The Law Commission has proposed changes to the law on how charities make social investments.

The Law Commission has today opened a consultation and published a paper outlining how the existing law could be discouraging charities from taking up social investment because it is not clear what the precise powers and duties of trustees are.

Proposals include introducing a new statutory power to make social investments, alongside existing powers, and a checklist of factors that should be considered by trustees before they make social investments.

The Commission is also reviewing when charities with permanent endowment can use their endowment to make social investments.  

Professor Elizabeth Cooke, the Law Commissioner leading the project, said: “Social investment is an important and developing area for charities. The reforms we are proposing would make social investment more straightforward legally. We are asking consultees: would our proposals help trustees to make the best of the opportunities offered by social investment?”

The consultation paper is available on www.lawcom.gov.uk and closes on 18 June 2014.