Stephen Roberts explains the Charity Commission’s new guidance on charity investments.
Lawyers working with charities will be aware of the traditional approach to charity investment, namely to generate a healthy, reliable return. Trustees invest their charities’ money so that they will eventually have more to spend on the charity’s aims. They do so in a way that seeks the best return while balancing returns with risk, taking advice from professionals as needed. It’s a straightforward model that has been reflected in the Commission’s guidance to trustees.
A new approach
But traditions are open to challenge and in recent years, more trustees have been questioning whether a purely financial approach to investment is appropriate for their charity. The concept of social investment has been rapidly gaining currency. The term social investment is used loosely to describe a variety of activities that involve achieving both a social purpose and a financial return. It covers, for instance, investments made by individuals or companies which aim at achieving social impact as well monetary returns.
The National Council for Voluntary Organisations’ Funding the Future report, which was published in
