Charities must lead the way by investing in good

23 May 2011 Voices

Ethical investment by some of the top charities has significantly decreased. Niki May Young deplores the drop and calls for the sector to stand as a moral leader. 

Ethical investment by some of the top charities has significantly decreased. Niki May Young deplores the drop and calls for the sector to stand as a moral leader. 

If the charity sector had a mantra, perhaps it would read “invest in good”, because that is what a donation to charity is. When someone puts their pennies in the pot, or leaves their estate upon their death, or pledges £10 a month, they are doing so on the basis of an ethical investment for social good.

This is what we expect, and regularly demand from the public at large. It’s what we campaign and lobby government for. The Giving White Paper published today outlines how we will increase this investment from the public, and makes no apology for doing so.

Why then is it that the sector can’t practice what it preaches? CFDG’s latest survey of charities’ finance processes, Finance Count 2011, found that from the 64 charities surveyed, which each earn more than £1m annually, ethical and socially responsible investment had dropped from a third last year, to a fifth this year.

The perception, the study reveals, is that ethical investments may generate lower returns. It might “reflect a need for many charities to prioritise gaining maximum financial return on investments in a difficult financial climate”, the report assesses. But is this the message that we, as a sector, should be projecting? That in bad times money takes priority over morals?

I shuddered when I first heard that the Wellcome Trust had chosen to invest in Wonga, a short-term loan provider that I deride for its excessive and potentially crippling representative 4,214 per cent APR. It struck me as deeply unjust of a charity which is “supporting the brightest minds” to invest in a company which IMHO preys upon the desperate, foolish or naïve. Wonga isn’t the worst lender, but let’s not get lax… a huge APR, £20 missed-payment fee plus accrued interest on your loan for 60 days, then a big black mark on your credit record if you pass the maximum 42-day payback period is no walk in the park when you’re facing destitution. 

If we expect the public to back charities, whether through the Big Society or by philanthropy, we should be prepared to back forces for good ourselves. The sector’s reputation takes enough of a beating from chugger-bashers and Amnesty International-style payouts without rotten investments too. We need to turn it around.