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Investment Governance, legal and compliance Environmental, social, governance (ESG)

Revised guidance on investing charity money

CFG's Head of Policy, Richard Sagar, takes a look at the Charity Commission's revised guidance on charity investments (CC14) and shares an update on the sector's work to develop complementary principles.

There is much to commend in the updated CC14; it now provides greater clarity on investment decision-making and is more accessible for trustees.

Notably, confusing terminology such as ‘mixed motive’ investment and ‘programme related investment’ has been incorporated under the heading of social investment.

The Commission has also removed the term 'ethical investment', instead replacing it with ‘social investment’ which focuses on achieving charities' purposes directly through the investment, as opposed to purely focusing on financial return.

The new guidance more faithfully incorporates recent legal changes, including the balancing act that charities should undertake when considering the potential investment benefits alongside risks. And it more clearly expresses the discretion that charities have in choosing investments that align with their values, providing they further their charitable purposes.

Example scenarios are provided in the guidance, and these also indicate that beyond merely excluding investments because they are deemed to conflict with a charitable purpose or harm its reputation, charities are allowed to proactively make investments in companies because of ESG factors, if charities deem it will help support the purposes of the charity.

The guidance states:

alongside the financial return you are aiming for, avoiding or making investments in companies because of their practice on environmental, social and governance (ESG) factors such as: climate, human rights, sustainability, community impact and board accountability. Taking this approach could be in your charity’s best interests if it could protect or enhance the financial value of your investments or returns over time, or because it will support delivery of your charity’s purposes more directly.”

On the whole, the revised CC14 is therefore much improved and has taken into account feedback from stakeholders, including CFG.

There is a lot more to be said about the specifics in the guidance, and others have given a more detailed and holistic account of all the relevant changes to be aware of. Kate Rogers, from CFG's corporate partner Cazenove Capital, has published a useful overview with further insights.

In due course, CFG will endeavour to help charities understand it fully via our trainings and events, and through content developed with our investment partners.


Could CC14 have gone further?

If one were being critical, CC14 could give more of a focus to responsible investment policies and the ESG agenda more broadly.

It could have also have been more explicit about the additional obligations on trustees in light of the principles laid out in the Butler-Sloss ruling.

However, it is still much improved and we would encourage charities to consider the guidance in full Investing charity money: guidance for trustees (CC14) - GOV.UK (


Charity Investment Principles

The work to support charity leaders with planning, managing, and reviewing investments doesn’t end here.

Alongside a group of charity infrastructure bodies and investment experts, CFG is in the initial stages of producing a set of investment decision-making principles to complement the Commission's new guidance.

It is understandable that CC14 has a regulatory focus, but we think creating a set of sector-led principles will help charity leaders and trustees set out what best practice looks like in charity investment.

The principles will focus on investment decision-making and follow on from the work CFG and others have done in the past year following the Butler-Sloss court ruling.

The Butler-Sloss ruling in 2022 was a pivotal moment for charitable organisations that have investments and coincided with the planned revision of the code.

As a sector, we can now build on the principles set out in Butler-Sloss and formalise best practice to support charities.

The principles will focus on the process of investment decision-making and will aim to cover how investment strategy and policy is set; who is and is not responsible for decisions taken; the make-up and work of investment committees; how the mandate is structured; and the relationship with investment managers.

This area of governance and policy is developing quickly and we know from our members and other charities that they are in need of practical support when it comes to investments. By collaborating in this way, we can ensure that we produce a set of principles that not only stand the test of time, but also lay a strong foundation for investment decision-making.

The new Charity Investment Governance Principles (working name!) will be independent of, and complementary to, the Charity Commission’s revised guidance and we hope they will be welcomed by charities, investors and the Commission.


If you would like further information about CC14 or CFG's ongoing work on charity investment, please email Richard Sagar.


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