Charity Commission updates guidance on charities & investments
Melanie May | 1 August 2023 | News
Published today (1 August 2023), the guidance has been updated to make it clearer and to help trustees make the right investment decisions for their charity.
As well as clearer language, the structure has been updated to make it shorter and easier to use.
The guidance clarifies that trustees are free to choose what is best in their circumstances with a range of investment options open to them – provided they ultimately further the charity’s purposes.
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Known as CC14, it follows a Commission ‘call for information’ and consultation on financial investment. It also reflects the ‘Butler-Sloss’ case, which was a significant High Court judgment on charity trustees’ investment duties.
The guidance:
- includes examples of various issues which may be relevant for trustees to consider when making investment decisions, such as the potential for an investment to conflict with the purposes of the charity, or the reputational impact of an investment decision.
- lists steps trustees ‘must’ take to be compliant with the law and those trustees ‘should’ do which are strongly recommended as best practice but not legally required.
- explains that acting in the best interests of a charity is about ensuring that above all else any decision furthers its purposes. It also warns trustees to not allow personal motives, opinions, or interests to affect the decisions they make.
- incorporates previously separate guidance on social investment and no longer uses terminology that could get in the way of trustees’ understanding, such as ‘ethical investment’, ‘mixed motive investment’ and ‘programme related investment’.
It also has examples that are designed to help trustees identify the factors relevant to their own charity’s situation and determine how to approach their investment decisions.
Helen Stephenson CBE, Chief Executive of the Charity Commission, said:
“Our refreshed guidance will help trustees make well-informed, carefully considered decisions about how to invest on behalf of their charity in a modern context. We would like to thank those who have played a part in helping us shape the updated guidance. We are clear that each charity’s situation is unique, and there is no ‘one-size fits all’ approach to charity investments. We are also clear that trustees have discretion to choose what is best in their circumstances and a range of investment options open to them.
“We want to stress that investment approaches are your [Trustees] decision to make, and this guidance is designed to help you do so with confidence, and in line with the law.
“You must balance the potential benefits of your approach with any risks it brings to your charity and ensure that your decision ultimately serves your charity’s purposes. You may opt to take issues such as sustainability or climate impact into account, provided it is in the best interests of your charity.
“Our guidance contains clear advice on how to make sure you are compliant with the law and following best practice.”
During the drafting process, the Commission conducted user testing with a sample of 1000 charities, and also engaged with sector representatives and other relevant stakeholders.
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About Melanie May
Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via thepurplepim.com.