Share

Trustees 'should be free to seek total return investments without approval'

Trustees 'should be free to seek total return investments without approval'
News

Trustees 'should be free to seek total return investments without approval'

Finance | 24 May 2012

The Charity Law Association has recommended trustees are given the legal freedom to invest on a total return basis without seeking prior Charity Commission approval, in its submission to the Charities Act Review.

In an 83-page 'first draft' submission to Lord Hodgson, who is carrying out the review, the CLA outlined measures it believes would help promote social investment, which also include enshrining parts of the Charity Commission's CC14 guidance in law.

The legal umbrella body which utilised a working party of 19 legal experts and a wider advisory group to construct its submission, said in the context of reduced funding for the Charity Commission a number of "refinements" to the Commission's powers were needed and outlined the total return freedom as a "deregulatory measure".

The move would allow all charities to build an investment portfolio which takes into account both the capital appreciation and the income received on the portfolio.

"Acompanying that power should be a power to permit mixed-motive investment generally," the organisation advised, alluding to the need to set the Mixed Purpose Investment section of the CC14 guidance outlined by the Charity Commission in law. The guidance, introduced in November last year, allowed charities to make investments based on a combination of furthering their charitable objects and securing a financial return, where before they were only permitted to invest based on one or the other.

The CLA acknowledged in its submission that allowing mixed-motive investments without prior authorisation by the Commission held "potential risks" and suggested incorporating the requirement for trustees to "be clear at the outset as to their purpose in making the investment". In its submission to Hodgson, Navca also outlined its perceived risks from mixed-motive investments, stating that they may shift the focus from charitable purpose to return on investment.

Charity law is a 'poor relation'

The CLA also used its submission to highlight the perception, as its members see it, that "charity law has long been a poor relation when it comes to legislative reform". 

Commenting on the fact that some provisions in the Charities Act 2006 have still not been implemented, the organisation said: "Charity law has tended to be dealt with piecemeal when it comes to implementation; or is simply left to gather dust on the legislative shelf. This is not a happy state."

It declared its hope that Lord Hodgson's review will "mark the beginning of what will become a comprehensive review of the state of charity law, with a view to achieving sensible, measured and genuine reform".

It also called for a more integrated approach, seeing charity bills passed alongside those originating from other sectors where they may also affect charities, such as was the case with the Companies Bill and the Charities Bill in 2006. 

Lord Hodgson's review of the Charities Act 2006 is expected to be brought before Parliament ahead of the summer recess this year.

 

Comments

[Cancel] | Reply to:

Close »

Community Standards

The civilsociety.co.uk community and comments board is intended as a platform for informed and civilised debate.

We hope to encourage a broad range of views, however, there are standards that we expect commentators to uphold. We reserve the right to delete or amend any comments that do not adhere to these standards.

We welcome:

  • Robust but respectful debate
  • Strongly held opinions
  • Intelligent relevant discussion
  • The sharing of relevant experiences
  • New participants

We will not publish:

  • Rude, threatening, offensive, obscene or abusive language, or links to such material
  • Links to commercial organisations or spam postings. The comments board is not an advertising platform
  • The posting of contact details for yourself or others
  • Comments intended for malicious purpose or mindless abuse
  • Comments purporting to be from another person or organisation under false pretences
  • Gratuitous criticism, commentary or self-promotion
  • Any material which breaches copyright or privacy laws, or could be considered libellous
  • The use of the comments board for the pursuit or extension of personal disputes

Be aware:

  • Views expressed on the comments board are left at users’ discretion and are in no way views held or supported by Civil Society Media
  • Comments left by others may not be accurate, do not rely on them as fact
  • You may be misunderstood - sarcasm and humour can easily be taken out of context, try to be clear

Please:

  • Enjoy the opportunity to express your opinion and respect the right of others to express theirs
  • Confine your remarks to issues rather than personalities

Together we can keep our community a polite, respectful and intelligent platform for discussion.

Free eNews

Supermarkets donate profits from #icebucketchallenge to MND Association

29 Aug 2014

Tesco has announced that it will donate the profits made from an increase in sales of ice to the Motor...

Commission contacts Bradley Wiggins' charity over concerns about how it has spent donations

29 Aug 2014

The Charity Commission has contacted the trustees of the Bradley Wiggins Foundation after the charity...

EU data protection proposals would kill fundraisers’ mailing lists, says report

28 Aug 2014

Proposed EU data protection rules could destroy mailing lists relied on by charity fundraisers, and would...

Lawyers call for animal charity to have greater crime-fighting powers

29 Aug 2014

Lawyers in Scotland have called for a Scottish animal charity to be granted greater powers to investigate...

Commission contacts Bradley Wiggins' charity over concerns about how it has spent donations

29 Aug 2014

The Charity Commission has contacted the trustees of the Bradley Wiggins Foundation after the charity...

Bubb responds to attack on charity campaigning in The Times

28 Aug 2014

Sir Stephen Bubb has written to The Times criticising an article which attacks charities for lacking transparency...

EU data protection proposals would kill fundraisers’ mailing lists, says report

28 Aug 2014

Proposed EU data protection rules could destroy mailing lists relied on by charity fundraisers, and would...

Macmillan: We did not hijack #icebucketchallenge

21 Aug 2014

Macmillan has hit back against accusations on social media that it has hijacked #icebucketchallenge, saying...

Smart wristbands aim to increase charity giving

20 Aug 2014

A new wristband that will enable people to make faster donations with just a tap of a smartphone, is...

Join the discussion

 Twitter button

@CSFinance