If your charity has any money or assets that are surplus to immediate requirements and you want to invest them, either to make money to spend on your aims (financial investment), or as a means of directly furthering your aims (social investment) then you need an investment policy.
You need to think through what you want to achieve with your investments, writing that up into your policy which then creates a frame of reference to support the Trustees to make good investment decisions.
There is plenty of guidance and support available because this is a tricky subject, here are some of the more straightforward offerings:
Loans can be a useful way to get hold of money, but need to be handled with care. As well as testing the financial viability of any loan, you need to ask yourself some questions about the circumstances in which your organisation would be prepared to borrow money.
Large loans will often require some security, for example a mortgage on a property. If this is required you need to assess the risk to the organisation if something were to go wrong. For example if the loan was secured on a building, what would be the impact if you had to sell the building?
Small organisations are unlikely to take out many loans, so a standard form seems like overkill, but you should present a report to the trustees that allows them to make a responsible decision (comparing lenders if appropriate). It would cover issues like:
The basic details of the report, and their decision should be minuted.
CC8 Internal Financial Controls for Charities section 4.9 issues guidance about what you should document for any loans you hold.
Last reviewed: 30 May 2019
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