‘Writing your charity’s investment policy              – a guide’ Speakers Jane Tully, Charity Finance Group Kate Rogers, ...
Jane TullyCharity Finance Group
A quick overview of some macro data oncharity investments
How much are the voluntary sector’s investmentsworth?
What type of investmentsdoes the sector hold?Investment assets: £64.6bnIncome from investments and cash: £2.4bnInvestment ...
How much income is provided from the sector’sinvestments and cash holdings?
Estimated investment returns for voluntaryorganisations with incomes greater than £500k
Charity Commission Investment GuidanceCharities invest so that they can further their charitable aimsIf trustees have - co...
Charity Commission Investment GuidanceFinancial investment‘Aims to generate the ‘best financial return within the level of...
What should an investment policy cover?  —   the scope of its investment powers  —   the charitys investment objectives  —...
What should an investment policy cover forcharities with an investment manager?‘For charities using an investment manager,...
About our guide —   What is it for? —   Who is it for? —   How to use it? —   Template and examples
Kate RogersCharity Investors’ Group
Your written investment policy
Areas to cover1.   Introduction2.   Investment Objectives3.   Risk4.   Liquidity Requirements5.   Time Horizon6.   Ethical...
1. Introductioni. General Background and Financial Objectiveii. Investment Powersiii. Governance
2. Investment Objectives—   Motive?—   Return expectation?—   Capital protection vs inflation protection?—   Balance betwe...
3. Risk i.     Attitude to risk ii.    Assets iii.   Currency iv.    Credit/Counterparty v.     Other
4. Liquidity Requirements —   Regular draw down requirement? —   Income and/or capital? —   Other planned spending? —   Li...
5. Time Horizon — Charity life? — Investment asset life? — Expected changes in capital, income or expenditure?
6. Ethical Investment—   Ethical investment policy?—   Negative screening—   Positive screening—   Engagement—   Direct vs...
7. Management, Reportingand Monitoringi. Managementii. Reporting and Monitoring8. Approval and Review
Examples1.   ABC Foundation                - grant making                                   - total return                ...
Examples3.   Permanent Endowment   - balance capital and income                           - income target                 ...
Examples5.   Pooled Family Charity Trust   - small charitable trust                                   - single investment ...
Aims… and difficulties — Helpful examples, and useful format for those starting from scratch — Not an additional burden — ...
5A - Writing your charity's investment policy - Kate Rogers and Jane Tully
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5A - Writing your charity's investment policy - Kate Rogers and Jane Tully

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Workshop at CFG's Annual Conference 2012

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5A - Writing your charity's investment policy - Kate Rogers and Jane Tully

  1. 1. ‘Writing your charity’s investment policy – a guide’ Speakers Jane Tully, Charity Finance Group Kate Rogers, Charity Investors’ Group
  2. 2. Jane TullyCharity Finance Group
  3. 3. A quick overview of some macro data oncharity investments
  4. 4. How much are the voluntary sector’s investmentsworth?
  5. 5. What type of investmentsdoes the sector hold?Investment assets: £64.6bnIncome from investments and cash: £2.4bnInvestment management costs: £246m
  6. 6. How much income is provided from the sector’sinvestments and cash holdings?
  7. 7. Estimated investment returns for voluntaryorganisations with incomes greater than £500k
  8. 8. Charity Commission Investment GuidanceCharities invest so that they can further their charitable aimsIf trustees have - considered the relevant issues, - taken advice where appropriate; and - reached a reasonable decision,they are unlikely to be criticised for their decisions or adopting aparticular investment policy
  9. 9. Charity Commission Investment GuidanceFinancial investment‘Aims to generate the ‘best financial return within the level of risk considered to beacceptable’(Main motive: financial investment)Programme related investment (PRI)‘Aims to use a charity’s assets to further its aims in a way that may also produce somefinancial return of the charity’(Main motive: social return)Mixed motive investmentWhere an investment cannot be wholly justified as either financial or PRI, it may bepossible to justify as MMIMotive: social and finanical returns combined
  10. 10. What should an investment policy cover? — the scope of its investment powers — the charitys investment objectives — the charitys attitude to risk — how much is available for investment, timing of returns and the charitys liquidity needs — the types of investment it wants to make, this might include ethical considerations — who can take investment decisions (for example, trustees, an executive, an investment adviser or manager) — how investments will be managed and benchmarks and targets set by which performance will be judged — reporting requirements for investment managers. — Charity Commission Guidance
  11. 11. What should an investment policy cover forcharities with an investment manager?‘For charities using an investment manager, the investmentpolicy should cover— the responsibility and remit of the investment manager— the principles that any investment manager must follow when taking investment decisions on behalf of the charity ’ —Charity Commission guidance
  12. 12. About our guide — What is it for? — Who is it for? — How to use it? — Template and examples
  13. 13. Kate RogersCharity Investors’ Group
  14. 14. Your written investment policy
  15. 15. Areas to cover1. Introduction2. Investment Objectives3. Risk4. Liquidity Requirements5. Time Horizon6. Ethical Investment7. Management Reporting and Monitoring8. Approval and Review
  16. 16. 1. Introductioni. General Background and Financial Objectiveii. Investment Powersiii. Governance
  17. 17. 2. Investment Objectives— Motive?— Return expectation?— Capital protection vs inflation protection?— Balance between capital return and income return?— Total return
  18. 18. 3. Risk i. Attitude to risk ii. Assets iii. Currency iv. Credit/Counterparty v. Other
  19. 19. 4. Liquidity Requirements — Regular draw down requirement? — Income and/or capital? — Other planned spending? — Likelihood of unanticipated need for cash?
  20. 20. 5. Time Horizon — Charity life? — Investment asset life? — Expected changes in capital, income or expenditure?
  21. 21. 6. Ethical Investment— Ethical investment policy?— Negative screening— Positive screening— Engagement— Direct vs indirect exposure
  22. 22. 7. Management, Reportingand Monitoringi. Managementii. Reporting and Monitoring8. Approval and Review
  23. 23. Examples1. ABC Foundation - grant making - total return - property held directly - investment committee - two investment managers2. Operational Ethical Charity - operating charity - short and long term reserves - ethical investment policy - negative screening - finance committee - one investment manager
  24. 24. Examples3. Permanent Endowment - balance capital and income - income target - investment committee - asset allocation strategy - investments selected by investment committee4. Cash Charity - holding only cash - no investment committee or manager
  25. 25. Examples5. Pooled Family Charity Trust - small charitable trust - single investment in pooled fund - reviewed and monitored by trustees6. PRI Local Foundation - large grant making charity - programme related investment portfolio - financial investment portfolio - investment and loan committees
  26. 26. Aims… and difficulties — Helpful examples, and useful format for those starting from scratch — Not an additional burden — Not suggesting existing policies should be rewritten — Not attempting to represent all types of charity Notable gaps: International Charity (Currency) Ethical including positive screening and engagement — Governance specific to each individual charity — Length and format — Not a cut and paste for your own charity policy

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