Investment

Charities with surplus funds often make investments to increase their income.

Under the Trustee Act, most trustees are able to invest in almost anything regarded under trust law as an investment. There are some restrictions on investment in land purchased and developed with a view to sale and works of arts or commodities such as gold or vintage wine, acquired with a view to resale in the future at a profit. The purchase and sale of such items will usually be viewed as trading.

When managing a charity’s investments, trustees must act to certain standards spelled out in the Trustee Act. These include a general duty of care, consideration of the suitability for their charity of any investment, allowing for diversification of investments, regular reviews of investments, and the use of specialist advice on investments.

The Charity Commission’s guidance on investments, known as CC14, was last updated in 2003 and so the Commission instigated a new review in 2009.  Many charities feel the sections on ethical investments particularly needs to be rewritten, to make it more permissable for charities to choose or exclude certain investments that support or hinder their cause.