Following new powers included in the Charities (Protection and Social Investment) Act 2016, the Charity Commission has updated its guidance on social investment.
The Act, which came into force in early August, has redefined social investment as a “relevant act” that is carried out “with a view to both directly furthering the charity’s purposes and achieving a financial return for the charity”.
In a bid to update the voluntary sector, the Commission’s guidance will reflect the new definition and work alongside existing guidance on charities and investment matters.
The new law will address the specific duties of trustees of charities who are considering social investment, ensuring that they seek advice on all social investment activities and consider that advice when given.
The Commission has also said that the new rules do not “override trustees’ general common law duties”.
“The stated purpose of this power is to give confidence to charities to undertake social investments. The legislation does place further duties on trustees who are considering social investments but these are not intended to be onerous. This updated guidance should help trustees to make well-considered, prudent decisions in this developing area”, said Sarah Atkinson, director of policy and communications at the Charity Commission.
“We look forward to working with charities and sector bodies as they develop their approach to social investment. The Commission will consider their early experiences of it as part of a future review of its investment guidance in 2017.”