What Is SRI (Socially Responsible Investing)?
   Socially Responsible Investing is the integration of personal values with investment decisions. It’s an approach to investing that considers both profit potential and the investment’s impact on all of society and on the environment. In a practical sense, socially responsible investing strategies can be grouped into the following three categories:

   SCREENING describes the inclusion or exclusion of corporate securities in investment portfolios. Socially responsible investors generally seek to own shares in profitable companies with outstanding employee relations, strong records of community involvement, excellent environmental policies and practices, respect for human rights around the world, and safe and effective products. Conversely, socially responsible investors attempt to avoid investments in firms that fall short in these areas.

   SHAREHOLDER ADVOCACY describes investor efforts to vote with a social conscience and to submit proxy resolutions as a means of influencing company behavior. This strategy was successfully used to pressure corporations to pull out of or to improve their business practices in apartheid South Africa. It also has been used on a wide variety of other issues, such as monitoring minority hiring practices, improving environmental reporting through adoption of the CERES Principles, and enforcing corporate codes of ethical conduct.

   COMMUNITY INVESTING is the most potent of the socially responsible investment strategies. It includes investing directly in community-based financial institutions, such as development banks, and in loan funds, such as SOSTENICA. This strategy of “economically targeted investing” supports development initiatives — housing, appropriate technology, small business development, and green agriculture — especially in poorer communities.

   In 2006 Coop America estimated that more than $22 billion had been invested in community development instruments. But that is still a very small fraction of the roughly $2.29 trillion currently available for investment in socially responsible instruments. If everyone who currently has a socially concerned portfolio directed 1% of those funds into community investing, the total directed to this important work would triple — to $66 billion!

   Do socially responsible investments generally earn lower returns than other investments? Interestingly, over the past 17 years the Domini 400, a portfolio of socially screened stocks, consistently outperformed the S&P 500 on a total return basis, as well as on a risk-adjusted basis. And we believe that a side effect of such a socially conscious portfolio is to make its investors feel very good about their socially responsible behavior.

What is a Charitable Remainder Trust?

   SOSTENICA is now offering a tried and true philanthropic investment vehicle — the Charitable Remainder Trust (“CRT”) — that provides lifetime income to North Americans as they plan for their retirement. The CRT allows donors to give cash, appreciated securities, or other assets directly to SOSTENICA and to receive annual income payments of 5% of the gifted assets for the remainder of the donor’s life. The CRT is a contract between the donor and SOSTENICA, so there is no trust administration costs. In addition, the donor realizes significant immediate tax savings. In the year the assets are transferred to SOSTENICA, the donor is entitled to an immediate deduction for federal income and gift tax purposes equal in most cases to 100% of the fair market value of the gifted assets. And the donor avoids any capital gains tax on the appreciated assets. Finally, because the assets remain the property of SOSTENICA after the death of the donor, by irrevocably transferring the assets to the CRT during his or her lifetime, the donor significantly reduces inheritance and estate taxes. All of this greatly benefits the donor while supporting the mission of SOSTENICA.

   For example, imagine a donor sets up a CRT with SOSTENICA using heavily appreciated stocks, which were originally valued at $20,000 but are now worth $100,000. If the donor sells the stocks instead of transferring them to the CRT, he or she has to pay the government taxes — at the current 20% federal capital gains rate for stocks held over 18 months — of $16,000 on the $80,000 of appreciated value. So after capital gains taxes the appreciated stocks have a net value of $84,000. But by making a gift of the stocks, which upon his or her death remain the property of SOSTENICA, the donor avoids paying any capital gains tax at all. In addition, if the donor is in the 36% federal income tax bracket, he or she receives an income tax deduction of $100,000, which results in income tax savings of $36,000 — which would have to be paid to the IRS if the stocks were sold — bringing the net value of the appreciated stock asset down to $48,000. Under the terms of the CRT, SOSTENICA agrees to pay the donor $5,000 (5% of $100,000) per year for the rest of the donor's life. Keep in mind that if the donor, instead of transferring the asset to a SOSTENICA CRT, had sold the stock, paid taxes, and invested the $48,000 balance (counting both tax savings), he or she would need to earn an annual yield of 10.4% to match the annual payout of the investment in SOSTENICA.