Sometimes the greatest of revolutions can come from the smallest and most parochial of incidents. An apple falling (our understanding of the universe). A student frustrated with his romantic inadequacies (social networking). Anger at tea taxes (the USA).
Incredibly boringly, the Cabinet Office in the UK recently requested the Charity Commission to review its guidance to charities on investment, known as CC14. The conventional wisdom is that charitable trustees have a ‘fiduciary duty’ to maximise the financial returns of any investments that they hold, on behalf of their beneficiaries.
The Charity Commission has published draft guidance, upon which it is consulting, that suggests that “many charities are now investing to deliver both a financial return and a direct social benefit, often described generally as ‘social investment’. This may involve considering ethical issues or how an investment helps further the charity’s aims directly. Sometimes, these ways of investing can achieve even more for beneficiaries and can therefore represent the best overall return for the charity”.
Geoff Burnand, the Chief Investment Officer of Charity Bank, responded thus “In recent years we have found ourselves in an absurd situation where many organisations have been obligated to invest in a way that is incongruent to the delivery of their core mission, despite a growing universe of social investments”.
The implications of this change are revolutionary. We entered the 20th century with an orthodoxy that said it was impossible to invest funds for anything other than financial return. ‘Doing good’ was something to be done with the fruits of the exploitation of capital for financial ends.
The revision of CC14 turns this orthodoxy on its head. It says that it is possible to invest funds for positive social outcomes, as well as for financial objectives. It enables goals other than purely the maximisation of financial return to be introduced to the operation of capital. As such, it is a Kairos moment, one that will have historic consequences.
As we reflect now on the smallest and most parochial of incidents – the birth of a baby in a stable – we can look forward to the future with a new hope, that good things are happening in the world, and that we have the chance to be part of them.
A joyful and peaceful Christmas to one and all