Why do it?
There are many reasons for charities to invest responsibly. These include avoiding conflict with objectives, minimising risks to reputation, using investments to further the work of the charity as well as avoiding alienating supporters, staff or beneficiaries.
If this is an issue that you feel strongly about you should raise it with the charity you support. As the alienation of supporters is a risk to charities, especially fundraising ones, your views should be important to the charity.
The Encouraging charities page gives guidance on how to raise the issue.
Below are the most common reasons why charities adopt Responsible Investment. You can use this list to present the key arguments to a charity.
Avoiding risks to reputation
Being seen to invest in particular sectors or companies could damage the reputation of the charity and the public’s perception of its work. According to a 2008 GFK/NOP poll of 2,000 adults commissioned by the EIRIS Foundation, 52% of the general public would be unwilling to give to a charity that is investing in a way that is against its mission, and a further 31% would be less likely to give.
Using investments to further the work of the charity
Investments can be used in a way that positively supports the work of the charity. For example, an environmental charity could invest in the renewable energy sector.
Avoiding conflict with aims
Particular investments could counter the aims of the charity – such as a cancer charity investing in tobacco companies.
Using investments to influence company behaviour
The charity could use its rights of ownership and influence as a shareholder to engage with companies to seek to influence responsible business practices.
Learn more about how SRI can have a social impact
Concern about alienating supporters, beneficiaries and staff
Particular investments could hamper the work of the charity by alienating stakeholders. In some cases particular investments could mean that potential beneficiaries would be unwilling to be helped, or staff morale could suffer.
Addressing financially-relevant social, environmental and ethical risks
Many social, environmental, ethical and corporate governance risks and opportunities are seen to be financially relevant. Incorporating them into the investment process may therefore lead to superior long term performance.
Further information
Further details of these factors can be found in the charities section.
The legal issues page sets out what charities are legally able to do.
Not what you're looking for? Email us for further help, information and advice.
