Regulation with Rosie: Ethical investment

The Charity Commission's Rosie Chapman on ethical investment.

The smoking ban inevitably generated a 'charity snubs donation' story about a cancer research charity turning down funds raised through a pub 'smokeathon' that took place the night before the ban came into effect. The refusal made perfect sense, but charities can sometimes be overly aware of their role as 'angels' when it comes to explaining where they invest and how they raise funds.

Investing in firms that experiment on animals may be a clear no-no for animal welfare charities, but what about charities that exist to find cures for chronic and debilitating diseases? And although holding shares in tobacco companies might be a turn-off for some, for charities providing overseas aid to people on the verge of starvation, the yield may justify the means.

Charities have always had to follow the money when it comes to investments. Ethical investment will mean very different things to different charities and Investment of Charitable Funds: basic principles, the Charity Commission's guidance, highlights the steps to take when balancing returns with ethics. The key is developing a well-considered investment policy and explaining to supporters, beneficiaries and stakeholders why certain investment decisions have been taken.

This is something a number of disability charities have been open about when investing in companies that use animals for research.

Similarly, many people disapprove of face-to-face fundraising. But charities such as Shelter have pointed out that sitting quietly cap in hand doesn't bring in the money and that this method has signed up a whole new generation of donors.

Angels might not have to have make choices about the end justifying the means, but charities often do. You've made your choices for a reason, so don't apologise - explain.

- Rosie Chapman is executive director of policy and effectiveness at the commission.

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