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produce an income. It requires charity trustees to invest their charity’s monies as they would if assets were absolutely their assets.
The investment powers of charities which are companies or charitable incorporated organisations (CIO’s) will be set out in their constitution and are usually very similar to the general power to invest for unincorporated charities.
CAN A CHARITY DECIDE TO MAKE “ETHICAL” INVESTMENTS?
The trustees of any charity can decide to invest ethically even if it means the investment might provide a lower rate of return than an alternative investment. Ethical investment means investing in a way that re ects a charity’s values and ethos and does not run counter to its aims. This is an aspect that is often of crucial importance to religious institute charities.
However, a charity’s trustees must be able to justify why it is in the charity’s best interests to invest in this way. This is not always something that religious institute charity trustees carry out as robustly as they should.
The law permits the following reasons for investing ethically:
A particular investment con icts with the aims of the charity. For example, a religious institute charity would be justi ed in deciding not
to invest in certain pharmaceutical companies where those companies were manufacturing drugs that were used as contraception, in the performance of abortions or in facilitating euthanasia (i.e. drugs that were in contravention of the sanctity of life)
A charity may lose supporters or bene ciaries if it does not invest ethically. One of the high pro le examples of this in recent years was Comic Relief
– a charity supporting projects assisting the poorest across the globe which was found to have been investing in companies which failed to demonstrate good corporate social responsibility. Similarly, the Church of England was found to be holding investments in Wonga at the same time as criticising payday loan companies
There is no nancial detriment to the charity in deciding not to invest in a particular company and/or sector
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