Large number of charities don't have ethical investment policy, survey reveals

Over a third of charities don’t have ethical investment criteria in their investment policy, a survey by Brewin Dolphin has revealed.

The survey, Charity Investment: What Matters Most?, found 34 per cent of charities don’t have ethical investment policies, primarily because of the “tension” between their fiduciary duty to ensure they achieve the best possible returns, and ethical considerations.

One interviewee said: “We don’t have an ethical investment policy. We have an ethical statement within our investment policy that says we expect to only invest in activities that are consistent with our values as an organisation, but we are not very prescriptive.

“There is a real tension between the fiduciary duty to get the best possible returns on your assets for your beneficiaries as well as operating ethically. Whilst those two can marry, your primary duty is to get the best possible returns.”

However, 60 per cent of charities said they do have an ethical investment policy, citing the values of the charity as the main reason.

“We do have an ethical policy because our charity is healthcare focused, supporting patients who have been diagnosed with terminal illnesses, which in the main are cancer related,” an interviewee said.

“So we had certain elements that were components of our policy, restrictions around tobacco being the main one. We had lots of debates about other ethical investments, whether it was arms and other things, but we felt that those weren’t against the core principles of the charity whereas supporting tobacco was.”

The survey revealed that as organisations whose overarching aim is to ‘do good’, respondents generally maintained a pragmatic perspective on aligning their investment goals with their charitable objectives.

“We have an ethics policy; there are certain things we won’t invest in and there is one area that we are prohibited by our trustee from investing in, which is armaments,” another interviewee said.

“Some boards get distracted by this idea of social investment being a special kind of investment. We are exploring mission-related investment, which is a different thing; but the social investment I rather resist as a sub-category. If our general investment in good performing British firms employing people is not social, I don’t know what is.”

The report was based on research among 124 UK charities and their advisers, targeting trustees and senior decision-makers, comprising desk research, an online survey and interviews undertaken by Gabriel Research & Management Ltd.

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