Financial Services for Charities
Ethical Investments
By their very nature, charities are in place for good causes and when investing charity monies it is highly likely that the trustees will feel that they should be investing in an ethical manner. This is a very complex area and a number of points needs to be considered.
First, what is ethical or socially responsible investment? Everyone has different views and opinions so you should really have a clear idea of what this means for you and the charity. You should also be aware of the implications choosing this type of investment may have on investment returns.
You may wish to ensure that the charity funds, or at least part of them, are invested in companies that make a positive contribution to society or the environment. On the other hand, you may wish to exclude companies investing in certain areas such as tobacco or weapons.
Fortunately, the investment industry has taken note of this increase in interest for ethical and socially responsible investing and a number of funds are now available to meet these requirements. In order to assist with defining the type of ethical fund in place, fund managers will usually use one of four strategies when they put together their portfolios.
Thematic
Themes are used to identify industries or sectors which have the potential to influence the world in a positive way.
Ethical Screening
Companies are included or excluded for their ethical policies and behaviour. If they do not meet the criteria set, they are not even considered by the fund manager.
Preference
Companies within an industry or sector are rated for their policies and performance against environmental or social criteria.
Positive Engagement
Where a company is identified as having the potential to do better in ethical and socially responsible behaviours. Fund managers may buy sufficient stocks in the company so that he can then use his influence at boardroom level to make changes to company policies and behaviours.
Whether you require all or a part of your funds to be invested in a ethical manner, there should be funds that would suit your requirements.
For further information contact Ruth Dolan, Chartered Financial Planner, on 01227 763939.
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