Report calls for more finance guidance
The House of Commons Treasury Committee published its fifth report of the session 2008 to 2009...
... Banking Crisis: The impact of the failure of the Icelandic banks on 4 April 2009. It recommends ‘on this occasion only, all charities should be compensated for losses incurred as a consequence of the failures of the Icelandic banks’ and that the Financial Services Compensation Scheme re-examines the criteria for classification of charities as retail or wholesale depositors.
The Committee expressed its concern that ‘one of the tests a charity must pass to be protected under the FSCS definition of a retail depositor is inappropriate for those charities using fixed assets in the course of their work’. A large number of the charities affected were not classified as retail depositors (see Caritas, issue 12, November 2008, page 4) and have been unsuccessfully trying to recover funds from the administrators.
Research conducted by ACEVO, CFDG, NCVO and CAF last year found that 48 charities had lost £86.6m in deposits, but not all charities came forward and declared their losses. John Low, CAF’s CEO gave evidence to the Select Committee confirming in his view that there was little financial guidance available to charities and that ‘the Trustee Act 2000 was the only statutory measure that governed the behaviour and duties of a charity’s trustees. The Charity Commission had issued guidance on how investments should be handled but this was non-statutory’. In particular, he explained that the Commission ‘did not have a view on offshore investments and did not provide guidance on the issue. Trustees had an obligation to obtain the best possible return for their investments and were obliged to take into account the risks associated with those investments’.
Andrew Hind, CEO of the Charity Commission told Caritas: ‘Our advice to charities on investing funds is very clear, and is published in our guidance for all charities, Investment of charitable funds: basic principles. It states that the fundamental principle governing trustees' decisions about investing their charity's funds is that they must take a prudent approach, considering both the suitability for their charity of any investment and the need for diversification.’
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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