Kate Rogers, Portfolio Director and Head of Policy at Cazenove Charities shares her thoughts on issues faced by the charity sector in Third Sector Magazine every other month.
Last month ACF published a report that was the culmination of a year's worth of research by myself and my co-author, Richard Jenkins. We have called it Intentional Investing, a title that perhaps needs a little explaining.
The research project was inspired by our perception of an increasing focus by charity investors on understanding how their investments aligned with their mission and values. We sought, through the largest survey of its kind and through discussion with many practitioners, to investigate how trustees are able to link their charity investment policy with the charitable aims that it is there to support.
We found a range of practices, from those that would traditionally be called 'ethical' or 'responsible' investment policies to 'social' or 'impact' investment, as well as charities that had decided that their aims are best served by focusing solely on the most attractive financial return. It became clear that there is no one size fits all approach, and in that context the report advocates intentional investing, which means that trustees have thought about the management and use of their charity's assets so that their approach supports the delivery of their charitable aims. They are able to explain their approach and, as far as possible, anticipate and review the impact of their decisions in terms of their mission and values, beneficiaries and supporters.
When speaking to practitioners it seemed that this holistic approach of considering how all of your charity's assets could further your aims unlocked fundamental strategic discussions about the best use of resources and the consistency of investment policies and spending. And this linking of financial investment objectives with the charitable mission and values is clearly an area of increasing interest. Our survey (of 286 charity investors) found a substantial increase in the number of charities choosing to manage their investments in ways to specifically reflect their mission or values. 59% of the survey respondents had a policy in place or plans to implement one, compared with only 23% with a policy 5 years before.
We found four main approaches to implementing these policies; exclude, select, influence and deliver. By far the most common, comprising 78% of survey respondents who had a policy, were approaches that exclude specific industries or companies from an investment portfolio - with tobacco the most popular exclusion. By contrast 34% of respondents with a policy aimed to select companies that align with their aims. 22% of respondents with a policy were seeking to influence companies' behaviour by engaging with them. And 17% of the total survey population had decided to use their assets to deliver tangible outcomes through social investment.
So how to decide what is right and practical for your charity. Our report aims to map out a thought process, to link your charity's aims with it's investment approach and we hope that it will help trustees discuss the myriad of options available. It is important to remember that there is no 'right' answer and experienced practitioners repeatedly called for humility in setting strategy - not to let the perfect get in the way of the good. Intentional investing is continuously evolving, thinking carefully about how your investments contribute to your overall charitable aims, whatever approach that entails, and using your assets with the firm intention of getting the best for your beneficiaries.
A version of this article first appeared in Third Sector in July 2015. For this and other articles by Kate Rogers, visit thirdsector.co.uk
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