Charities lack investment policy


More than two-thirds of Irish charities have no policy on socially responsible investment (SRI), according to a new survey by investment managers Montgomery Oppenheim.

A survey of 74 Irish charities showed that only 29 per cent had a formal policy on socially responsible or ethical investment.

However, the survey also revealed that only half of the charities had assets invested. Of these, over two-thirds had their assets resting in a bank account.

Mr Kevin Gallacher, head of business development at Montgomery Oppenheim, said there was close correlation between those charities that did not have a policy on SRI and those that either had no assets to invest or had a very short call on funds.

The 74 charities surveyed by Montgomery Oppenheim had total assets of €500 million; however, 17 per cent reported having no assets and 28 per cent had assets of less than €100,000.

Charities placing assets in bank accounts may be forced to look at more rewarding investment options in light of the current low interest rate environment, Mr Gallacher said.

But charities investing in the stock market will have to consider any conflict of interest between their aims and the desire to produce returns that will best fund those aims, he added.

"The charity might be a medical research charity to which people are making donations. With no ill-intent, the charity could be investing those funds in a tobacco company, which is against the interests of the charity and against the wishes of those who donated to it," he said.

Mr Gallacher said pooled SRI funds created some difficulty, as what was deemed unethical by certain charities was not necessarily unethical for others.

"By trying to be all things to all people, they risk not satisfying anyone," he said.

The report suggests the Irish charity market faces considerable changes, if the UK experience is repeated here. In the UK, the Charity Commission has proposed that large charities should report annually on their policy on SRI, although this is not a mandatory requirement.

Some 65 per cent of Irish charities surveyed said they would be interested in hearing more about socially responsible investment.

SRI entails avoiding stocks in industries such as nuclear power and tobacco, as well as selecting stocks in companies with positive social, environmental or ethical records.

Oppressive regimes and armaments were the two issues most frequently cited by charities as those they would want to avoid in their investment choices.