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.