UK: CC14: Flexible Finance?

Last Updated: 23 March 2012
Article by Alice Unwin

Alice Unwin, Trainee Solicitor at BDB, considers the Charity Commission's publication 'Charities and Investment Matters: A guide for trustees (CC14)' and whether it provides charities with greater investment opportunities.

The publication contains important investment guidance for trustees and replaces the earlier version of CC14 published in 2004.

From the sector's perspective the new CC14 represents an important and timely step forward:

  • it opens the door to a social enterprise marketplace in which charities may feel more confident about participating;
  • and it addresses a growing appetite among the charitable trust and foundation community to apply their resources differently in a way that weds investment and philanthropy together to produce a social and economic return.

The guidance is just that - guidance - and rather than providing a prescriptive set of rules the purpose of CC14 is to provide a framework to enable trustees to establish investment objectives and manage investment activity and risk as is appropriate for their charity.


The publication of CC14 coincides with the Commission's strategic review and a significant reduction in its funding. Accordingly, the guidance reflects the desire of the Commission to move away from a strict regulatory role by emphasising that it is the responsibility of trustees to make and justify investment decisions. The Commission was concerned that its recommendations as to good practice in previous guidance was being misinterpreted as law and as a result CC14 attempts to clarify the distinction between the two so that the guidance is not interpreted as being more prescriptive than intended.

CC14 provides trustees with guidance on how to make investment decisions and how to take account of the relevant trustee duties, however, its main focus is on what types of investment trustees can make. By broadening the activities and objectives that fall within 'investment' beyond the scope of traditional financial investment the Commission shifts it's emphasis away from the pursuit of the 'best financial return' and towards a 'whole portfolio approach'. This change reflects a growing desire among charities (as well as individuals and non-charitable organisations) to make decisions based on not only financial return but also ethical, social and charitable considerations.

Programme Related Investment (PRI)

CC14 expands the previous guidance by including PRI; this is described as investment that furthers a charity's aims, with the expectation of some financial return. The guidance distinguishes this from grant making, which is described as an 'investment' that directly furthers a charity's aims with no expectation of financial return. It is perhaps questionable whether PRI should be categorised as an investment in the first instance and as such, whether it belongs in this guidance.

Mixed Motive Investment (MMI)

What is often described as social investment is termed MMI by the Commission in CC14. MMI is a hybrid of traditional financial investment and PRI; such investment furthers a charity's objectives whilst also giving a degree of financial return and can only be justified by a combination of these outcomes.

Notably, the guidance does not rank different investment objectives (eg ethical, sustainable, financial or charitable) in any particular hierarchy; trustees can pursue all or any of these. The Commission itself acknowledges that the concept of MMI is in its infancy and in need of development but emphasises that if trustees adhere to the various legal and good practice requirements they are unlikely to be criticised or to be in breach of the fiduciary duties.

Stakeholder Activism

Another noteworthy addition to the guidance is that it now details how charities can engage in stakeholder activism. In particular, CC14 explains how a charity can engage in stakeholder activism for the purpose of PRI and/or MMI by using their voting rights to influence a company's policies in a way that reflects the charity's objectives.


CC14 further clarifies the Commission's approach to investment and removes many of the constitutional barriers to a wider use of charity funds, however, questions remain as to how successfully charities will be able to translate the guidance into working practice. In particular:

  • The market lacks appropriate investment products for these new categories of investments. Some charities are looking in to this and Oxfam have launched its first investment fund with social and financial returns but how quickly will other social investment funds emerge?
  • There is no clear guidance on how the success of PRI and MMI should be monitored, there is also a lack of clarity as to how it should be accounted for, particularly as the current Statement of Recommended Practice (SORP) does not address many of the accountancy issues. How adequately can the success of such investment be monitored?
  • Given the role HMRC plays in the regulation of charities and the fact that they have a vested interest in sanctioning charities to ensure that no revenue is lost to them, it is important that it supports the guidance. The Commission has never prosecuted an investment regulatory breach but might HMRC?

The discretion and flexibility afforded to trustees in determining their charity's investments by the guidance is accompanied by a significant degree of responsibility. Trustees may need to draw upon accountants, lawyers and investments funds to help navigate these new waters and enable them to manage risk appropriately and make the most of the new guidance. However, If CC14 achieves its purpose it should allow trustees to use investment as a tool not only to protect and better their charity's finances but also to further the aims of the charity in a more direct and effective fashion.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Smith & Williamson
Withers LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Smith & Williamson
Withers LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions