The New Charity Investment Governance Principles (CIGPs) Framework
· Posted on: February 18th 2025 · read
The Charity Investment Governance Principles (CIGPs) were introduced to assist trustees in navigating their investment responsibilities more effectively.
These principles align with existing Charity Commission guidance and reflect changes in the legal, ethical, and economic landscape (New Charity Investment Governance Principles Launched (CAF)).
Key Features of the Principles
- Trustee Duties and Decision-Making: The CIGPs emphasize that trustees have a legal obligation to act in the best interest of their charity, including ensuring investments align with charitable purposes. Trustees are encouraged to balance financial returns with broader considerations, such as reputational risks and ethical obligations. Recent court cases, including Butler-Sloss, have reinforced the importance of documenting decision-making processes and ensuring investments reflect the charity’s mission (Civil Society).
- Integration of ESG Factors: Environmental, Social, and Governance (ESG) considerations are now central to investment strategies. With growing pressure from donors and stakeholders, charities are encouraged to adopt responsible investment policies. The CIGPs suggest that ESG factors can enhance long-term financial performance while aligning with the charity’s values.
- Transparency and Reporting: Transparency is a critical element of good governance. Trustees are advised to establish clear reporting mechanisms that outline the rationale behind investment decisions and provide regular updates to stakeholders. This practice not only builds trust but also ensures compliance with Charity Commission regulations.
Why These Principles Matter
The development of the CIGPs reflects the evolving expectations placed on charities. Increasingly, stakeholders are demanding that investments align with ethical and social values. Trustees are also expected to navigate financial risks effectively in an uncertain economic climate. These principles provide a framework for balancing financial returns with responsible investment practices.
Action Steps for Charities
- Review Policies: Trustees should review their investment strategies and ensure alignment with the CIGPs and the broader expectations
of stakeholders. - Engage Professional Advice: Seeking professional advice can help integrate ESG factors into strategies and ensure compliance with legal requirements.
- Strengthen Monitoring and Reporting: Trustees should develop robust reporting mechanisms to enhance transparency and accountability.
For further information, consult the Charity Investment Governance Principles (Charity Investment Governance Principles Guide).
