Charity Commission to review responsible investing

The Charity Commission will launch a formal consultation into responsible investing at charities, it has been revealed.

Announcing the move, Sian Hawkrigg, Strategic Policy Advisor at the Commission, said charities need to take into consideration the “potential unintended consequences” of their investments.

“Trustees have a duty to maximise the financial returns generated from the way in which they invest their charity’s assets, but the Commission also encourages them to consider whether their investments are consistent with their charity’s aims,” said Ms Hawkrigg.

The consultation comes after a study suggesting that transparency is a key driver of public trust in charities. According to the research, published by the Charity Commission, the public most value “transparency about where money goes”, followed by “truthfulness to values”, “the efficient use of resources”, “good governance and management”, and “being able to demonstrate positive impact”.

“We are all – as donors, beneficiaries, tax-payers – increasingly interested not just in what a charity achieves, but how it behaves along the way,” added Ms Hawkrigg.

The consultation will also look at how trustees consider factors affecting the longer-term financial sustainability of their investments. According to the report, there is a case for charities removing entire industries or companies without significantly impacting on financial returns.

As a 2015 study, published by the Association of Charitable Foundations (ACF), suggested: “In some cases, the pursuit of responsible business practices can be positive from a financial as well as a values perspective.”

The Charity Commission is seeking views until Tuesday 31 March 2020. Feedback should be addressed to policy@charitycommission.gov.uk.

For help and advice, get in touch with our expert charity finance team today.

Posted in News.