A surprising number of voluntary sector organisations still don't have ethical investment policies. They operate on the basis that they need to maximise their financial resources and that restricting their investment policies will compromise this. Trusts and foundations often share this attitude, yet there's a growing body of evidence that an ethical investment policy will not compromise the ability to generate income.
"I think we need to use any means to push foundations to think about this issue," says Danielle Walker Palmour, director of the Friends Provident Foundation. "We probably distribute about 5 per cent of our money; the other 95 per cent is invested in all sorts of areas to make money."
So why are relatively few foundations active in this area? One reason is that trusts - like other third sector bodies - don't always know where to start. Ethical investment, after all, spans a whole continuum, from screening so as to avoid specific investments to mission-related investment.
"There are a lot of different approaches," says Sam Collin of the Ethical Investment Research Service. "It's a matter of finding which issues are the most relevant to you and the approach that suits you." Collin is in charge of www.charitysri.org, the website set up last September by the Eiris Foundation and the UK Social Investment Forum. Its purpose is to increase the number of charities investing ethically, but it is also intended as a resource for grant-makers.
"Trusts and foundations tend to be the organisations with the greatest amounts to invest," she says. "They really can lead the way in terms of using all their resources, not just the money they give out in grants. I think trustees tend to be quite conservative, with a small 'c'. They're obviously keen to do the right thing with charity resources, but they're worried about the legality and the financial implications. The wealth of different approaches can be confusing."
Jackie Turpin, finance secretary at the Joseph Rowntree Charitable Trust, which contributed to the site, agrees: "We have a common ethical base for our work. A lot of other foundations would like to have ethical stances, but the trustees have difficulty getting a starting point. That's the beauty of this site - it gives them a way in."