Introduction: Investing with Confidence and Compliance
As a charity trustee, you are responsible for ensuring that your organisation’s investments are made prudently, legally, and in line with your mission.
But with evolving ethical standards, reputational risks, and growing public scrutiny, it’s no longer enough to simply seek the best financial return. The Charity Commission’s guidance increasingly expects charities to consider how they invest—not just what they earn.
In this blog, we explain what the Commission expects, what this means in practice for trustees, and how you can invest ethically without breaching your fiduciary responsibilities.
What the Law Requires: A Quick Overview
Under the Charities Act 2011, trustees must:
- Act in the best interests of the charity
- Exercise care, skill, and diligence
- Ensure investments are suitable and diversified
- Have a clear and documented investment policy
- Review investments regularly
These are your core fiduciary duties. But how you interpret “best interests” has evolved—especially where your charity has a clear ethical, religious, or mission-driven purpose.
Understanding CC14: The Commission’s Core Guidance
The Charity Commission’s main investment guidance is CC14: Charities and Investment Matters. It outlines two key types of investment:
1. Financial Investment
Investing to achieve the best risk-adjusted financial return to fund your work—subject to risk and diversification.
2. Programme-Related Investment (PRI)
Investments made directly to advance your charitable purposes (e.g. loaning money to a social enterprise you support). The primary aim is mission impact, not financial return.
Where Does Ethical Investment Fit?
Ethical or mission-aligned investment is a form of financial investment—but with added ethical criteria.
The Charity Commission allows trustees to take non-financial considerations into account if:
- They believe an investment conflicts with their charity’s aims
- There is a risk of reputational damage
- The decision is in the charity’s best long-term interest
You do not have to invest unethically to maximise return.
The law recognises that purpose matters—and that ethics can be part of prudent stewardship.
What Trustees Must Do
To satisfy the Charity Commission and your own conscience, you should:
Have a Written Investment Policy
This should cover:
- Investment objectives and risk appetite
- Ethical exclusions and screening
- Voting and engagement policies
- Governance and review processes
Epworth offers templates and support to help charities draft and update their Investment Policy Statements.
Demonstrate Due Diligence
Trustees should be able to show they:
- Considered the risks and benefits of their approach
- Selected an appropriate manager
- Monitored both financial and ethical performance
- Took advice where necessary
Documented minutes and regular reviews are key.
Align Investment with Your Mission
If your charity supports environmental or social justice causes—or is a church or religious organisation—investing contrary to those values could undermine your credibility.
For example:
- A climate charity investing in fossil fuels
- A faith-based charity profiting from gambling or arms
- A children’s charity investing in companies linked to child labour
The Commission supports alignment—as long as trustees make informed, reasonable decisions.
What Trustees Should Avoid
- Failing to define or document your ethical approach
- Chasing maximum return while ignoring reputational risk
- Delegating investment decisions without oversight
- Using ESG labels without understanding the substance behind them
The Rise of Responsible Investment Expectations
The Commission is part of a wider regulatory trend emphasising transparency, accountability, and ethical integrityin the charity sector. This is especially true as:
- Donors demand ethical use of funds
- Churches seek investments consistent with theology
- Faith-based charities build credibility through consistent values
How Epworth Helps Trustees Navigate Expectations
We support trustees by providing:
- Clearly screened, charity-exclusive investment funds
- Ethical engagement and voting reporting
- Help drafting or revising investment policy documents
- Transparent reporting for boards, auditors, and stakeholders
- Advice on governance best practice
We work only with charities—and we understand your responsibilities.
Conclusion: Faithful, Legal, and Aligned
You can meet Charity Commission expectations and your ethical commitments. These are not in conflict—they are two sides of responsible stewardship.
Want help aligning your charity’s investments with your mission and legal duties? We’re here to support trustees every step of the way.
Contact us or explore our ethical investment solutions for churches and charities.