The Charity Commission has updated its guidance for trustees after new social investment powers included in the Charities Act came into force.
The guidance, which was released today, reflects the definition of social investment in the Charities (Protection and Social Investment) Act 2016, which came into force on Sunday, and complements existing Charity Commission guidance on charities and investment matters.
The act, which received royal assent in March, defines social investment as a "relevant act" that is carried out "with a view to both directly furthering the charity’s purposes and achieving a financial return for the charity".
The law places specific duties on trustees of charities that are considering a social investment, with trustees obliged to consider whether advice on the social investment ought to be obtained and to consider any advice provided.
Trustees also have a duty to satisfy themselves that any social investment the charity undertakes is in its best interests, the guidance says.
The Charity Commission said the new legislation did not override trustees’ general common law duties and the guidance applied to any decision regarding social investments.
Sarah Atkinson, director of policy and communications at the Charity Commission, said: "The stated purpose of this power is to give confidence to charities to undertake social investments. The legislation does place further duties on trustees who are considering social investments but these are not intended to be onerous. This updated guidance should help trustees to make well-considered, prudent decisions in this developing area.
"We look forward to working with charities and sector bodies as they develop their approach to social investment. The commission will consider their early experiences of it as part of a future review of its investment guidance in 2017."