At last, charities have had their powers extended to clarify what was an ambiguous area, allowing them, subject to safeguards, to make social investments from their permanent endowments. Allowing charities to do this means that an important obstacle has been removed, and now we only await confirmation that HMRC will issue guidance allowing these to be treated as qualifying investments eligible for tax relief on income and capital gains, an issue that still is murky.
A step forward,, but not yet a full move....
The Charities (Protection and Social Investment) Act in the UK has now received Royal Assent, giving foundations and charities in England and Wales the statutory power to make social investments from their endowment funds.Historically, the legal position was that charities had a limited ability to invest where their investment decisions were based on considerations other than the expected financial return.However, several years ago, the Charity Commission introduced into its guidance on investing the idea of mixed-motive investing by charities.This means funding an acquisition or project to make a financial return, while helping the charity’s mission at the same time (but where the investment could not be justified on the basis of its financial return or its charitable impact alone).
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