The Charity Commission has published interim guidance for trustees about the new social investment power that was introduced on 31 July 2016 as the first phase of the Charities (Protection and Social Investment) Act 2016 came into force. The new interim guidance supplements the Commission’s existing guidance, Charities and investment matters (CC14).

For the first time, social investment has been defined in legislation, as a ‘relevant act’ that is carried out ‘with a view to both directly furthering the charity’s purposes and achieving a financial return for the charity’. The guidance explores this definition to provide further advice on what is and is not a social investment.

The new legislation does not alter or override trustees’ general common law duties, and the guidance makes clear that these duties apply to any decision regarding social investments. However, the legislation places specific duties on trustees who are considering making a social investment. Trustees must:

• consider whether advice ought to be obtained
• obtain and consider any such advice
• satisfy themselves that it is in the interests of the charity to make the social investment.

Trustees must also review their charity’s social investments from time to time.