FINANCE NEWS: Ethical investments rise to 60%

Nearly two-thirds of all charities now consider ethical issues when investing their money, according to new research.

The 2004 Survey of Charitable, Educational, Endowment and other Funds, by the Charity Fund Partnership, found that 60 per cent of charities "take into account socially responsible, ethical or environmental issues" when deciding how to invest their funds.

This compares to just 47 per cent in the same survey last year.

The findings are based on responses from 234 charity funds holding assets of £17bn.

The change could be attributed to charities preparing for new regulations on ethical investment. The Government has said that charities with investments above £1m will in future have to state their stance on ethical investment in their annual reports.

Ethical investment advocate Les Jones, the former deputy chief executive of WWF-UK, said: "This is brilliant news. The Strategy Unit report and the Government's encouragement of charities to invest ethically is obviously having an effect. But it shouldn't be 60 per cent of charities investing ethically, it should be 100 per cent.

"My only concern is to what extent charities are really taking ethical issues into account, not just paying lip service. Charities should marry their investment with their charitable objectives."

The survey also found that one in 10 charity funds admit that their trustees are not well-versed on investment issues. A further 15 per cent say their trustee boards have mixed investment knowledge. Charities with larger investments appear to be more responsive to investment developments. Two-thirds of the largest charity funds made changes to their asset allocation over the past year, compared to just over one-third of the smallest funds, the survey says.

Kevin Sims, managing director of the Charity Fund Partnership, said: "While the majority of charity trustee boards are fairly well-versed when it comes to investment, this research confirms there is a knowledge gap."

But John Hildebrand, head of charities at Investec Asset Management, said the survey indicated a comparatively high level of investment knowledge among charity trustees.

The survey also shows a higher level of satisfaction with the performance of investment managers, compared to last year. Three-quarters of respondents said they were satisfied with investment performance, compared to just over 50 per cent in the 2003 survey.

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