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WHAT ARE TRUSTEES’ RESPONSIBILITIES WHEN MAKING INVESTMENT DECISIONS?
Trustees retain overall responsibility for the investment of their charity’s funds. In practice, trustees will usually decide to delegate day to day decisions about investments to a quali ed third party (see below).
When investing their charity’s funds, trustees must use skills and knowledge that is reasonable in the circumstances. This is often referred to as the “duty
of care”. This will vary for individual trustees. For example, a trustee who has investment experience (possibly as a result of their professional training or their role elsewhere) will be deemed to have greater skills and experience than a fellow trustee who may never have had a need to consider nancial investment. The trustees with the relevant experience will be deemed to owe a greater duty of care.
The role of trustees involves:
Ÿ Considering how appropriate an investment is for the charity
Ÿ Considering the need to diversify investments by owning investments in a number of different companies
Ÿ Taking advice. The Trustee Act requires trustees to take and consider advice from someone who is experienced in investment matters before making investments and when reviewing them, unless the trustees have good cause for not doing so – possibly because there are experienced investment professionals within the trustee body for example
Ÿ Reviewing the investments and the investment manager from time to time
CAN WE MAKE
FINANCIAL INVESTMENTS?
Generally the answer is “yes”. In order to act within the law, trustees must know and act within their charity’s powers to invest. A charity’s speci c powers of investment will depend on its legal form.
Most unincorporated charities have a general power of investment set out in Section 15 of the Trustee Act 2000 which allows the charity to invest in any asset that is speci cally intended to maintain and increase its value and/or
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