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CAN WE INVEST IN CASH?
The answer is “yes” and in some situations this may be appropriate especially if the funds are going to be required in the immediate to short/medium term. However, if the decision is taken to hold money in the form of cash this does not excuse trustees from preparing a written investment policy justifying this decision. Such a written policy should include reference to:
How long the money is to be deposited
The maximum amount that may be held with one institution
The acceptable rates of interest
The required timing of interest payments
Access conditions
The charity’s ethical stance
The charity’s attitude to credit risk generally
Consideration of whether there is protection for the deposits (see the FSCS website)
The consideration and need for professional advice
The frequency for reviewing the policy
IF WE HAVE FINANCIAL INVESTMENTS, WHAT INFORMATION NEEDS TO BE GIVEN IN OUR TRUSTEES’ REPORT?
The trustees’ report of a charity should set out the name and address of the charity’s investment managers where relevant. In addition, it should include:
An outline of the charity’s investment powers and any restrictions set out in the charity’s governing document
An outline of the charity’s investment policy including details of any ethical considerations built into that policy; and
A statement about the performance of the charity’s investments
during the period and whether that performance has been in line with expectation given the charity’s policy. Where performance has been poor, it would be normal to give some form of explanation for this and any actions taken as a consequence
The following are examples taken from the trustees’ reports of religious institute charities illustrating the above requirements:
116 Chapter 6
