Institute of Fundraising warns of reputational risk for charities in donate-while-you-invest website

A director of the website says the IoF report has misunderstood how the scheme works


The Institute of Fundraising says a new website that allows investors to donate money to charity while investing in funds might carry a reputational risk for the sector.

The institute’s Innovation Zone road test report, which involves a panel of fundraising experts testing new fundraising products on the market, says it is the first investment website of its kind.

The site, called Investaid, allows investors to choose a portfolio of available funds or select fund managers to manage their investments for them.

Most of the fund managers registered on the site pay Investaid 3 per cent commission on each investment that is made through it.

This commission goes straight back to the investor, who can decide whether to donate some or all of it to a charity registered on the site. Gift Aid can be claimed on all donations

The institute’s report, available to IoF members from today, says one of the site’s disadvantages is that there is a reputational risk for charities if any of the investments made involve illegal or unethical practice.

Mike Stafford, director of Investaid, said the panel had misunderstood how the site worked and that he had explained this when he was sent a copy of the report in advance of its publication.

"Where is the connection?" he said. "The charity doesn’t know what funds you have invested in. And in the unlikely event that a company in which the fund managers invested was dealing fraudulently, they would remove it from their portfolio. These are fund managers charities use to invest their own funds."

The IoF’s review gave the site marks of three out of five for practical application, two out of five for innovation and two out of five for fundraising potential. One of the main advantages, the review found, was the reasonable cost to the charity.

It costs charities £250 a year to be registered with Investaid. If a charity does not make this back in the first year of being registered, Investaid will pay it back the difference.

The site also takes a 0.5 per cent annual fee from the ongoing value of each investment that has been made through it from the fund managers. This is paid monthly, with 20 per cent of the fee also being given to charity.

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