Charities and Investment Matters: A guide for trustees (CC14)

This guidance is about how to make decisions about investing charity funds. All charities are able to invest, and investments can be a major source of funding for them. However, investing also exposes charities to risks which, if not properly managed, can affect not just the charity itself but the public's trust and confidence in the sector more generally. Because of this, it's important that charities manage these risks and operate within the law. As the regulator of charities in England and Wales, we have produced this guidance to support charities and their trustees in confidently making decisions about investments that comply with their duties.

A3 What does this guidance cover? This guidance sets out the legal and good practice framework for the investment of charity funds. It covers: financial investment - investing to produce the best financial return within the level of risk considered by the charity to be acceptable the key steps in making financial investments programme related investment - using assets to directly further the charity's aims while potentially also generating a financial return the key steps in making a programme related investment mixed motive investments - investing to both further a charity's aims and generate a financial return.

As the United Nations Global Compact and other development organizations have recognized, big companies can play a pivotal role in raising living standards around the world. Given that their largest shareholders often expect these companies to generate the highest possible rates of return, what’s the best way for them to benefit society as well? Our new working paper offers an answer that may seem counterintuitive at first: Publicly owned companies will be most effective in creating social benefit when they 1) plan for a long time horizon and 2) focus on a single bottom line. The long time horizon is the key here, since several years may pass before the effects of social initiatives feed back into profits. But we’ve found that they do feed back in so many important ways that profit-maximizing companies have an obligation to take investments in social initiatives seriously.

One might also argue that double- and triple-bottom lines help to promote transparency and accountability for social benefits, especially in emerging economies. Yet investments that satisfy double- and triple-bottom lines in the short term may not be built for long-term sustainability. Moreover, evaluating and reporting social investments with the same criteria as other investments offers a kind of transparency that we think shareholders will value in any economy.  For most large public companies, we believe that targeting the long-term single bottom line offers clear benefits for executives, shareholders, and, most importantly, for society as a whole.

Social Finance is exploring how Social Impact Bonds could be used to improve patients’ health at the same time as reducing expenditure on health services. In this webinar Ben Jupp and Eleanor Stringer will discuss the need for Social Impact Bonds in the health field, and suggest the ways social investment could be used to improve outcomes.

23 June 4.00 - 5.00pm GMT Ben Jupp and Eleanor Stringer, “Could SIBs lead to better health outcomes?