Blog

Governance, regulation and compliance

4 January 2013, 16:00

Using your mouth as well as your money: charities investing for change

One issue that we can expect to hear more of in 2013 is responsible investment. Now more than ever, charities are taking a holistic view of their activities and considering ...

Post byDoug Hull

Where next?

Events »

Tuesday, 31 December 2019
Finance Count 2019/20 More »

News »

Wednesday, 18 September 2019
Charities still virtually unprepared for a no-deal Brexit, finds survey More »

One issue that we can expect to hear more of in 2013 is responsible investment. Now more than ever, charities are taking a holistic view of their activities and considering how they can use all of their assets in the interests of their mission and beneficiaries. Using investments for social objectives is one way of doing this. We debated this issue with some leaders in the responsible investment field towards the end of last year and a common theme which emerged was a growing appetite for using positive screening and corporate engagement as a campaigning tool to further the charity’s mission. Whilst many charities try to influence companies through their campaigns, those which are shareholders have a unique capacity in this area, a point highlighted by Al Gore in a speech I attended in October. Not only do their shares enable them to attend company AGMs and vote on company affairs, but being a shareholder also enables them to develop a reciprocal relationship with the company. With their funds invested, it is in a charity’s interests for the company to be successful in the long run, and this enables a partnership between the two to develop, with the charity challenging the company where it’s activities run contrary to a charity’s mission or supporting it where there is a joint long term interest. As Catherine Howarth, CEO of Fair Pensions, pointed out at our debate, companies like to be pushed, and charities are in a perfect position to take on this role. Charities have huge moral force as investors, and surveys continue to find that they are among the most respected and trusted groups in society, but also that there is a strong public desire for them to be open and transparent about all of their operations. A survey carried out by YouGov for UKSIF released in October reported that almost 60% of GB investors believe that UK charities have a responsibility to take a lead on ‘stewardship’ issues – engaging with the companies they invest in and challenging them if they perform poorly on particular issues. Unlike screening them out, investing in companies and challenging them offers an opportunity for charities to showcase their position as forward-thinkers on key issues in society, further their campaigning work and shape future debates. There have been several positive examples of engagement and the impact it can have. Several FTSE100 companies have recently adopted policies to ensure that their staff are paid the Living Wage, following pressure from Fair Pensions, charities and others through pooled funds. Fair Pensions have also worked with Amnesty to support their high-profile campaign calling on Shell Chief Executive Peter Voser to commit Shell to take responsibility for damage to the Niger Delta. WWF have a well-established Living Planet Fund, which enables them to engage directly with companies in which they invest. Useful tips for organisations looking to develop an active engagement strategy as part of their investment policy include:

Forging close links between the finance and policy/campaigns teams within the charity to ensure their interests are aligned. Adrian Warburton, Finance Director of WWF-UK said at our debate that aligning WWF-UK’s Business Engagement Policy with their Investment Policy was crucial in ensuring that their corporate engagement strategy was as effective as possible.
Consult your investment manager on their engagement strategy, and challenge them to do more if necessary; fund managers want your business so should respond to your demands.
Attend AGMs and other meetings of companies in which you have shares in; these offer great opportunities to put your views across. It’s worth taking time in advance to plan a few key questions to ask, and thinking about how to phrase them to ensure a meaningful response.
Make a point of thanking companies if they do respond positively to your campaigns; this ensures the development of a lasting healthy and collaborative relationship, and leaves the door open for future engagement.

Traditionally discussions about responsible investment by charities focus on negative screening approaches, focusing on minimising harm caused to beneficiaries or to the charity’s reputation by abstaining from investment. However, charities can also look more creatively at how they use some of their investment portfolio to bring about the lasting change they were set up to achieve. Investing in a pooled fund or directly in a company in order to gain a say in how it is run can be a powerful tool to change adverse corporate behaviour and make a strong contribution towards positive change in society today. With thanks to Caron Bradshaw (CFG), Helen Wildsmith (CCLA), Catherine Howarth (Fair Pensions), Claire Curtin (EIRIS), Adrian Warburton (WWF-UK), and Penny Shepherd (UKSIF), who all spoke at our breakfast debate, which was kindly hosted by CCLA.

Post by Douglas Hull, policy and membership officer at CFG « Back to all blog posts

Blog

Using your mouth as well as your money: charities investing for change

Related Content

Civil society asks of the Spending Review 2019

Five takeaways from August’s Inflation Report

The lessons for Oxfam and the wider sector

Finance Focus July 2019

BEIS Independent Review of the Financial Reporting Council

CFG Annual Handbook 2019

How the best boards do it, from preparation to meeting execution

Seeing the wood for the trees

CFG responds to the Charity Commission’s consultation on the SORP-making process

What the recent SCOTUS judge controversy can teach us about the Charities’ SORP

Annual Report 2017-18: Empowering Your People

Changes to the CFG Board of Trustees

Finance Focus May 2018

The key to good governance - truly understanding the business

Does your charity follow serious incident reporting guidelines?

Charity finance professionals need to be aware of new automatic disqualification rules

How big a threat is property to your charity?

Money is not the issue when it comes to charging for Charity Commission

How can charity investors perform better in a volatile market?

A stairway to heaven on business rates for the charity sector?

Investing in financial governance is one of the most cost effective ways to help your charity

Sarah Atkinson - Have your say on the annual return for charities

New report raises concerns about complacency on financial governance

Trustee Survey Report

Time to review your risks? An update from the experts...

Where are the ‘automatic stabilisers’ for charities income?

6 simple steps your charity can take to help protect themselves from fundraising fraud

Do I need a fraud response plan?

Fraud and the 3 C's

Three new Charity Finance Group trustees elected

How can charities ensure they work towards gender equality in their organisation?

What can charities learn from the recent fraud cases?

CFG launches Counter Fraud Campaign

Record Management Toolkit Launch Roundup

What can charities learn from the international cyber attack?

NCVO Almanac points to fundamental shifts in the charity operating environment

Better partnerships needed between finance and fundraising teams

Annual Report 2016-17

Essential Charity Finance for Trustees Guide

We must not see a rush to charging charities for regulation – House of Lords report

IFS 2017 Green Budget – the good, the bad, and the worrying?

Responsible Record Keeping: what do voluntary organisations need to know?

Trustee Week: Working to inspire good leadership

Charging charities for regulation isn’t inevitable but it is risky and inefficient

Let's talk about the F-word

Tony Armstrong looks at Devolution: working with local organisations to transform public services

Devolution is our chance to advocate for the most vulnerable

How will the 'devolution revolution' be financed?

Caron asks: 'Why does the voluntary sector need a devolution summit?'

Do charities need to become social enterprises to survive?

Ten things you should know about the new power to make social investments

New report should prompt major re-evaluation of social investment

EU Referendum: Keep watching this space…

CFG's SORP Survey

Guest blog: Stamp duty increase reinforces case for charity investors to invest in stamp-exempt funds

Guest blog: SAVE Financial Planning

Guest blog: Insights into charity investment practices

EU Referendum: What could this mean for charities?

You don’t need to be a charity to do good…but it helps!

Another day, another opportunity for charities to engage in a consultation

Friday Afternoon Fraud

Is the SORP FRS 102 working for you?

ACF, CFG and NCVO raise concerns on draft guidance for funding non-charities

Annual Report 2015-16

Employment Status 2016

Rethinking Risk: Beyond the tick box

Charities need to do the walk, not just the talk and invest in financial leadership

Hunting for the silver lining; the IFS, the economy and charities.

Charging charities for their regulation: A fait accompli?

Affinity Deals: What do you need to know?

Lessons to take away from Kids Company report

New Charity Commission guidance on reserves

What did the Romans ever know about data protection?

Public divided on charging charities for charity regulation, new report finds

What Regulation, Who Pays? Public Opinion and Charity Regulation

Social investment: Government's Windex for civil society

Banking and Payment Systems: Invisible Enables for Charities