Charity trustees will be expected to become investment experts and to intervene in failing companies, if proposed reforms of the pension fund industry are implemented.
The Government is currently consulting on the recommendations of the Myners Report on the management of pension funds. Consultation ends in May and reform of the role of trustees and investment managers seems certain, either through legislation or a voluntary code of practice. Investment managers are likely to adopt the practices for all investors including charity trustees.
Carole Cook, a partner at charity law firm Nicholson, Graham and Jones, warns that one of the proposed reforms - that pension fund trustees should familiarise themselves with investment principles and administer a higher standard of care - could, if it becomes accepted practice across the investment management industry, discourage people from becoming charity trustees.
"Most charity trustees don't have that kind of expertise. If we expect them to be professionals, where will trustees come from? They are essentially volunteers,
said Cook, who is also a member of an Association of Chief Executives of Voluntary Organisations committee which is working to establish a code of investment principles for charities.
Another proposal, that trustees should intervene in a company if it is failing, was also ill-suited to charity investors. She said: "That would cause trustees a lot of concern because they are not qualified and it's not appropriate for them."
Cook believes that unless charities do something now they could get carried along and be shackled by the proposals by default. "Charities need to stand up and say we're different,
Charles Mesquita, charities specialist with investment managers Carr Sheppards Crosthwaite, welcomed anything that encouraged good practice, but voiced concerns that trustees should maximise their contribution to the charity and not be over-burdened with investment matters.