Businessman connects Catholicism and finance
Gabriela Malespin | Sunday, February 22, 2015
Immaculata Law Firm and Julius Capital founder Michael Schierl, a leader in the Catholic financial community, presented his vision for an ambitious Catholic financial system and community on Friday at the Mendoza College of Business.
As part of Mendoza’s Ten Years Hence lecture series, Schierl’s lecture focused on his plans and vision to create a self-funded Catholic community capable of implementation on a national level. Schierl said this system is based off the Marytown community model first implemented by Saint Maximilian Kolbe.
“In 10 years, we hope to do something enormous for the Catholic Church in the area of impact investing,” he said. “The simple goal we’ve taken upon ourselves is to build a new Catholic financial ecosystem.”
With the intent to integrate more than 186 dioceses across the nation, Schierl said he hopes to establish a community that integrates senior citizens and parishes in the process.
He said he hopes the project, which requires over $1 billion in Catholic impact bonds and $10 million in campus investment for parishes and dioceses, will create a financial model that can generate funding for high-impact projects in the Catholic Church.
In order for the project to become a scalable and replicable model, Schierl said the project needs to overturn the “scarcity paradigm” that prevented dioceses and Catholic nonprofits from generating usable capital for high-impact projects. Schierl said he looks to Mary, as well as biblical stories such as that of the five loaves and the fish, as models for a new paradigm grounded in Catholic principle.
“In order to adopt this goal, we’re going to have to develop a ‘mission possible’ mentality,” he said.
The key to this funding paradigm is issuing bonds and bond structures, which Schierl said include Catholic taxable bonds and conduit mortgage bonds through parishes and dioceses.
“Catholic taxable bonds are bonds that can provide funding to religious projects and follow Catholic principles, as opposed to tax-exempt bonds, which present limitations for funding parishes and other religious institutions,” he said.
Schierl said issuing these kinds of bonds requires taking advantage of the “Catholic municipality opportunity,” which involves taking advantage of the taxing power of Catholic dioceses and nonprofits to issue taxable bonds.
“What we have is a secured bond immunizing bond holders from diocese bankruptcy risk. We have a flexible instrument that can be invested in anything,” Schierl said. “[Catholic taxable bonds] are secure; they’re flexible; they’re faithful. By doing a master indenture over the diocese and having the blessing of the bishop or the organization that’s sponsoring it, we can ensure that every loan is faithful to the Catholic tradition and doesn’t have anything contrary to canon law.”
Another fundamental component of this Catholic financial ecosystem is the incorporation of the “flex endowment campaign,” which Schierl said allows donors to purchase certain types of donor-friendly bonds in order to buy up a lot of death benefit on life policies.
Schierl said the flex endowment campaign model improves on traditional models by ensuring donors can see the results of their donations, such as parish donations, during their lifetimes and create and insure more usable capital for high-impact projects.
The dioceses of Lexington and Phoenix are types of structures that have expanded lending capacity and created more funding opportunities for these dioceses, Schierl said.
“We’re going to need a whole new breed of Catholic institutions and foundations who are audaciously brave enough to invest in our Catholic impact bonds,” he said. “Rather than a watered down socially acceptable investment screening, why not have a peer play investment opportunity directly in the building of the church?”