Most churches and charities think carefully about where donations come from and how spending is governed. Investment portfolios, however, sometimes sit in a separate category — managed for financial return alone, with values applied elsewhere. That disconnect is becoming harder to justify.

The UK charity sector generated around £96 billion in income in 2023/24, with projections exceeding £100 billion by 2025. With reserves, endowments, and long-term assets at this scale, the question of how those assets are invested is not a minor administrative matter. It is a governance question, a reputational question, and for many faith-based organisations, a moral one.

Public trust in charities stood at 57% in 2025. Donors, congregations, and beneficiaries increasingly expect organisations to demonstrate consistency between what they say and what they do — including how they manage money.

Values-based investing is how charities and churches bring their investment decisions into alignment with their purpose. It is not a niche trend or a marketing label. It is a disciplined approach to managing assets in a way that reflects who you are and what you exist to do.

In this guide, we cover:

• What values-based investing actually means, and how it differs from mainstream ESG
• Why it matters specifically for churches and charities
• How it works in practice, and what the building blocks look like
• Whether trustees can adopt this approach without compromising their duties
• How Epworth can help you put it into action

What values-based investing actually means

In plain terms: Values-based investing means managing your organisation's money in a way that reflects your beliefs, mission, and ethical commitments — not just your financial objectives. It is an investment approach shaped by purpose, not just by risk and return.

The term sits within a broader family of responsible investing language that also includes ethical investing, socially responsible investing (SRI), ESG integration, and impact investing. These are related but distinct. Understanding where values-based investing sits within that landscape matters, because the differences have real consequences for how a portfolio is constructed and governed.

For charities and churches, values-based investing typically involves three elements working together:

• Mission alignment: Investments are selected, screened, and managed in a way that is consistent with the organisation's stated purpose and values — not just its financial targets.
• Ethical screening: Certain sectors, activities, or companies may be excluded because they conflict with the organisation's beliefs, regardless of their financial performance. This might include industries such as tobacco, gambling, or weapons manufacturing.
• Active stewardship: Rather than simply filtering investments, values-based investors also use their position as shareholders to engage with companies, vote at annual general meetings, and advocate for practices that reflect their values.

What distinguishes values-based investing from a simple exclusion list is intentionality. It is not about avoiding a handful of categories and calling it done. It is about building and maintaining a portfolio that, at every level, reflects what your organisation stands for.

FaithInvest, which works with faith communities on investment policy, describes this as "faith-consistent investing" — a framework where financial stewardship and moral conviction are not in competition, but aligned.

Why it matters specifically for churches and charities

Values-based investing is sometimes discussed as though it were a consumer preference — a lifestyle choice for individuals who want their pension to feel good. For churches and charities, it is something different and more substantive.

Mission-led organisations exist to advance a purpose. When investments conflict with that purpose, the result is not just an ethical awkwardness — it is a governance problem, a reputational risk, and, for faith communities, a question of integrity.

Consider a few scenarios that trustees and finance leads regularly encounter:

• A charity working to reduce addiction holds shares in a company that profits from gambling. The investment may perform well financially, but it sits in direct tension with the organisation's stated purpose.
• A church with a clear commitment to human dignity invests in funds with significant exposure to industries that exploit vulnerable workers. The portfolio has never been reviewed through that lens.
• A charitable foundation focused on environmental education holds assets in fossil fuel companies. Donors and beneficiaries begin asking questions.

None of these situations are hypothetical. They reflect real tensions that arise when investment decisions are made without reference to organisational values.

The Charity Commission for England and Wales is clear that trustees must act in the best interests of their charity, which includes considering how investment decisions might affect the organisation's reputation and ability to pursue its objects. That is not a soft consideration — it is part of the fiduciary framework.

For faith organisations, the case goes further. Stewardship is not only a financial concept. It carries a theological weight: the idea that resources held in trust should be managed in a way that honours the values and calling of the community they serve.

Values-based investing vs mainstream ESG

The most common source of confusion for trustees new to this area is the relationship between values-based investing and ESG. The two are often used interchangeably, but they are not the same thing — and for charities and churches, the distinction matters.

ESG stands for Environmental, Social, and Governance. It is a framework used by investors and analysts to assess how companies manage risks and opportunities across those three dimensions. ESG analysis is primarily a financial tool. It asks: does this company's approach to climate risk, labour practices, or board governance create or destroy long-term financial value?

Values-based investing starts from a different question entirely: does this investment align with who we are and what we believe?

The table below sets out the key differences:

	ESG Investing	Values-Based Investing
Primary driver	Financial risk and return	Organisational mission and beliefs
Starting point	What is material to the market?	What matters to our community?
Screening	Optional; varies by fund	Central to the approach
Stewardship	Increasingly common	Core expectation
Who sets the agenda	Fund managers and ratings agencies	The organisation itself
Relevant for faith bodies?	Partially	Directly

A charity or church may well use ESG data within a values-based framework — ESG analysis can be a useful input. But ESG alone does not answer the question of whether an investment is consistent with a faith community's theological convictions, or with a charity's specific charitable objects.

This is the gap that many generic investment managers leave open. They offer ESG-integrated portfolios and present them as sufficient. For trustees of churches and charities, that is rarely enough. The starting point has to be your values, not a ratings agency's methodology.

What values-based investing can look like in practice

Understanding the concept is one thing. Knowing what it actually involves in practice is what helps trustees move from principle to decision.

Values-based investing is not a single product or a fixed formula. It is an approach that can be shaped around an organisation's specific mission, beliefs, and circumstances. That said, most values-based frameworks for charities and churches draw on three core building blocks.

1. Negative screening

Negative screening means excluding investments in sectors, companies, or activities that conflict with the organisation's values. For a church, this might mean avoiding tobacco, alcohol, gambling, or weapons manufacturing. For a charity working in public health, it might mean excluding companies whose business models contribute to harm.

Screening is the most widely understood element of values-based investing, but it is also the most commonly misunderstood as the whole of it. Exclusions are a starting point, not a complete strategy.

2. Positive allocation

Positive allocation means actively directing investment towards companies, funds, or themes that contribute to outcomes the organisation cares about. This might include renewable energy infrastructure, affordable housing, healthcare innovation, community development finance, or businesses with strong records on fair employment.

By 2023, UK social investment had reached approximately £10 billion, according to Better Society Capital — a significant and growing pool of capital available for mission-aligned deployment. Charities and churches are not working in a niche corner of the market; they are part of a mainstream shift.

3. Active stewardship

Active stewardship means using the rights that come with investment — particularly shareholder voting and direct company engagement — to influence corporate behaviour in line with organisational values. Rather than simply filtering what you hold, stewardship allows you to use your voice as an investor.

This is where values-based investing moves beyond portfolio construction into genuine advocacy. Organisations that engage actively with the companies they invest in can drive change, not just avoid complicity.

Used together, these three elements give trustees a coherent, defensible, and mission-consistent approach to managing their assets.

Can trustees do this without compromising their duties?

This is the question we hear most often from trustees who are interested in values-based investing but uncertain about where they stand legally and professionally.

The short answer is yes — but it requires care, documentation, and the right advice.

The trustee concern in plain terms: "We want our investments to reflect our values, but we are worried that prioritising ethics over returns could expose us to criticism, or worse, a breach of our fiduciary duties."

This concern is understandable, but it rests on a misreading of what trustee duty actually requires. The Charity Commission's guidance on charity investments makes clear that trustees must act prudently and in the best interests of the charity — which includes considering reputational factors and the charity's ability to pursue its objects. Values-based investment policies are not inherently in conflict with that duty.

The courts have upheld mission-aligned and ethically-driven investment policies where they have been reasonably formulated, properly documented, and consistent with the charity's purposes — even where some financial trade-off was acknowledged. The key is that decisions must be made thoughtfully, not casually.

What good governance looks like for values-based investing:

• Develop a written investment policy that sets out the organisation's values, objectives, and any screening criteria, and review it regularly
• Take appropriate advice from an investment manager who understands both the financial and ethical dimensions of your requirements
• Document your rationale so that decisions can be explained and justified to trustees, regulators, and stakeholders
• Review performance against both financial and mission-related outcomes on a regular basis
• Consider the whole picture — including the risk to reputation and mission of investments that conflict with your charitable objects, not only the risk of lower financial returns

The Charity Finance Group provides useful sector-specific guidance on investment governance for trustees who want to go deeper on this area.

Values-based investing is not a departure from prudent governance. Properly implemented, it is an expression of it.

How Epworth helps churches and charities put this into action

At Epworth Investment Management Ltd (“Epworth”), we have been managing investments for churches and charities for decades. Our work is grounded in a straightforward conviction: that investment management and ethical stewardship are not in tension — they are part of the same responsibility.

We are part of the Methodist Church's Central Finance Board and manage around £1.3 billion in assets. That means our values-based approach is not a product feature or a marketing position. It is built into how we operate, what we hold, and how we engage with the companies we invest in.

What we offer churches and charities:

• Faith-consistent and mission-aligned screening, developed in close conversation with each client's values and charitable objects
• Discretionary portfolio management, where we take responsibility for day-to-day investment decisions within an agreed ethical and financial framework
• Multi-asset and cash plus funds, designed for organisations that want a straightforward route to values-aligned investing without building a bespoke portfolio from scratch
• Active stewardship, including voting and engagement with companies on issues that matter to our clients — from climate and labour standards to governance and transparency
• Ongoing governance support, helping trustees develop investment policies, document their rationale, and review outcomes against both financial and mission-related objectives

We work with organisations of different sizes, traditions, and charitable purposes. What they share is a desire to ensure that their investments reflect what they stand for — and a need for an investment partner who takes that seriously.

If you are a trustee or finance lead exploring what values-based investing could mean for your organisation, we would be glad to have that conversation.

Mission and money should not pull in different directions

Values-based investing is not a compromise between doing good and managing assets well. It is a recognition that for churches and charities, the two cannot sensibly be separated.

The core principles to take away:

• Values-based investing starts with your mission and beliefs, not a ratings agency's framework
• It encompasses screening, positive allocation, and active stewardship — not just exclusion lists
• It is compatible with trustee duty when it is thoughtfully designed, properly documented, and regularly reviewed
• The distinction from mainstream ESG matters: ESG is a financial tool; values-based investing is a governance and stewardship commitment

The organisations that get this right are not the ones that find a perfect off-the-shelf solution. They are the ones that take the time to articulate what they stand for, build an investment policy that reflects it, and work with a partner who understands both the financial and the ethical dimensions of the task.

If that sounds like the conversation your organisation needs to have, get in touch with Epworth. We are here to help.

Epworth Investment Management Limited (“Epworth”) is authorised and regulated by the Financial Conduct Authority (FCA Registered Number 175451). It is incorporated in England and Wales (Registered Number 3052894), with a registered office at Methodist Church House, 25 Tavistock Place, London WC1H 9SF and is wholly owned by the Central Finance Board of the Methodist Church. Epworth-managed funds are designed for long term investors. The value of units in funds can fall as well as rise and past performance is not a guide to future returns. The level of income is also variable and investing in Epworth

funds will not be suitable for you if you cannot accept the possibility of capital losses or reduced income. Any estimates of future capital or income returns or details of past performance are for information purposes and are not to be relied on as a guide to future performance.