Main proposals
- The Trustee Act 2000 should be amended to entitle trustees to consider the total benefit an investment is expected to provide, including social as well as financial benefit.
- Another amendment should indicate the difference between charitable and private trusts, in that charities need to further their charitable purposes rather than simply preserve capital.
- The government should consider a legal power for charities with permanent endowments to place them in mixed-purpose investments, with a requirement to restore capital levels within a reasonable period.
- The government should develop a standard social investment vehicle to allow funding from different sources to be invested in the same product.
- The Statement of Recommended Practice from the Charity Commission should be revised to facilitate reporting of social investments.
- Charities should be able to apply to HM Revenue & Customs for prior clearance on tax treatment of social investments; HMRC should provide clear guidance on the different types of social investment.
Sector reaction
No main sector body opposed the proposals. The National Council for Voluntary Organisations is "delighted" by them, Acevo and the Charity Finance Group are enthusiastic and the law firm Bates Wells & Braithwaite has recently published a report that calls for social investment to be put on a more coherent legal footing, with tax breaks. Social Enterprise UK and the Social Investment Business both welcomed the call for better recognition of social investment.
What's likely to happen?
Although the government is keen to foster social investment, it might be difficult to find parliamentary time for legislation and the focus in the short term might be more on piecemeal improvements.
Read in more detail about: trustees, regulation, fundraising, and complaints and the charity tribunal
Read other news about Lord Hodgon's review
