Post-Risk Capital

There's no such thing as post-risk capital.

What categories of capital are you most familiar with? In 2000, we were talking about networking charitable capitalists. Gifts, grants, impact investments, urgent capital, patient capital, market rate returns, concessionary returns, even sacrificial investing, per my previous blog. One term I recommend we avoid is "post-risk capital." The truth is, all capital is at risk. What do I mean?

Tell those who are rich in this present world not to be contemptuous of others, and not to rest the weight of their confidence on the transitory power of wealth but on the living God, who generously gives us everything for our enjoyment. Tell them to do good, to be rich in kindly actions, to be ready to give to others and to sympathise with those in distress. Their security should be invested in the life to come so that they may be sure of holding a share in the life which is permanent. 1 Timothy 6:16-18 (JB Phillips)

Capital is at risk of either not producing a return on earth or not producing a return in heaven. There is a concept in Scripture of temporary capital and permanent capital. In his short book "Wealth Conundrum," Ralph Doudera outlines temporary assets and permanent assets as follows: The list for temporary assets includes stocks, bonds, real estate, and cash. Permanent assets, he says, is money given away.

Combined with the parable of the shrewd manager, a more nuanced description might be that permanent capital is temporary capital that has been repurposed for eternity. 1 Timothy 6:19 seems to speak to this. “In this way laying up for themselves [the riches that endure forever as] a good foundation for the future, so that they may grasp that which is life indeed.”

If one's major focus is this current life, then your capital is at risk of not producing a return while you are still alive and perhaps for your heirs. If you are a spiritually-minded person, then your capital is at risk of not producing a return for eternity. Again, there is no post-risk capital.

Undeployed capital is most at risk of not producing an eternal return. In recent times, we have seen the development of mechanisms for deploying capital for the good of others. Donor Advised funds (DAFs) are an example. By some estimates, $1.4 trillion sits in donor-advised funds. One's first response might be that this represents a lot of generosity. A second response is that this is in serious danger of being categorized as undeployed capital, buried talents. As such it is capital at risk of not producing an eternal return.

Shifting our capital from a market portfolio to a charitable portfolio does not de-risk it. Charitable dollars placed in index funds and other "sure bets" (in the systems of the world) is unlikely to produce an eternal return unless it is somehow deliberately connected to good soil, kingdom-advancing, eternity-pleasing, risky endeavors. Gifts placed in impact funds that will not take the first seat at the investment table – is this wisdom, or is it over-stewardship of capital? And isn't over-stewardship just another form of greed or a cover for fear?

If there is no such thing as post-risk capital, how then shall we re-invest? How then shall we risk?

We start by retiring the word "safe" from our capital vocabulary — or at least demoting it. Safe was never a spiritual category. It's a market category we smuggled into our theology. Perhaps what we mean when we say "safe" is post-risk: capital that has been moved from an active decision into a passive holding pattern, capital we've given ourselves permission to stop thinking about. And permission to stop thinking about your capital is not the same thing as capital that has stopped being at risk. It has simply changed which risk it's carrying.

Post-risk capital, then, isn't a financial state. It's a psychological one. It's the relief of having moved money somewhere — a fund, an index, an endowment, a DAF — and calling that movement a decision, when really it was the postponement of one. The shrewd manager wasn't commended for finding a safe place to put his master's money. He was commended for staying in motion with it, for treating it as a live question until the very end.

So here's the re-investment principle: if all capital is at risk, the only real choice left to us is which risk we're willing to carry. Undeployed capital risks producing nothing. Over-stewarded capital — capital tucked into "sure bets" that never touch good soil — risks producing a return that means nothing beyond this life. And sacrificially deployed capital, capital that takes the first seat at the table of a kingdom-advancing, eternity-pleasing, genuinely risky endeavor — that capital is finally at risk of the only outcome worth wanting: a permanent return.

Not post-risk. Eternity-bound.