New investment funding structure to benefit charities

A new structure for the investment of charity funds has been launched this month. The new Charity Authorised Investment Fund (CAIF) is only available for assets that are directly earmarked for charitable purposes.

The Charity Commission will regulate each Fund which will be registered as a charity and the investment will be regulated by the FCA, according to the terms of the Financial Services and Markets Act.

The Charity Investors’ Group and Charity Law Association have both welcome the new CAIF funding initiative which was first announced in the March Budget by former Chancellor, George Osborne, replicating the main benefits of the existing Common Investment Fund structure (CIFs).

CAIFs will retain many of the specific characteristics of CIFs, including:

  • The ability to smooth income to aid cash flow,
  • Tax benefits associated with being a registered charity
  • Option to have an independent advisory committee to represent charity unitholders

Additional benefits will include better regulatory supervision as well as an exemption from VAT on investment management fees which could add up to a saving of more than £12million a year for the charities sector.

The new CAIF structure has been introduced as a result of collaborative work by the Charity Investors Group, the Charity Law Association, the Investment Association, the Charity Commission, and the Financial Conduct Authority.

Moore Thompson has extensive experience of helping charities to maximise their investments. For more information on the benefits of the new CAIF structure, please contact us.