The Charity Commission has updated guidance on charities and investments.

Published on 1st August 2023, the guidance (known as CC14) has been redesigned to offer greater clarity and to give trustees confidence to make investment decisions that are right for their charity.

The language used in the guidance is clearer and the structure has been updated so that it is shorter and easier to use, and trustees can find the information they need more quickly.

As discussion continues within the sector about charities’ ability to account for factors such as the environmental impact of investments, the guidance makes clearer that trustees have discretion to choose what is best in their circumstances and have a range of investment options open to them – provided they ultimately further the charity’s purposes.

The refreshed guidance follows a Commission ‘call for information’ and consultation on financial investment and reflects a significant High Court judgment on charity trustees’ investment duties (the ‘Butler-Sloss’ case). Trustees can have confidence in the decisions they make when following the guidance, knowing it is up to date and properly reflects the relevant law.

The guidance:

  • includes examples of various issues which may be relevant for trustees to consider when making investment decisions, such as the potential for an investment to conflict with the purposes of the charity, or the reputational impact of an investment decision.
  • lists steps trustees ‘must’ take to be compliant with the law and those trustees ‘should’ do which are strongly recommended as best practice but not legally required.
  • explains that acting in the best interests of a charity is about ensuring that above all else any decision furthers its purposes. It also warns trustees to not allow personal motives, opinions, or interests to affect the decisions they make.
  • incorporates previously separate guidance on social investment and no longer uses terminology that could get in the way of trustees’ understanding, such as ‘ethical investment’, ‘mixed motive investment’ and ‘programme related investment’.

The examples featured in the guidance are designed to help trustees identify the factors that are relevant to their own charity’s situation and then use these to determine how to approach their investment decisions. This should make it easier for trustees to apply the guidance correctly and feel able to justify that the decisions they take are in their charity’s best interests.

posted 8 August 2023