The unregulated management of charity investment is “a scandal waiting to happen”, according to the director of the Centre for Charity Effectiveness at Cass Business School.
Paul Palmer, a professor of voluntary sector management, wrote in an article in Charity Finance magazine that a number of reforms were needed to improve the regulation of charity investment to prevent it facing a scandal similar to that in the world of fundraising.
He expressed particular concern about charities classing themselves as professional rather than retail investors, due to the lack of regulatory protection the former receive.
He added that many charities are not even aware of this distinction, meaning they could be classed as professional investors without their knowledge.
Investment consultants
Palmer also expressed concern about the quality of advice being given to charities by investment consultants.
He said that a recent report by the Financial Conduct Authority had proposed changes to the regulation of investment consultants, and that the charity sector should start preparing for these changes.
“As with the recent reforms in fundraising, the unregulated management of charity investment is a scandal waiting to happen,” he wrote. “It is therefore good to know that reforms will come into place before yet another damaging story hits the press.”
He called for the development of a more effective relationship between charities and independent financial advisors (IFAs) to allow smaller charities access to more effective advice.
Related articles
