Investments

INVESTING AS A CHARITY: A TRUSTEE’S DUTIES AND POWERS

We've picked out some key areas of the Charity Commission's guidance on managing your charity's investments.

News from fund managers

We've selected some expert blogs on the theme of investment governance.

THE TRUSTEE ACT AND WHAT IT MEANS FOR YOU

If you’re a trustee of a charity, the Charity Commission guidance CC14 outlines your duties and powers regarding the effective management of your charity's funds. This brings your duties in line with the Trustee Act 2000 (England & Wales) (The Act).

We recommend that you read the guidance in full before proceeding, but have picked out a few key areas to get you started.

Trustees and good governance

Explore our useful resources for charity trustees and leaders.

The Act gives trustees wide powers of investments, as long as you follow the strict duties and responsibilities which are set out. The specific duties are:

  • You must consider any restrictions or requirements to invest (or not invest) that are detailed in your charity’s investment policy. This includes considering diversifying your organisation’s investments.
  • You should regularly review your charity’s investments — this is usually done at least annually. You should keep a record of the review, even if you decide not to make any changes to how and where the funds are invested.
  • Before making any investment decisions you must consider whether you need to take expert advice about the way in which you’ve decided to invest.
  • When reviewing investments you must consider proper advice about whether the existing investments should be kept or changed.

YOUR STATUTORY OBLIGATIONS

If your charity is investing its funds, it’s vital that you understand what’s required of you and your organisation, and that you have all the processes in place to comply with the law.

Suitability

You’ll need to consider the suitability of investments both in terms of asset allocation and stock selection. This includes reviewing:

  • the proportions of the fund which should be allocated to different classes of investment (asset allocation), and of the overall level of risk
  • the merits of individual investments within each asset class (stock selection), in terms of their performance and their individual contribution to the overall management of risk

If your organisation has an ethical or socially responsible investment policy, you should take this into account when reviewing the suitability of investments.

Investment policy

Your organisation must have a written investment policy, and all investment decisions made should be in line with it. According to the Charity Commission, the investment policy should identify:

  • whether there’s enough resource to allow your organisation to operate effectively
  • the level of acceptable risk and how to manage it
  • the charity's stance on ethical investment, if any

For tips on what to cover in your investment policy see How to write an investment policy for your charity.

EXPERT ADVICE

The Charity Commission guidance says that trustees must take advice from someone experienced in investment matters unless they have good reason for not doing so. Reasons will be unique to each charity, but could include existing expertise on the Board or within the organisation, or where the amount is small and it would not be cost-effective.

Need more help?

FIND AN INDEPENDENT FINANCIAL ADVISER

We can’t give advice, so we’d recommend that you find an independent financial adviser before investing.

More about investment advice for charities
CAF Financial Solutions Limited (CFSL) is authorised and regulated by the Financial Conduct Authority FRN 189450. Registered office is 25 Kings Hill Avenue, Kings Hill, West Malling, Kent ME19 4TA. CFSL is a subsidiary of Charities Aid Foundation (registered charity number 268369).

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