A report on charity investment published by Acevo this week will doubtless prompt many of Third Sector’s readers to look again at how their charity’s reserves are invested.
In a financial world full of complex jargon and products, it is tempting for charities to leave investment matters to those board members and senior executives who are most comfortable with the professional investment arena. But this would be a mistake.
The Acevo report proposes that a charity’s investment policy be part of its identity, with all its senior leadership able to articulate their policy on responsible and ethical investment, and the reasons for it.
Good with Money: Why Charity Investments Matter is published on the anniversary of Panorama’s controversial documentary on charity investments. A year on, the sector needs little reminding about the reputational risks attached to being thoughtless as a charity investor. But there is also growing awareness about the potential to drive and sustain a charity’s mission through an intelligent approach to responsible and ethical investment.
ShareAction, the charity I run, supports foundations and other charities to create a dialogue with major companies they invest in about their social and environmental impacts. This year, we helped organise questions at 80 company annual general meetings, mostly from the charity sector, on topics including the living wage, tax justice, climate change and sustainability, workers’ rights abroad and gender equality. In multiple cases, companies listened and changed course as a result. In other cases, we succeeded only in putting the issue firmly on the directors’ radar.
This is just one example of how charities are developing confidence and skill in the investment arena, and making an impact on their mission in a highly cost-effective way.
I sat on Acevo’s commission on ethical and responsible investment, and I fully support its findings. Alongside the proposal that a charity’s investment policy be part of its identity, the report calls for charities to be proactively transparent about their investment policies; to come together to reduce barriers that prevent their investments better matching their missions; and, in the case of the largest foundations, to innovate in the area of responsible and ethical investment so as to create pathways for other, smaller, charities.
This is a challenging report for the sector but an exciting one. There’s a massive opportunity to be grasped here. Our sector brings significant and valuable business to investment firms, and it’s time that charity investors, working together, were more assertive in getting the type of investment service that serves our needs best.
We want value for money, of course, but also we want our charitable objectives to be properly understood and integrated into the investment of our assets. Acevo’s report presents the perfect opportunity to start a better conversation on these issues. I look forward to the debate I hope it will generate.
Catherine Howarth is chief executive of ShareAction