The Charity Commission has published renewed guidance on charities and investments, bringing it up to date for the modern era.

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 this 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.

Helen Stephenson CBE, Chief Executive of the Charity Commission, said:

Our refreshed guidance will help trustees make well-informed, carefully considered decisions about how to invest on behalf of their charity in a modern context. We would like to thank those who have played a part in helping us shape the updated guidance. We are clear that each charity’s situation is unique, and there is no ‘one-size fits all’ approach to charity investments. We are also clear that trustees have discretion to choose what is best in their circumstances and a range of investment options open to them.

Addressing trustees directly she added:

We want to stress that investment approaches are your decision to make, and this guidance is designed to help you do so with confidence, and in line with the law.

You must balance the potential benefits of your approach with any risks it brings to your charity and ensure that your decision ultimately serves your charity’s purposes. You may opt to take issues such as sustainability or climate impact into account, provided it is in the best interests of your charity.

Our guidance contains clear advice on how to make sure you are compliant with the law and following best practice.

The Commission conducted user testing during the drafting process with a sample of 1000 charities. The regulator also engaged with sector representatives and a range of other relevant stakeholders to help ensure the guidance meets the needs of the charities and trustees who will be using it.

The guidance is available on the Charity Commission’s gov.uk page.