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The Law Commission is the statutory independent body created by the Law Commissions Act 1965 to keep the law under review and to recommend reform where it is needed. The aim of the Commission is to ensure that the law is:

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Professor Elizabeth Cooke

Professor Elizabeth Cooke

Clarifying the legal framework for social investment by charities

We are consulting on the law that governs how charities make social investments.

Social investment is an important and developing area for charities. It enables them to meet their charitable objectives by combining investment and spending. Many charities are already making social investments but the lack of clarity in the law about the precise powers and duties of charity trustees may be deterring others.

In our consultation we are asking whether the introduction of a new statutory power to make social investments, and a checklist of factors that may be considered by trustees, would bring clarity and certainty and give trustees more confidence in making social investments. We are also reviewing the circumstances in which charities can make social investments using permanent endowment. 

Law Commissioner Professor Elizabeth Cooke said: “Charities have a special place in society. The contribution they make is made possible, in part, by how they spend their money. The reforms we are proposing would make social investment more straightforward legally. We are asking consultees: would our proposals help trustees to make the best of the opportunities offered by social investment?”

The consultation closes on 18 June 2014.

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