Over one third of charities do not have an ethical investment policy, survey finds

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30th October 2017 16:38 - Voluntary

Over one third of charities do not have an ethical investment policy, survey finds

Over one third of charities do not have an ethical investment policy, survey finds: An online survey conducted by Gabriel Research and Management asked 116 charity representatives if their charity has an ethical investment policy.

Out of those interviewed, over half (60%) said their charity has an ethical investment policy, while over one third (34%) said their charity does not. Additionally, 6% of charity representatives said they are unaware if their charity does have an ethical investment policy.

In the survey, respondents best described the policy as a “balance between ethical considerations and trying to generate returns”. However, one respondent mentioned that generating returns is a seen as main priority: There is a real tension between the fiduciary duty to get the best possible returns on your assets for your beneficiaries as well as operating ethically. Whilst those two can marry, your primary duty is to get the best possible returns.”

In short, an ethical investment policy allows charities to invest their money in a way that reflects their charity’s values and ethos, however the law states that charities must take into consideration how this would affect their returns, and if so, balance out risk with low returns.  

Types of ethical investment approaches include ‘negative screening’, whereby charities can avoid investment in companies that go against the charity’s values or may be harmful to their interests or reputation. Out of those who said their charity has an ethical investment policy, just over half (51%) said their approach was negative screening.

In contrast, positive screening is where a charity chooses to invest part or all of their company’s portfolio into a company which best reflects a range of ethical values, such as environmental protection, human rights, health, etc. 

Furthermore, researchers also asked the respondents from service-providing charities and grant-making charities about their main concerns.

Out of the those interviewed, both categories said their main concerns are:

·       67% said the need for income

·       53% said the regulation’s current requirements are too demanding

·       29% said political uncertainty

Commenting on the survey’s results, head of charities at Brewin Dolphin, Ruth Murphy, said: “The complex, fast-changing investment landscape makes it hard for all but the exceptionally well-informed to keep pace with the latest investment thinking and, whilst many have skilled investment professionals on their committees, we need to remember that both trustees and charity staff have many other responsibilities and roles.”

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