The Law Commission has proposed a new statutory power for charity trustees to make social investments as part of a consultation begun today.
In a consultation document on social investment, published today as part of the Law Commission’s continuing review of charity law, the commission says that some charity trustees are not confident about making social investments because they are unsure whether their powers under the charity’s governing documents or under general law allow such investments.
It says that the new power should supplement trustees’ existing powers rather than replace them.
The consultation also suggests introducing a basic checklist of factors that charity trustees could take into account when deciding whether to make social investments. These factors include the duration of the social investment, its anticipated overall benefit, how its performance and investment risk would be monitored and the adviceon social investments that trustees should obtain.
The document says its proposals "are intended to facilitate social investment by charities, not to impose it".
The new powers would encourage trustees to take a holistic view on social investments, as opposed to considering the mission benefits and financial benefits separately, it says.
The consultation period runs from today until 18 June.