- The Washington Times - Tuesday, April 22, 2003

Forget about Bechtel Corp., Halliburton Co. and the other corporate giants that will help rebuild Iraq. Two "socially responsible" mutual funds are giving average investors an opportunity to help finance the reconstruction of the war-torn nation.
The Pax World Balanced Fund allows investors to forgo their distributions and donate them instead to a charity that will assist with the rebuilding. The Calvert Foundation, a nonprofit group that receives some support from the Calvert Group Ltd. mutual fund company, has also invited investors to help bankroll the reconstruction.
"We believe this is a unique opportunity to help Iraq recover from the effects of the war," said Anita Green, director of social research for Pax World Funds, the Portsmouth, N.H.-based parent of the Pax World Balanced Fund, which derives its name from the Latin word for "peace."
The 32-year-old fund, the nation's oldest socially responsible mutual fund, has about $1 billion in assets. It comprises stocks and bonds, but it doesn't invest in defense, liquor, gaming or tobacco companies.
The fund's investors can donate all their capital gains and dividends to Pax World Service, a nonprofit sister organization that directs the money to the international relief group Mercy Corps.
The charity will use the money to provide refugees with food and shelter, and to establish medical clinics for displaced families. The fund began inviting investors to donate their distributions in mid-March, but Ms. Green could not provide the number of investors who have taken fund managers up on their offer.
In the past four years, fund investors have contributed $775,000 to support Mercy Corps' humanitarian efforts in 30 countries, including the rebuilding of postwar Afghanistan, she said.
Mercy Corps estimates that a $500 contribution would provide medicine for 300 Iraqi children and that a $2,750 contribution would buy a 10,000-liter bladder bottle that could store water for 333 persons.
The year-to-date return on the Pax World Balance Fund was 1.23 percent through Thursday, according to mutual fund tracker Lipper Inc. The fund and 154 other socially responsible funds Lipper tracks have averaged a 1.03 percent year-to-date return.
In most cases, socially responsible mutual funds such as Pax avoid investing in defense or tobacco companies. In other cases, the funds invest in companies deemed socially unacceptable, then investors attempt to use their voices as shareholders to change the companies.
The Calvert Foundation in Bethesda has given people three ways to donate to the reconstruction of Iraq. The Calvert Group, a mutual fund company that manages more than $8.5 billion in socially responsible funds, provides the foundation with office space and legal support.
People can make a donation through the foundation to InterAction, a coalition of more than 160 relief organizations. The foundation does not keep any portion of the donations for itself, absorbing all administrative costs.
People can also contribute to the foundation's "donor-advised funds" and designate the money to go toward relief efforts in Iraq.
The foundation has also introduced the Middle East Microcredit Giftshare, which allows donors to contribute to a pool of money that will be used to make small, high-risk loans to small-business owners in Iraq.
"If you are a street vendor or other small-business owner in Iraq, getting credit is the first step toward economic recovery," said Shari Berenbach, executive director of the Calvert Foundation.
The foundation does not know how many people have invested in the funds because it introduced them in the past few weeks, she said.
Using socially responsible investing to help rebuild Iraq makes sense for investors, said Kathryn Barland, senior research analyst for Lipper. "There will almost certainly be tax advantages for the individual investors who take part in this sort of thing," she said.
For example, the straight donations available through the foundation are tax-deductible.
Tim Smith, president of the Social Investment Forum, a nonprofit membership organization that promotes socially conscious investing, said he is not aware of other mutual funds that have given people an opportunity to support the rebuilding of Iraq.
Pax World Funds and the Calvert Foundation have set an example that other funds could follow, he said.
"A lot of people want to express their philanthropy, but they generally don't think to go through mutual funds to do it," Mr. Smith said.


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