and reflect, the gospel? So yeah, that's that's how I got into this work.
Austin
Yeah. That's fantastic. So I think that for most folks that here pension funding, they just probably think, okay, that's probably pretty similar to my investment accounts. I've got a mixture of stocks and bonds. How is investing a pension fund significantly different or similar to personal investing?
Tim
Yeah. So there's a lot of similarities. You're thinking about the same kind of portfolio diversification strategies. You're investing in many of the same instruments. But in the Australian context, there's about 100 kind of regulated pension funds and of 20 million Australians in those pension funds, they get to choose their employer makes a selection for them, but then they can move anywhere across those hundred funds.
And so most of our members, beneficiaries were pastors and teachers. They all have individual accounts, but the investment assets themselves are pooled. And that means a few things. One, you know, the money's locked in the system. Every Australian must contribute 12% of their salary to a pension fund. So it's not just an IRA account or something that is exclusive to the wealthier end.
The people that we represented were teachers, cleaners, pastors, youth workers at churches, your everyday mums and dads, your as well as wealthier people. And then secondly, because you can pull the assets, you can actually take illiquid investments as well. You know the money's not leaving until they're 65. You know that they can afford to tolerate some illiquidity risk.
And because you're aggregating assets across, in our case, 25,000 beneficiaries, you know that at a pool level, you can take liquidity risk that you couldn't as an individual. And so very similar principles of investment risk return diversification, but with that caveat that the pooling lets you try some different types of investments. And we'll talk about some of those investments later today.
Austin
Yeah. Fantastic. So tell us then about like you mentioned, this pension fund was a Christian pension fund. How how did that come about? How do you manage a Christian pension fund that is different than just a traditional pension fund?
Tim
Yeah. So the genesis of that was the the Australian pension system started in the 80s when the trade unions negotiated a 3% contribution in some certain industries, and the education industry was one of those. And so the Christian schools said, well, we have to pay 3% of teacher salaries into a pension fund. Let's set one up. And so they did, and it was a very small pension fund for many years.
And then kind of grew as contributions came in. But it was their vision of, those organizations that gathered together and said, let's set up a pension fund for teachers and workers in Christian schools. And then the churches did the same thing. And eventually those funds kind of merged together to form Christian Super, the group that I was working with.
And so at first it was really just, well, we want to provide for the needs of Christians in retirement. That seems like a faithful expression. As kind of the assets grew, the pension fund started to wrestle with, well, what does this mean for our investment portfolio? How what we invest as believers, we knew that 98% of our members were Christians, a mix of Catholics, Protestants, different denominations.
But we knew that they shared a love of Jesus. And so we thought, well, how would they invest? And we started to explore. Well, it's probably parts of the portfolio that we have that they wouldn't want to own, and they probably would want us investing in positive ways where we have the capacity to do so. So that was a big part of it.
We also spent a lot of time thinking about what purposeful retirement looks like. So if you're in Australia, the classic question for the retiree is clockwise or counterclockwise, which which direction are you driving around the continent while you're kind of got your caravan or your Winnebago? And and we just wanted something different to that. We our members are pastors, teachers.
They have contributed to the church in society their whole careers. What does it look like to equip them for a purposeful retirement of meaning and continued service? And so it wasn't just the investment portfolio. It's also how do we talk about retirement? How do we talk about who is your provision? Is a we your retirement account. Is that what makes you secure?
Or is it our father who has promised to provide that which you need? And so it ended up affecting every, every part of what we did. I remember, one of the things that we did for many years was we made the investment team sit for an hour a week in the call center. We had a kind of four person call center.
And so when they would take lunch, the investment team would take it, interns to go in and add to the phones. And so we're praying with beneficiaries. We're navigating them through loss. We're helping them to understand career transitions. It was infused into every aspect of what we did, which was just a really cool environment to be in.
Austin
Yeah, what a way to not only care for them in terms of the investment management, but also to care for them and hear what is actually important to them. I mean, I mean, I think so many folks that get into investment management get a little bit further, the the greater their careers grow, maybe the further away they get from the people that they're actually engaged with, the people that they're actually managing those resources for.
So what a what a really full way to really think about how do you love the beneficiaries of these accounts that you're managing on their benefit for?
Tim
It's a real reminder. I got into the investment side not because I love investing, although I do now, but because I love numbers. And that hour a week in the call center was just a real reminder that these are real people. They're real people who in many cases are less financially secure than I am as an investment professional.
It made it very tangible, very real.
Spencer
So, Tim, as you think about that journey along the way in working in the pension fund, you know, your faith was growing your kind of discernment of how you go about this for the fund. Can you talk about just maybe, some of the different milestones that you and your team got to as you deployed resources and as you thought through things?
Tim
Yeah, absolutely. So we started with kind of a really basic well, there's probably investments that we don't want to hold as Christians. This was 2005, 2006, when I started working with the pension fund and kind of designing that investment strategy. And so over time, we put a lot of work into wrestling through what does the Bible have to say about investing in tobacco or weapons or casinos?
What does it say about child labor and things like that? So that was kind of a real journey from 2005 onwards, 2006. We really quickly got feedback, by the way, as we went out to our beneficiaries with this, hey, we're starting to do genuine faith based investing. We've got two really interesting pieces of feedback. The first was, hang on, wait, you weren't doing that already?
Which was a little confronting. And there were reasons, to do mostly with scale and just the accessibility of products in Australia, but that was helpful feedback. The second feedback that we got from our beneficiaries was, that's great, but what is my money doing? What is it invested in? How is it contributing to good. And we didn't have a good answer to that.
And so in 2006, really early on in the journey, we just made a couple of kind of dip your toe in the water investments. The first was in microfinance. We were also, early investors into some of the early faith driven investing products. With what to us were really small allocations, like $1 million out of $1 billion pension fund.
But which were positive expressions. And then we built that. It took us a decade. But we got that positive impact portfolio, the faith driven portfolio to nine, almost 10% of our total assets. By the time kind of 2017, 2018 rolled around and there were milestones along the way. I mean, in around 2011 or 2012, we kind of sat back and said, well, why are we doing this?
It kind of feels right to not invest in tobacco or casinos, but the theologically speaking, why? Why do we have this intuition that certain things are okay to invest in and certain things aren't? And so we we spent a few years kind of writing a paper on the theology of investing, which, has, through God's providence, then formed the basis of much of the work that Kingdom Advisors now does in that space.
And we get to continue to contribute into that. That was a big milestone. We we brought various pieces in over the 15 years that I was working at the pension fund. We in housed our screening exclusionary screening team. We started to in-house corporate advocacy. We internalized the manager research function because the consultants we were working with weren't interested in researching faith driven investment products.
And we really wanted to, all of those were big milestones that that kind of led to the work that I do today with the team that I get to work with.
Austin
Yeah. That's great. You know, Tim, I think we we love to get to the impact side of things at some point. But you talk about the screening and the engagement. What does that look like on a day to day basis, as with your work in bright light, with the work that with the pension fund, how did you guys go about creating these processes to where screening was important and advocacy was important?
Tim
Yeah. So it started, I guess, with that sense that we were called to invest differently and a willingness to explore that, and then the exploration of a series of topics. I've mentioned some tobacco, gambling, child labor and bribery, corruption, investing in countries or companies working in countries with oppressive regimes. We kind of identified these 30 or 40 different areas that we thought should have something to say about the portfolio.
And we we kind of came up with an ideal expression of what we would like to be able to do. And so it was pretty easy on day one to not invest in tobacco companies. It was lot harder to not invest in companies with child labor in their supply chains. But we said, look, in an ideal world, we would have this nuanced approach where companies that have labor but are doing something positive about it.
We stay invested and we engage in companies that are refusing to recognize their responsibility. We divest and we don't hold them in the portfolio. And so we came up with that for every issue, and it just became apparent that what we needed was data that we weren't able to buy on the market. And not just the data, but the interpretation of that data.
A, a screen on gambling is very objective. What's the revenue tolerance? Are they running casinos? Yes or no? A screen on bribery is really subjective. And so we realized we needed Christians working at the fund to be looking at these issues and making those assessments. And so we internalized that function. We hired a small research team, some of whom are at bright light today, to kind of give a little bit of the corporate story, the bright light team in Australia, spun out of Christian Super, the pension fund that I was working with, we took about 6 or 7 people with us with the pension funds.
Blessing to launch bright light in Australia. And then four years ago, when I moved to the US, we we set up Bright Light Us as a team of Eversource Wealth advisors to offer similar services here with our sister company back in Australia. But yeah, it was really around that, that sense that the research we needed, the data we needed and then the interpretation, we had to do that ourselves because there just weren't Christian offerings out in the marketplace.
Austin
That's fantastic. So, Tim, you know, when we are having conversations with clients, one of the things that we often come back to is no screen is ever going to perfectly align with every single client. So whether it's even tidal, whether it's DFA, One Ascent or Inspire, every screen is at some point going to say, well, I align maybe 80%, I align 70%.
How did you guys start to determine you use the example of child labor of people that are in the progress and in the process. How did you guys even start to say these are the 30 or 40 different areas? Obviously some are simple, but when you started to dial it in, were there things like you came across in Scripture and said, hey, yes, this is an absolute no, or this is a gray area because I think that's the hardest part.
To communicate with clients is what is a absolute black and white line versus what can be a little bit more gray.
Tim
Yeah, it's a great and really complex question. I think first for me is the conviction that when it comes to exclusionary screening, this is a wisdom issue and a conscience issue. I'm not going to stand in front of a fellow believer and say, you are sitting by investing in this specific company. Every single company on the planet has great things that they do.
There's companies that I absolutely hate. And yet they still create jobs. They create goods and services that people want to buy. They, they have good things about them. And there's problems with every company. And so the first thing for me, I remember early on, I thought, right, we're going to set up an internal research team, and that team is going to divide the sheep from the goats, the good companies, from the evil companies.
And it's just going to be clear. There's going to be a line and companies are going to be on one side or the other. And a year in I kind of worked out, oh no, it's not, it's not like that. I can find a problem with everything and I can find good things about everything. And so at that point, it became much more a sense of how do we reflect the convictions of the people that we represent.
The 25,000, 30,000 Australians who have trust entrusted their retirement savings to us? How do we reflect that? And one of the big challenges is in a pooled environment, you can't reflect everyone's individual decisions. I remember having I was on the phones, I was talking to one of our beneficiaries, I think he was going to a Lutheran church, and he was taking objection to our decision to screen out alcohol investments.
He said, what are you telling me? That I can't have a drink as a Christian on a Friday night after a long, hard week at work? And I said, no, I'm not. I'm not saying that. What I'm saying is that alcohol industry generates roughly 80% of its profits from a very small number of highly addicted users who are being harmed by the product.
And when I when when we make a decision to divest from something, we're not saying it's sinful for you to engage in that activity. What we're saying is we don't want to profit from that. And you see those same wrestles with Eventide with Cross Mark with Inspire. They all have nuanced approaches. This is a real win, I think, for Christian investing that we're not all doing identical things, that as people search their own hearts and prayerfully come to their own convictions, they can find products that are closely aligned to what they're looking for.
I remember another conversation with a beneficiary where they were taking objection to one of the screens we had, I can't remember which, and they said, well, I agree with you on everything else, but on this issue, which is really important to me, I disagree, and so I'm going to take my money to another fund. And I said, that's fine.
You're welcome to do that. But you realize that the you're going to a different fund that has zero overlap with your ethical values. Like you, you want to screen tobacco, you want to screen casinos. We do all this. You're you're getting a portfolio that's misaligned, more than what you're getting with us. And, and I think one of the things that can stand in the way of us just making forward progress here is looking for that perfection.
Tim
Oh, I wish I could find that asset manager that just perfectly aligns with me on every single issue. Chances are you're not going to find it. But to move to something that is faith aligned and aligns with your convictions 80, 90% of the time, to me is a step in the right direction compared to just leaving it kind of with a lack of conviction or a lack of expression of those faith values in a portfolio.
Spencer
Yeah, we've talked a lot about screening, you know, and making decisions there. One of the other things that you guys do, though, is really you engage with companies, but with thousands of different publicly traded companies, that that process has got to be a little bit different than, say, the screening. How do you how do you think through where you engage what maybe the highest leverage points there where you might not engage?
What is that entire enterprise look like there for you and your team at Brightlight Tim?
Tim
Yeah. First I want to say there's there's several different approaches to engagement. For us, what we want is a real conversation with the company where they feel like we are for them and for their shareholders. And we're we're getting to express, views on the direction of the company that promote human flourishing. That's our end goal. There are legitimate approaches to engagement that seek to use kind of shareholder resolutions.
That's a really legitimate approach. It's not our approach. There's approaches to engagement that really focus on speaking the truth to companies, regardless of kind of how they respond to that. Again, a really legitimate form of engagement, but not our approach. Our approach is let's get to meetings with decision makers, where they feel like we're being winsome and they, they want to listen to us because we have something useful to say.
Yeah. And so that means we're going to look for engagement opportunities where we think we can find that we're looking for an overlap between an area that we and the partners we work with have something unique to offer, where we think the company has a risk or an opportunity that they're not seeing fully, and where we can point not just to a Christian reason to act, but to a broader human flourishing reason to act so that it doesn't matter...
Tim
Sometimes the people we're sitting across from it, the company, are believers, and that's great. But we need arguments that are persuasive to them, even if they're not. And so we're looking for that sweet spot of of overlap. And we find it in places where people are being hurt and harmed and the company doesn't know how to do it or doesn't see that they could be at risk.
So, back in 2021, I think it was, the government in Western Australia released a report on sexual harassment in remote mining operations. And they found that a horrific percentage of women working in remote mining operations were reporting sexual harassment, sexual assault, and that the mining companies didn't they weren't dealing with it. They had written policies that were designed to work in operations where someone would turn up to the miner at 8:00 in the morning, at 3:00 in the afternoon, they go home.
Not situations where someone's there for ten days at a time. And so we took this report and we did the research. What is best practice in sexual harassment and assault prevention in remote overnight live in mining accommodation facilities. Where are the companies that have done something? How do we talk to those companies and take their practices and apply them into other companies?
And we found the companies really receptive. They knew they had a problem because the government report had just revealed it to them. They didn't know how to fix it. Companies don't want the women in their worksites getting harassed and assaulted like it's not. No one thinks that's a good thing. And so we found an issue where we had something unique to offer, where we could point to best practice, and where we could show that we were on the same side as the company.
And we're finding that at the moment, with some of our engagements around child trafficking, we're hopeful of starting a campaign soon around children's access to online gaming. And we we're just looking for these things where the people we're sitting across can say, yeah, I don't want that. Like, no one in this company wants this, but we don't know how to prevent it or how to stop it.
That's the kind of things. And then I would say being effective is about dialog and just about showing that you want the company to succeed.
Austin
Yeah. That's fantastic. And Tim, I've really appreciated getting the emails from Brightlight about the advocacy that you're doing on behalf of shareholders. And it just it's it's so fascinating to read the breadth of responses. I think so much of the focus of the emails recently have been on human trafficking and the breadth of responses of what some companies are willing to do and what some companies are not willing to do.
Just really pretty astounding eye opening look at seeing, okay, what can shareholder advocacy actually do? And then sometimes the companies are just unwilling to make a movement because it's it's challenging. It's an expensive.
Tim
Yeah. And Austin for us this is where the screening and the advocacy conversation just goes hand in hand. We we think screening is about nuance. There's some obvious things that that are not nuanced, casinos or pornography and things like that. But most of where we spend our work is really nuanced, and the way a company responds to the challenges they're facing is, in our view, of genuinely meaningful factor in whether the average client that we're working with feels comfortable holding that company or not.
And so those responses that you're seeing that's informing the screening work that we do, and the advice that we give to clients on whether they should be comfortable holding that company or whether they might want to divest and the screening, an engagement work together as well, and that the things we learn from one company, we can then use to inform our research on another.
Austin
Yeah, that's so good. Well, so I would love to as much as I would love to sit here and talk more about screening and advocacy, I think it's so important. One of the things that you offer and that we have found so profoundly meaningful, on top of the screening, on top of the advocacy, is y'all's work in private placements and these impact investments.
And you alluded to it earlier, some of these initial investments that you made through the the pension fund. Can you tell us a little bit more about how did you guys start noticing where impact investments can be? How do you think about it impact investment. And then we'll dive in a little bit more about how do you actually do research on these.
But you know, you talked about wanting to proactively deploy resources. Tell us about a few of those first impact investments that you made, because those were some that were just incredible to us.
Tim
Yeah. So and again, in addition to the feedback we'd received from our beneficiaries, we also had a problem at the pension fund, which was that the average pension fund in Australia and we needed to provide performance that was consistent with other pension funds. The average pension fund in Australia had about 20% of their assets in illiquid investments.
And we went to the providers for the illiquid investments. And they said, well, when we said like, we love your strategy, but we don't want to invest in tobacco companies or casinos, will you sign a letter promising not to do that? And they wouldn't sign them. And so we just couldn't access the unlisted markets in the way that all of our competitor peers were.
And so we had to find another way. And so we had this beneficiaries saying, well, but what are you doing that's good? And a market that wouldn't give us access to the products we needed in the way that we needed them. And so we turned into we turned to look at the impact investment market. The first investment we made was a microfinance investment.
It was a fund. Most of our investments were through funds. Occasionally we did a couple of direct investments. But, this this was like most of our through a fund, and it was just investing in lending money to the banks in emerging and frontier markets, where they were then lending in microfinance, ways to like really small loans, 20, 50, $250 to buy a sewing machine or buy a goat or stock a little corner shop.
And and that investment started to kind of show some promising signs. And so we kind of grew and grew one of the ones that I loved, we put a lot of work into this one was one of the state governments in Australia at the time, realized they were spending a lot of money on foster care, on paying foster parents, on, social workers and all the support services that are needed around it.
And they worked out that the kind of lifetime value of safely keeping a child with their family of origin was well into the hundreds of thousands of dollars. And so they said, look, we're willing to pay, a certain dollar amount per year if you can find innovative ways of safely keeping children in their families of origin.
And so we ended up getting to partner with a church, nonprofit organization in the foster care space that ran training programs for parents who were at risk of having their children removed. It was his, like, just here's how you discipline a child without getting angry with them. Here's how you meet their nutritional needs. Here's what it looks like to sit and spend time well with them.
A big part of it was also, honestly getting mums out of abusive relationships with partners, so that the children who were in a home that had an abusive relationship, could be protected from that. But it was just parenting skills and coaching and all of those things. And so we set up an investment. We made an investment, provided the capital to the nonprofit church partner.
And over the course of the next five years, they were able to either prevent from being removed or restored back to their families of origin, several hundred kids, who would otherwise be in the foster care system. And we'll we will do a with an 11% return. The government walked away not having to fund those kids in the foster system for the next ten years, 15, 20 years.
But, I mean, it genuinely would bring tears to my eyes when I'd read the stories or see the videos of these dads that had just never understood how to engage well with a child and now they knew how. Or these mums who had been, helps to leave an abusive relationship, and therefore they got to keep their kids with them for the next 15 years.
It's still emotional to me today. But those were some of the early investments that we made as we started this journey.
Austin
Yeah. Well, it's so beautiful to think about. Okay. There are resources and investment resources that we can utilize literally for the good of the most vulnerable. I think that's one of the the things that I've been so astounded by is just there are resources. And I love this partnership between the Australian government and you guys as the pension fund.
It's like there is a real need with foster care kids. There's a real beauty of keeping them in families, and there's a Christian nonprofit that's doing this. How do we utilize all three of them for the good of these vulnerable kids? Just what a beautiful story. So tell us a little bit more then as you looked to other impact investments, what does it look like to do the due diligence.
How do you determine? Because there's a lot of great things out there in the world that people could invest in, but it could be an absolute terrible investment versus maybe a good charitable gift?
Tim
Yeah. We realized really quickly that on many of these impact investments, we were one of the larger pieces of capital coming in. We had rules around kind of not being more than 20 or 25% of a single investment. But yeah, if you're 10 or 15% of a fund, you easily in the top three investors usually may even be the largest.
And so we kind of realized a few things really quickly. One, it was really easy to fall in love with the impact. And the risk of that is you persuade yourself that it's a good investment when it's not. And so one of the things we kind of did early on was we separated the impact diligence from the investment diligence and assigned analysts to look at, you're just just the investment.
Don't go reading the impact report and don't feel like you're just the investment analysis on this one. So that that was the first thing. The second thing was in recognizing that we were often a larger investor in these products, we kind of came to the realization that no one else is going to ask the hard questions if we don't, we can't as a pension fund.
So, to give some context, $1 billion is a lot of money in the context of the Australian pension system. I think we were the 60th or 70th largest pension fund in the country. So most of the time if I invest in something, there's ten other investors with teams that are five times the size of our team are doing diligence, and not that I or we would slack off, but you can kind of there's a catch.
There's someone to catch mistakes if you make them in this impact space, we kind of realize it's just us. And if we don't identify the risks and ask the questions, no one else is going to do that for us. And so we had to build out this kind of really sophisticated investment diligence program, with a, with a smaller team.
Our investment team was about 9 or 10 people at the pension fund. But we had to do the diligence well. And therefore we, we couldn't do 50 deals a year. We, we were able to do about 3 or 4 deals a year. I also we realized that when you're investing in the impact world, the foster care bond that I mentioned before is a really good example.
Your investment returns are directly tied to the impact you create. The government's paying us based on how many kids are successfully reunited with their families or safely kept with their families. And so if you don't understand impact, you don't understand the investment risk that you're taking. And so we had to bring in people who were experts on understanding impact and develop that skill set ourselves.
Otherwise, we didn't understand the investment thesis and the investment risks that we were taking. Those are kind of three big takeaways that we kind of learned the separation of investment and impact, diligence, the need to go deep on diligence and, get this, this sense of if you don't understand the impact, you don't understand the return profile.
Austin
Yeah, absolutely. So then as you're thinking about that now, you've shifted to the States. You're working with Brightlight here. You're working with financial advisors, with folks that are looking to make these impact investments. When you think about ideal clients, folks that have resources, who are these investments typically for? How do you start thinking through what are potential avenues for them to invest?
What are maybe some of the ways, as we engage with investors to to really move that needle, to say, okay, you have resources, how do we think about who to place, where to place them?
Tim
Yeah. So I think the the first thing is all about goals and objectives. The ideal client, is working with an advisor. And as you've said, and as we work with you, we don't tend to work directly with clients. We support the advisors who are supporting the clients. For all the hours I spent in a call center, I would not make a good advisor to an individual.
And our team's not built that way. But what we want our kind of advisors and clients who can work together to know what they want, what their objectives are, what their priorities are. That how they want faith integrated into their portfolio. Because I think we would say there are some real nuances around integrating faith into a private markets portfolio and will unpack some of them.
But really, what we want is clients to be able to live out their faith and their value set in a consistent way across everything. Whether that's public equities or private credit or public bonds or cash, we want values holistically implemented in a portfolio, and we want clients to be able to kind of walk through what practical implementation looks like.
Asset class by asset class, sleeve by sleeve. And of course, the deepest expressions of faith alignment and the most exciting expressions of what can be done to achieve impact happen in the private markets, but that the ideal client starts with a just desire to bring their faith into what they're doing. That then leads to conversations around how much is enough, and do I want to go into impact investing with just my surplus, or am I willing to put some of the money that I think I'm going to need for retirement at risk in, in the impact investment, landscape?
Of course, as advisors, as people in the investment industry, you and I know that all the money is at risk all of the time. But there are there are unique risks in the impact and faith driven investing space that clients need to be comfortable with. from there it's about developing a conviction around what do you feel called to make a difference?
How do we identify, impact and faith driven investment opportunities that align with that sense of calling and purpose? And then unpacking practical questions like, are you willing to take a concessional return, or do we need to try and find market returns? Are you willing to lock your capital up for ten years, or does this need to come back to you in three years time?
Questions about family involvement in those decision making and all of those things. But to me, the ideal client just always starts with, hey, I want to work with my advisor to bring my faith into everything that I'm doing.
Spencer
Yeah. Tim, as you've seen the landscape kind of evolve over time say that even the last ten years, you know, in developed markets and obviously there's a lot of impact investments that are different parts of the world. But as you kind of think about what you've seen in Australia or in the United States here over the last ten years, how is how is that landscape changed for access to impact investments?
Tim
Yeah. So this is a really positive developments and some kind of stagnation as well. I'll start with the stagnation. I think if you'd asked me 15 years ago, I would have said impact investing is really just only accessible to people who have quite decent account sizes. Probably not your everyday investor. Certainly your kind of million dollars balance and above type, and probably more than that.
And I would have said, but in 15 years we'll have solved that. We'll have found ways of getting impact investing to the mum and dad investor because they want it. Right. I worked in a pension fund that represented mum and dad investors, and we had impact investments in their portfolio only because we could pull the assets. And so we met the minimums in aggregate, not individually.
And I thought surely we'll find ways of doing this more broadly. And we just haven't. Most of the impact investments we see are still restricted to at at best accredited investors, at worst kind of qualified purchases. Most of them still have minimums that are at least $100,000 and probably 250 and maybe even more than that. And so I want to see development in that space.
We just haven't seen much of it yet. But there's been a lot of great developments. Firstly, the breadth of product has expanded massively. To the extent where you can get really niche themes. I mean, funds just around job creation or just around stopping human trafficking or just around providing childcare facilities to people in very concentrated parts of the of the US.
Tim
There's more vehicles to access some of the offshore impact investment opportunities as well. There's great opportunities here in the US, but some of the most exciting stuff that we see in terms of the impact it creates is in emerging and frontier markets. And now you have more feeder vehicles, more access vehicles into those. You've seen the emergence of fund of fund vehicles where you can get diversified access to impact and faith driven opportunities in a single fund, which is great if you can only meet the minimum once.
And I think more broadly, we've just seen the continued growth of that evidence that there's legitimate ways of investing in impact and some of those involved giving something up, and some of them don't involve giving something up. And so as, as some of the products that are out there come with funds two and fund three and fund for, you just get more and more of a track record that gives investors more confidence to work in the space.
Spencer
So, Tim, you're starting to work more and more with advisors, you know, on due diligence process and supporting them, as you kind of mentioned, working with their clients. What does it look like typically as you start to work with advisor or advisory teams in this space?
Tim
Yeah, it's it's a real privilege to get to work with you guys and the other advisors that we support with this kind of diligence. Most of those conversations start around this idea of what are your clients feeling called to? Where are they feeling like they want to make a difference with their portfolio? And what can we find in the investment landscape that is excellent and aligns with where they're feeling called?
I think a lot of times people feel like, well, there's not going to be an impact investment that's aligned perfectly to what I'm looking for. And yeah, if you come and tell me I want an impact investment that serves kids who are falling behind in education in inner city Chicago with this specific program, like, no, but we can we can almost always find something that maps to the passions that God has placed on the hearts of the clients that advisors are working with.
And so our conversation with you, as you know, starts with your clients care about what are they asking you for? What do they wish they could do in their wildest dreams with their capital? Then we go out. We look at the suite of investments that we know about. We reach out to contacts to try and find more. We identify a pool of opportunities, and then we work together with you to diligence those opportunities for your clients.
And we can't diligence everything. But what we're trying to do is make sure your clients have access to those products are just really going to fire their heart up, and deliver investment excellence. Excellence, again, might be the market rate returns, or it might be an intentional decision to take a lesser return to achieve an impact. But yeah, and then we provide that ongoing support.
We meet regularly with the manager. Ongoing diligence give you recommendations if something's changing. All of the things that you would expect. But it all starts with that. Like what are your clients wish that they could do? And how do we find things that will just light their heart up?
Spencer
Well, and it's it's been so much fun to work with you and your team. One of the early reports that we read, and of course, we love Eagle and Wes Lions and his team and what they're up to. But reading one of the due diligence reports, I still remember you pointing out that one of the questions that you had asked them and that you had determined was that they, you know, there was a fee that was being charged on a certain amount that was a little bit different than maybe some of the industry standards.
Now, these are great people and they're doing things about board and such, but you were getting down to a level of specificity that I thought, okay, Tim and his team, they're still recommending this investment. They still think it's a great opportunity, but they're dotting every I and and crossing every T there. And then, you know, of course, our experience, you know, last fall we reached out and said, okay, you know, we've got client that's really interested in sharing the gospel
you know, where there's no church that is really viable. You know, in certain areas of the world, even where Christians are persecuted. Do you have any, you know, investment options, you know, for, for private placements there? And we you know, this was almost a throwaway question of like, well, the client asked this, but, you know, surely there probably isn't anything.
And you said no immediately. This is you need to talk to these guys. And sure enough, we got a conversation with them three days because you made the introduction and we were off to the races. So I think we've seen tremendous value. And of course, you know, we're cheerleaders in the advisory space. I mean, the more advisors that work with you guys, I think the more clients broadly that will be blessed.
But that's been a couple of the examples that just give us that level of confidence that, okay, we're working with a really a specialist here, that this is not the first rodeo. This is not just, you know, you drinking the Kool-Aid and saying, yeah, let's look, you know, we got great impact here. But really digging into the details and knowing, okay, what what are the risks.
What are the trade offs? What kind of return is being targeted? You're knowing that there's nothing that's certain, but that we've got a good set of eyes there.
Tim
Yeah. We love working with you guys. Spencer. Thanks. Yeah.
Austin
So, Tim, to close this off, I think the last question that I would have is just where do you dream this investment, the impact investment space, particularly where do you dream that it heads in the next 5 to 10 years?
Tim
Yeah. So I have some confident dreams and some unconfident dreams. I'll share them both. The first I, I am confident that we'll continue to see more specialized products that let people really express their heart in targeted ways, not a kind of broad impact. Although for some clients, broad impact is right. But some of the examples you mentioned, unreached people or human trafficking or, underprivileged children, like more and more products I think will come to market that enable that really personalized expression of impact.
I'm confident about that. I'm confident that the demand will continue to grow. I've been working in faith based investing for 20 years, and there's just something that has happened in the last three years or so, I would guess, where people are wanting this more than they have in the past. And we're seeing that in conversations with advisors. We're seeing it in the conversations advisors have with their clients.
We're seeing it in attendance at Kingdom Advisors and demand for what we do. And I just I'm so delighted that Christians are just developing that desire to live holistically as followers of Jesus, including with their investment portfolio. The thing that I dream that I don't know. I hope that we find ways of getting this to people with $1,000 to invest, not half $1 million to invest. I know there's efforts underway,
we're involved in supporting some of them. I don't know if we'll be able to do it, but I really hope that we can. And the other dream that I have is that our capacity to kind of report back on here's what you achieved. Will will shift from just stories. The stories are great. The stories are needed. But I want us to start to see more numbers and more evidence of, hey, we made this difference through the investment that we made.
That's really hard work. But that's that's what a dream might happen in the next few years.
Austin
That's fantastic.
Spencer
Well, and, you know, it just strikes me, there's such opportunity broadly, of course, to be able to engage people at lower investment levels. But I think of my kids, you know, I mean, they've they've made some money. They both they all have, you know, four of them. They have small Roth IRAs. Every one of them wants to make investments in Eagle.
Every one of them wants to make investments in talents and or hope or, you know, all these different, you know, institutions. But, you know, they don't need any kind of qualification there. So, and, you know, that's that's not because of those institutions, that's because of a regulatory environment and, you know, hurdles and such. So, but but I think, you know, if we could, if we could create that avenue where, you know, kiddos, you know, because they see it, you know, they say, wow, you know, they're they're not jaded by maybe money.
And sometimes some of the same ways that we see as people get older and they say, okay, I got to get a real job and I got to do this, that and the other, they get excited, you know, about it and participating. So that would be awesome.
Tim
And so here's a sort of pull that out. Here's why that really, really matters. When when Jesus says where your treasure is that your heart will be also. Yes. He's saying, that we will invest. We will put our time and money into the things that we care about. But he's also saying, I think where you put your money shape to your heart.
And so that desire from your kids to put the money that they have in places that just warm God's heart, is a signal that they're trying to put their heart, their money in places that will shape their heart and make them more want to do that. I say to people, faith driven, impact investing, it's addictive. You start doing it and you want to do more of it because it shapes you.
And so yeah, it's one of the reasons I'm so passionate about that is, I think, the opportunity for Christ followers to have their heart shaped by the way they invest is just so significant.
Austin
Fantastic. Well Tim thank you so much for joining us. It's been such a pleasure to talk with you this afternoon. Clients. If you have questions about the faith driven investing landscape, about impact investments, you want to approach Tim through us to talk about what are those places that you are most passionate about? We would love to have that conversation with you.
Tim, again, thanks for joining us, and we'll see you again next time, guys.
Tim
Austin Spencer, it's been a joy. Thanks. Thanks.
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