How investors can divert their (meager) dividends to help others

Socially responsible investors often put more than their principal to work for good causes. Citizens Funds, for instance, lets its investors channel their dividends to any nonprofit group they choose.

Investors in the Pax World Balanced Fund, which screens out war-related industries and defense contractors, can direct their gains toward humanitarian aid in Iraq and other war-torn countries.

Voluntary contributions - anywhere from 5 percent to 100 percent of capital gains and/or dividends - can be designated for refugee assistance and rebuilding efforts. The money goes to Pax World Service, a nonprofit that teamed up with the Mercy Corps relief organization in 1998.

Pax investors have given $775,000 to humanitarian efforts in more than 30 countries. The amount of money the fund can offer Mercy Corps varies from year to year because it is tied to the market, says Marian Murphy, Pax's vice president of marketing. For 2002, contributions hit about $40,000.

As of this week, investors in Calvert funds also have the option of donating dividends to humanitarian efforts through member agencies of the American Council for Voluntary International Action.

Another approach for the altruistic set: a growing push toward "community investing" - directing funds toward financial institutions that make loans to low-income people for housing or small businesses, both in the United States and abroad.

Shared Interest, a nonprofit social-investment fund in New York, has been aiding development in South Africa since 1994. People who make the loans receive half the interest, and contribute the other half to banks that make microloans. For every dollar loaned to Shared Interest, $17 has been distributed. Executive director Donna Katzin says those loans have helped create 6,000 small businesses, 12,000 jobs, and 62,000 units of low-cost housing.

The Social Investment Forum, a trade association in Washington, urges members to put at least 1 percent of managed assets in community investments. Nearly a dozen mutual funds are listed on its "Honor Roll" for participating in the 1 percent campaign (see www.communityinvest.org/ campaign.htm).