The Charity Investment Governance Principles – Following best practice

At the beginning of this year, the Charity Investment Governance Principles (CIGP) were launched. This has provided organisations with a new and practical tool to support the evaluation and strengthening of their organisation’s governance around financial and social investments.

The Principles aim to give trustees and charity leaders greater clarity and confidence in managing investments, helping them make well-informed decisions that align with their charity’s purpose, values and long-term objectives.

The Seven Principles

The Charity Investment Governance Principles are organised into seven key areas:

Purpose of investment – Trustees share a clear understanding of why the charity makes investments, how these further its purposes and the legal and practical factors, such as time horizon, that influence decisions.
Leadership – The board provides leadership on investment matters through a robust governance structure and delegation framework.
Integrity – The charity’s purposes remain central to all investment decisions.
Decision making, risk and control – Effective systems for decision-making, risk management and internal control are in place and appropriate to the charity’s size and the complexity of its investments.
Effectiveness – Trustees, staff and committee members responsible for investment oversight have the necessary knowledge, skills and experience to fulfil their roles effectively.
Equity, diversity and inclusion – The board actively explores and takes action to promote equity, diversity and inclusion in relation to the charity’s investments and decision-making processes.
Openness and accountability – Transparency and accountability are understood as essential values in how the charity manages and reports on its investments.

Why the Principles were needed

The development of the Principles was partly driven by a recent High Court ruling which clarified the discretion trustees have in adopting responsible or ethical investment policies.

In this case, trustees of two environmental charities—the Ashden Trust and the Mark Leonard Trust—were permitted to adopt investment policies that aligned with their charitable purposes, even though doing so excluded over half of all publicly traded companies and could potentially reduce financial returns.

The court confirmed that:

Trustees are not prohibited from avoiding investments that directly conflict with their charity’s purposes

Trustees have broad discretion in determining how to exercise their investment powers, even where there is a potential conflict between financial return and charitable purpose

This judgment provided welcome clarity but also underscored the complexity of trustees’ responsibilities. Determining how far investments align with a charity’s mission, or assessing the reputational risks of certain investments, can be challenging.

The new Principles therefore offer a structured framework to help trustees make informed, defensible decisions. This reflects the breadth of their discretion, while maintaining transparency and accountability.

Not a legal requirement, but strong guidance

The Charity Investment Governance Principles are not a legal or regulatory requirement. For charities in England and Wales, the binding rules remain those set out in the Charity Commission’s guidance CC14: Investing charity money.

However, the Principles build on CC14, offering additional, practical support for trustees, staff and investment committee members involved in charity investment decisions.

Why good investment governance matters

Strong investment governance underpins every aspect of a charity’s financial health and sustainability. It enables trustees to:

Safeguard financial stability by ensuring investments are managed prudently

Comply with legal and regulatory obligations, avoiding breaches or reputational damage

Align investments with values, ensuring the portfolio reflects the charity’s mission and avoids ethical conflicts

Mitigate financial and operational risks, including those linked to market volatility or liquidity

Build confidence among stakeholders, demonstrating that funds are managed responsibly and transparently

The next step for trustees

The Charity Investment Governance Principles provide a valuable opportunity for trustees to review, refresh and reinforce their approach to investment governance.

By adopting the Principles, charities can ensure that their investment policies and practices are not only legally compliant but also aligned with modern expectations of transparency, responsibility and sustainability.

In an era where public trust and ethical stewardship are more important than ever, the Principles represent a timely and practical guide to best practice in charity investment governance.