Charity Commission defines investment for a social return

Watchdog's draft guidance is up for consultation until February

Charity Commission: new draft investment guidance
Charity Commission: new draft investment guidance
The Charity Commission has rewritten its investment guidance to clarify and extend how charities and charitable foundations may invest money for a social, rather than financial, return.

The new draft guidance document, Charities and Investment Matters, is published today. The commission has opened a consultation on the draft guidance, which will close on 28 February.

The 76-page document says trustees must be able to show how the investment is in the best interests of the charity. It describes three permissible forms of social investment:

  • Ethical investment: "to achieve the best ?nancial return consistent with ethical principles re?ecting the charity’s aims."
  • Mission connected investment: "to achieve the best ?nancial return which furthers a charity’s aims"
  • Programme related investment: "to further the charity’s aims. May also get a ?nancial return"

The commission's previous investment guidance, which was last updated in 2003, says social investment is a method of carrying out a charity's objects rather than a form of investment.

A statement from the commission said: "The commission has updated its guidance to reflect how policy and practice have moved on since the last revision to its guidance in 2003. The guidance makes clear that it is ultimately for trustees to decide the best approach for their charity, but sets out their duties and responsibilities when making these decisions."

Dame Suzi Leather, chair of the commission, said: ""In 2010, registered charities held nearly £78bn in investment assets, so this is an important consultation for many trustees.

"The commission's guidance has always allowed charities to use a mix of financial and social investment to achieve their aims, and we hope our consultation clarifies this even further by explaining what charities can actively do within the law."

To respond to the consultation, go here.

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