Charity Commission updates investment guidance: the key details

On 1 August 2023, the Charity Commission (Commission) published its renewed guidance on charities and investments, Investing charity money: guidance for trustees (CC14) (previously called “Charities and investment matters: a guide for charity trustees”). The guidance outlines what trustees need to know and do to make financial and social investment decisions in line with their trustee duties. The Commission also explains the rules that apply in specific circumstances, such as where trustees are working with an investment manager or investing their charity’s permanent endowment, details that were previously lacking.

Its development was delayed pending the High Court’s decision on charity trustee investment duties in Butler-Sloss and others v Charity Commission for England and Wales and another [2022] which reviewed charity investment powers generally and, in particular, decided that charity trustees were permitted to adopt a climate change-focused investment policy (see below).

The Commission has redesigned CC14 to make it shorter, clearer and easier to use, with the intention of giving charity trustees confidence to make investment decisions that are right for their charity. The guidance now:

• Reflects the Butler-Sloss decision. It makes it clearer that charity trustees have discretion to choose what investment approach is in the best interests of their charity in the circumstances and have a range of investment options open to them. This is provided they ultimately further the charity’s purposes. It also warns charity trustees not to allow personal motives, opinions, or interests to affect their investment decisions.
• Includes a non-exhaustive list of example approaches charity trustees might decide to take to financial investment. Alongside the financial return charity trustees are aiming for, these include one or more of the following: avoiding investments that conflict with a charity’s purposes or could reduce support for the charity or harm its reputation (particularly among its supporters or beneficiaries); avoiding or making investments in companies because of their environmental, social and governance (ESG) practices; and using a charity’s shareholder vote (or other opportunities that come with the investment) to influence practice at companies it invests in.
• Incorporates previously separate guidance on social investment and no longer uses terms that were prone to misunderstanding, such as “responsible investment”, “ethical investment”, “mixed motive investment” and “programme related investment”.

If you have questions about the Charity Commission’s guidance, please contact Robert Meakin.