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This page sets out the proposed changes to CC14: charities and investment matters.

We have only included sections where we are proposing to make changes. There are no proposed changes to any other sections.

1. Introduction

This section to be removed - except the definition of 鈥榤ust鈥� and 鈥榮hould鈥� which we will include in updated guidance.

Section 1 of the guidance will now be 鈥楻easons to invest鈥�.

2. Executive summary

This section to be removed. Section 2 of the guidance will now be 鈥業nvesting to make money 鈥� financial investment鈥�.

3. The legal framework for financial investment

This section to be removed. Section 3 of the guidance will now be 鈥楩ollow the law on financial investment鈥�.

4. Setting a charity鈥檚 investment objectives

4.2 What risks should a charity consider when making investments?

Information about 鈥楨nvironmental, social and governance (ESG) risk moved to the top of the list of types of risk.

The first sentence of this section is now: 鈥淲hen considering which companies and organisations to invest in, all charities can take into account such factors as impact on climate, employment practices, sustainability, human rights, community impact, executive compensation and board accountability. 鈥�

It used to be: 鈥淲hen considering which companies and organisations to invest in, charities are increasingly taking into account such factors as impact on climate, employment practices, sustainability, human rights, community impact, executive compensation and board accountability.鈥�

4.3 What should an investment policy cover?

Under 鈥業n more detail鈥�, the fifth bullet point is now: 鈥渢he types of investment it wants to make, including whether the trustees have decided to take a responsible investment approach鈥�

It used to be: 鈥渢he types of investment it wants to make, this might include ethical considerations鈥�

5. Deciding what to invest in

5.1 What can a charity invest in?

Under 鈥業n more detail鈥�, the first bullet point about what trustees must consider in all cases is now: 鈥渉ow suitable any investment is for their charity - this will be influenced by the charity鈥檚 approach and attitude to risk across its investment portfolio鈥�

It used to be: 鈥渉ow suitable any investment is for their charity - this will be influenced by the charity鈥檚 attitude to risk across its investment portfolio鈥�

5.3 Collective investment schemes (pooled funds) - what are the benefits for charity investors?

Under 鈥楢n example of a collective investment scheme鈥�, the penultimate sentence is now: 鈥淏efore investing, trustees should review these documents and regularly review them after investment, to ensure that they know what their charity is investing in and that each selected pooled fund continues to meet the charity鈥檚 needs.鈥�

It used to be: 鈥淏efore investing, trustees should review these documents and regularly review them after investment, to ensure that each selected pooled fund continues to meet the charity鈥檚 needs.鈥�

6. Who can manage and make decisions about investments?

6.4 What should a charity think about before choosing an investment manager?

Under 鈥業n more detail鈥�, the following bullet point has been moved from the bottom of the list to the third bullet point: 鈥渢he investment manager鈥檚 capacity to handle any responsible investment requirements; does the investment manager understand the charity鈥檚 responsible investment policy and can they respond to the charity鈥檚 requirements? What other experience do they have in these investment approaches for charities?鈥�

6.6 What are the trustees鈥� and the investment manager鈥檚 responsibilities?

Under 鈥楾rustees鈥� duty of care鈥�, we have added this bullet point: 鈥渒nowing what their charity is invested in鈥�.

6.8 What should a charity consider when looking at an investment manager鈥檚 charges?

Under 鈥業n more detail鈥�, we have added 鈥渋ncluding any incentives or hidden fees to the third bullet point. It now reads 鈥渃harges relating to pooled funds which are for investment management, and other related fees, including any incentives or hidden fees鈥�.

We have add a final bullet point to the list: 鈥渇ees for services provided by advisers - in particular consider any performance based incentives or hidden fees鈥�

7. Monitoring investments and performance

This section remains the same.

8. Other questions on financial investments

8.9 Can a charity engage in stakeholder activism?

Under 鈥業n more detail, the first bullet point is now: 鈥渟hareholder activism needs to be related to its aims鈥�

It used to be: 鈥渟hareholder activism needs to be related to its aims, and the charity needs to consider and manage any risk of significant financial detriment鈥�

We have removed this text from the second sentence in final paragraph of this section: 鈥渋n other words seeking the best long term financial return for the charity.鈥�

The sentence now reads: 鈥淗owever, they will generally be voting with long term financial outcomes in mind鈥�.

9. Cash deposits

9.1 What should trustees consider when investing in savings and cash deposits?

Under 鈥淚nvestigate the benefits offered by a particular deposit account鈥�, the final bullet point is now: 鈥渢he charity鈥檚 responsible investment stance鈥�

It used to be: 鈥渢he charity鈥檚 ethical stance鈥�

New section: Investing to achieve your charity鈥檚 purposes

Between sections 9 and 10, we have added a new section on investing to achieve your charity鈥檚 purposes.

You can invest your charity鈥檚 money to achieve its purposes directly, in a way that may also make a financial return.

Follow different rules and considerations depending on whether your intention is to make a

• social investment
• programme related investment
• mixed motive investment

10. Programme related investment (PRI)

As a result of adding a new section 10, this section will now be section 11.

All references and links to section 10 have been updated to section 11.

10.1 What is PRI?

Under 鈥淭he difference between financial investments, PRI and grants鈥� we have removed this sentence: 鈥淯sually the charity will be seeking the best financial return on their investments within the level of risk they consider appropriate for the charity鈥�

The first bullet point is now: 鈥淔inancial investment generating a financial return鈥�

It used to be: 鈥淔inancial investment targeting the best rate of financial return given the level of risk considered appropriate鈥�

10.11 Can charities use their permanent endowment to make PRIs?

Under 鈥淛ustifying it as a financial investment鈥�, the third sentence is now: 鈥淭rustees can take account of responsible investment considerations or make mission connected investment when investing permanent endowment.鈥�

It used to be: 鈥淭rustees can take account of ethical investment considerations or make mission connected investment when investing permanent endowment.鈥�

11. Mixed motive investments

As a result of adding a new section 10, this section will now be section 12.

All references and links to section 11 have been updated to section 12.

11.1 What is a mixed motive investment?

Under 鈥業n more detail鈥�, the first bullet point is now: 鈥渇inancial investment -鈥� generating a financial return given the level of risk considered to be appropriate or鈥�

It used to be: 鈥渇inancial investment -鈥� seeking the best financial return given the level of risk considered to be appropriate or鈥�

Annex 1: Technical terms used in this guidance

We have added: 鈥淎 duty to invest is where trustees do not have a choice about whether to invest money or keep money invested. The charity鈥檚 governing document (or another document) says that the trustees must invest the money. Most commonly a duty to invest is relevant to permanent endowment.鈥�

We have removed: 鈥溾�楨thical investment鈥� describes a way of making financial investments which takes into account the charity鈥檚 values and ethos. Trustees must exercise their investment power in the best interests of the charity.鈥�

We have added: 鈥淔inancial investment means investing with the aim of making money, but generating income or growing the value of your charity鈥檚 money or other assets.鈥�

We have added: 鈥淧urposes means the purposes which the charity is set up to achieve. The purposes are usually express in a charity鈥檚 governing document.鈥�

We have added: 鈥淩esponsible investment is, rather than just focusing on the financial return on an investment, taking into account your charity鈥檚 purposes and values when making financial investments.鈥�