Example UK Charity Investment Policy Template

UK Investment Policy Template For Charities, Including Charity Commission Investment Guidance and FAQs

UK Charity Investment Policy Template

This investment policy for charities can be copied from your screen or you can register (everything is free) to download it and 40 other policy templates in Word format.  At the end are links to the relevant Charity Commission E&W guidance and charity investment FAQs.

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UK CHARITY INVESTMENT POLICY TEMPLATE

Scope

Our charity will invest in a diversified range of asset classes and regions. We will consider investment in stocks, bonds, property, and other investment vehicles that align with our charitable mission.

Investment Objectives

Our investment objectives are to achieve growth and income. We aim to generate sustainable returns that allow us to achieve our charitable objectives while protecting the capital value of our investments.

Risk Appetite

We recognize that every investment carries risk, and we will manage these risks to ensure that they are commensurate with our objectives and the financial resources available. Our charity's risk appetite is moderate, and we are willing to accept fluctuations in the value of our assets in pursuit of our investment objectives.

Balancing Investment Risk and Return

We will balance risk and return to achieve our investment objectives. We will seek to achieve our investment goals through a mix of low-risk and high-risk investments to achieve a diversified portfolio of investments that suit our needs.

Amount Available

We will invest our financial resources in line with our objectives, risk appetite, and investment policy. The amount we have available for investment will be reviewed annually, and we will adjust our investment strategy as necessary to ensure that we continue to meet our objectives.

Time Horizon

Our investment time horizon is long-term, and we aim to invest in funds for the long term. We recognize that investing is a long-term activity that requires a disciplined approach to generate sustainable returns.

Liquidity Needs

We will ensure that we have sufficient liquidity to meet our financial commitments, including grants and other charitable activities. We will invest in liquid assets and maintain an appropriate level of cash reserves to ensure that we can access our money when we need it.

Types of Investments

We will consider investing in ethical stocks that align with our charitable mission. We will avoid investing in stocks that go against our charity's aims.

Decision-Makers

The trustees are responsible for making investment decisions, including approving the investment policy, setting investment objectives, and selecting investment managers.

Key Performance Indicators

We will measure the performance of our investments based on the total return, risk-adjusted return, and other appropriate benchmarks. We will review our performance regularly and adjust our investment strategy as necessary.

Reporting Requirements

We will communicate investment performance to our stakeholders annually, including donors, beneficiaries, and the Charity Commission.

Responsibility and Remit of the Investment Manager

If we engage an investment manager, they will be responsible for implementing our investment strategy, making investment decisions on our behalf, and reporting on investment performance.

Investment Manager's Principles

Our investment manager must follow our investment policy and adhere to our ethical standards. They must act in our best interests and manage our investments prudently.

Investment Responsibilities of the Trustees

The trustees have a legal obligation to secure the best financial return within the appropriate level of risk to be spent on the charity's aims. They have a duty to consider investment suitability and diversification, to take advice, unless there is good reason for not doing so, and to review investments.

Conclusion

Our investment policy sets out our charity's approach to investing. It is a framework for making investment decisions, managing our financial resources, and meeting our governance responsibilities. We will review our investment policy annually to ensure that it continues to align with our charitable mission and objectives.

Version Control - Approval and Review

Version No Approved By Approval Date Main Changes Review Period
1.0 Board Aug 23 Initial draft approved Annually

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Charity Investment - Regulatory Guidance

Charity Commission E&W

Charities and investment matters: a guide for trustees (CC14).

Charity reporting and accounting: the essentials (CC15b).

Internal financial controls for charities (CC8).

HMRC

Annex iii: approved charitable investments and loans.

Charity Investment FAQs

Can charities invest? All charities can make investments, and your powers to invest usually come from one or both of the following: your governing document and/or the law.  In general, the source of your charity’s investment powers depends on its structure - whether it is incorporated (such as in the case of a charitable company) or not.

Does keeping charity money in a savings or deposit account, count as investment?  If your charity keeps money in a savings or deposit account, this counts as a investment. Your charity investment policy should include where and how long your charity can deposit cash, the maximum amount with one provider and your approach to deposits that are short, medium or long-term.

Are there limitation on what a charity can invest in?  Your charity governing document may place some conditions or limitations on the use of any power of investment, such as you must or must not invest in some types of investment, you must invest some or all of your charity’s money or include other rules about how you invest.

What are charity trustee financial investment responsibilities?  The Charity Commission CC14 investment guidance sets out both trustees’ general and specific investment responsibilities, including the duty to consider investment suitability and diversification, to take advice, unless there is good reason for not doing so, and to review investments.

What does social investment mean?  The Charities Act says that a social investment is where charity trustees use money or property with a view to both achieving their charity’s purposes directly through the investment and making a financial return.

What is a financial return from a social investment?  A social investment achieves a financial return if, in financial terms, your charity is better off from the investment than it would be if the funds or property were spent.  The expected financial return on a social investment can be a return of the money invested, plus capital growth or income.

Charity Investment Policy Disclaimer & Legal

This investment policy may be used by charities but may not be used on a commercial basis, without our prior written approval.  Copyright and all other intellectual property rights of this and any derivatives of this document are retained by Alumna to the fullest extent possible in law.

We are neither lawyers nor accountants, so are unable to offer professional advice.  Even if we were, we could not offer advice that would adequately cover all charities or all circumstances.  This draft policy is an example only and not intended to be taken into use as is.

In using this draft policy, you are accepting that you will take all necessary steps, including seeking professional advice, to ensure the policy approved meets fully your charity’s needs and complies with all regulatory and legal guidance and that we have no responsibility whatsoever for any loss or detriment that may arise from using it.

This policy template was based on CC14 but also informed using a ChatGPT prompt for the CAF guidance on writing an investment policy.

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