Charities should be proactively transparent about their investment policies and commit to reappraising those policies every year, according to a new report.
The report, initiated in the wake of the BBC Panorama exposé of Comic Relief's investment portfolio and published today by the charity chief executives body Acevo, says that a charity's investment policy "should be at the heart of its identity" and devised through an organisation-wide conversation.
Good With Money: Why Charity Investments Matter – which was overseen by a working group chaired by Martin Clarke, former chair of Uksif, a membership organisation that campaigns for responsible investment – says charities should be proactively transparent about their investment policies, with all trustees and leaders conscious of and able to speak about them.
It says that charities should work together to reduce legislative and economic barriers that prevent their money being used to match their missions, and they should review their investment policies every year. "This should coincide with a whole-board ‘check-in’ with the investment manager to ensure that the strategy is reflecting the board and the leaders’ policy," it says.
Research for the report found that half of the chief executives questioned by Acevo took an active role in setting their charities' investment policies.
It says that the investments of charities in England and Wales generated a total income of more than £3.6bn last year, or about 6 per cent of the sector's total annual income, and that 1,990 very large charities accounted for more than half of this figure.
It is often assumed that investment is a topic for only the largest charities, but the report shows that charities with reserves of £10,000 or less generated nearly £250,000 of investment income in the past year.
In December last year, the BBC Panorama programme revealed that Comic Relief had made investments in companies that did not chime with its mission, including arms, alcohol and tobacco firms. In May, the charity promised to stop these investments and be more transparent in the future about its portfolio.
In the same month, Acevo set up a working group to advise charities and social enterprises on ethical investment.
Sir Stephen Bubb, chief executive of Acevo, writes in the foreword to the report: "No charity should ever be in a position where it does not know where its funds are. "The Panorama programme did us a great service in highlighting the dangers of not ensuring we are on top of this. We have a good record; now let’s build on it. We have the will, so let’s deliver."