So you think you're an environmentally conscious hipster who carefully separates recyclables from his or her trash, hauling them proudly and painstakingly to the curb once a month. So you protest against sweat shops in Asia by stripping off your $25 college sweatshirt, never to wear it again until small children get paid more than 2 cents an hour. Maybe you even spit when tobacco-sponsored NASCAR racing comes on the tube, as a protest against having a cancer-causing product endorse athletes while inspiring impressionable 13-year-olds to light one up. Yeah, yeah, Gandhi, you're all of those great things. But when it comes down to your finances, are you as pure as you think? If you really want to make a difference, then prove it with your pocketbook, and become a socially responsible investor.

1. LEARN WHAT SOCIALLY RESPONSIBLE INVESTING IS

Socially responsible investing is when you take your beliefs and values and apply them to how you invest your money. This is also known as having a "double bottom line," because not only are you looking for a profitable investment, but also one that meets certain moral criteria and that lets you sleep well at night. Your second bottom line could be moral, religious, or based on whatever Chicken Soup for the Soul principles help guide you through life.

Given the wide range of attitudes out there, socially responsible investors screen companies and mutual funds for those that conflict with their beliefs. For instance, some will not invest in those profit mongers that damage the environment, use innocent monkeys for research, or rely on vices (like smoking and boozing) to make a dime. There are investors who screen according to their personal causes, and others who follow a set doctrine, such as Catholics or Muslims for whom there are specific mutual funds. But of course, not all socially responsible investors are in agreement. Take, for example, the "gay benefits" issue. Some investors exclude companies like Walt Disney Co. for having gay-friendly policies while others embrace them. In fact, there is an entire mutual fund, the Meyers Pride Value Fund, that only invests in companies with gay partner benefits and policies that prohibit discrimination against homosexuals. As Austin Powers would say, it's all about your second bottom line, baby.

You are not alone

As a newcomer to the world of socially responsible investing, you may be interested to know that there are lots of other people out there with you. In fact, in 1999, $1 out of every $8 invested in stocks was prompted by a socially conscious decision. That comes to $2.16 trillion of the $16.3 trillion professionally managed in the United States, or 13%. The $2.16 trillion figure is up 82% from 1997. Yet in 1984, there were only 40 billion dollars in socially responsible investing.

While precise demographics of other socially responsible investors are not available, certain segments of the population are more inclined to participate. They include, but are not limited to:

  • baby boomers who lived through love-ins and peace rallies and who have an affinity for social awareness
  • women, who tend to appreciate companies where a glass ceiling is not part of the décor
  • minorities, who tend to support businesses that encourage diversity

Socially responsible investing has been around, in some senses, ever since the first investor took a stand against profit at any cost. The Quakers, who preach non-violence, probably would not put money on the Patriot missile just as centuries earlier they did not invest in slavery. Toward the end of the '70s, an international outcry was raised for South Africa to end apartheid, and some investors put their money where their mouths were by divesting from multi-national companies that did business there. Although economic sanctions against South Africa ended in 1993, investors continued the practice by applying similar principles to every company. Socially responsible investing got a serious foothold in the financial industry in the '80s with the establishment of screened mutual funds like Domini Social Investing and Citizens Mutual Funds.