Kate Rogers: A holistic approach can lead to better decisions

Our report aims to map out a thought process to link your charity's aims with its investment approach, writes our columnist

Kate Rogers
Kate Rogers

In June, the Association of Charitable Foundations published a report that was the culmination of a year's research by myself and my co-author, Richard Jenkins. We called it Intentional Investing, a title that perhaps needs a little explaining.

The research project, reported at the time in Third Sector, was inspired by our perception of an increasing focus by charity investors on understanding how their investments aligned with their missions and values. We sought, through a survey and discussion with many practitioners, to investigate how trustees are able to link their investment policy with the charitable aims that the charity exists to support.

We found a range of practices, from those that would traditionally be called ethical or responsible investment policies to social or impact investment. We also found charities that believed their aims were best served by focusing solely on the most attractive financial returns. It became clear there was no one-size-fits-all approach, so the report advocates intentional investing, which means trustees have thought about the use of their charity's assets so that their approach supports the delivery of their charitable aims - they are able to explain their approach and, as far as possible, anticipate and review the impact of their decisions.

When speaking to practitioners, it seemed that this holistic approach of considering how all of your charity's assets could further your aims unlocked fundamental strategic discussions about the best use of resources and the consistency of investment policies and spending. This is clearly an area of increasing interest. Our survey found a substantial increase in the number of charities choosing to manage their investments in ways that specifically reflected their mission or values: 59 per cent of respondents had a policy in place or had plans to implement one, compared with only 23 per cent with a policy in place five years before.

We found four main approaches to implementing these policies: exclude, select, influence and deliver. By far the most common - mentioned by 78 per cent of survey respondents who had a policy - were approaches that excluded specific industries or companies from an investment portfolio, with tobacco the most popular exclusion.

By contrast, 34 per cent of those that had a policy aimed to select companies that aligned with their own aims, and 22 per cent sought to influence companies' behaviour by engaging with them.

So how to decide what is right and practical for your charity? Our report aims to map out a thought process to link your charity's aims with its investment approach, and we hope it will help trustees discuss the range of options available. It is important to remember that there is no right answer and experienced practitioners repeatedly called for humility in setting strategy - for the perfect not to get in the way of the good. Intentional investing is continually evolving, but it essentially means thinking carefully about how your investments contribute to your overall charitable aims, whatever approach that entails, and using your assets with the firm intention of getting the best for your beneficiaries.

Kate Rogers is client director at Cazenove Charities

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