Investment Policy Statement: Template for Charities
This document is intended as a comprehensive example of an Investment Policy Statement that
incorporates all of the elements outlined within the accompanying Investment Policy Statement :
Guidance Notes for Charities. The Content of each Investment Policy Statement will vary from
charity to charity in order to reflect their own unique objectives and needs.
Company Name: The Example Charity
Charity Number: 1234 56789
HM Revenue and Customs Number: 123 456 789
i) General background
The charity was set up in 1850 by way of a legacy of farmland in the St. Mary’s church
parish. Where possible the vicar and at least one church warden of St David’s church,
Rufford, Lancashire should be appointed trustees, with any other trustees being chosen
from those closely associated with the church’s activities. The income from the trust’s
assets is to be used solely for the purpose of supporting the activities of the church, but
specifically not for the maintenance of its fabric.
ii) Financial profile
The charity still owns land and property in the church parish of a value of approximately £6
million, from which annual rental income is achieved of the order of £200,000. An additional
£2 million or so is held in investments from which annual income is derived of
approximately £60,000. The total income generated at present is more than sufficient to
meet the charity’s normal outgoings.
iii) Investment powers
The charity’s assets must be invested in accordance with the Trustee Act 2000 and the
iv) Investment policy
a) General objectives
The investments must be managed in such a way as to provide sufficient income to
enable the charity to carry out its purposes effectively both in the short term and over
the longer term. Where possible, the value of the assets should be enhanced so as
to at least keep pace with inflation over the longer term.
The charity’s capital constitutes a permanent endowment, and only the income from
the charity’s investments is to be used for furthering the charity’s aims.
b) Balance between intended capital growth and immediate income requirements
An approximate balance is to be maintained between the enhancement of capital
and the generation of income.
c) Acceptable risk
A “medium risk” approach is to be adopted in the management of the charity’s
assets. Refer to “investment parameters and exclusions”.
d) Functions delegated to the trustees’ agent (investment manager)
The investments are to be managed on a “discretionary” basis.
Working capital might constitute up to 5% of the charity’s assets, and reserves a
further 5%. This proportion of the overall assets will be retained by the trustees,
although in this regard advice may be sought from time to time on cash deposits and
short dated bonds. The remainder of the portfolio will be subject to the guidelines
detailed in “investment parameters and exclusions”.
f) Investment parameters and exclusions
Any bonds held in the portfolio should be of “investment grade”, and all should be
denominated in sterling.
The trustees should be consulted in the event of the average yield on the portfolio
falling below 2%. No investment at the time of its acquisition should exceed 10% of
the overall value of the portfolio, and those investments that each account for more
than 5% of the total portfolio value should not combined exceed 40% of the total
funds under management.
The geographical and asset class constitution of the portfolio is to be based on that
of the WM “unconstrained” asset mix which, as at 28 September 2007, was as
WM “unconstrained” average asset allocation 28/09/07
UK Equities 53.9
Overseas Equities 25.0
The investment manager has discretion to vary the UK equity element of the portfolio
by up to 15% either side of the current WM position, the bond and overseas equity
element by up to 10% of the WM positions and property, other and cash elements by
up to 5% of the respective WM positions. In the case of cash, additional leeway may
be allowed after consultation with the trustees.
“Derivatives” may not be used without prior consultation with the trustees.
The objects of the charity are to be met by way of a prudent investment strategy
based on a diversified range of bonds and equities which are quoted on a
recognised investment exchange, and unit trusts and Open Ended Investment
Companies (OEICs) which are authorised under the Financial Services and Markets
Act 2000. The “type” of each investment and the individual investments themselves
should be suitable to meet the charity’s purposes.
g) Ethical Restrictions
The portfolio should not include any investments in companies where more than
25% of total turnover is accounted for by tobacco products.
No further ethical restrictions apply, although the trustees reserve the right to
exclude from the portfolio any investments in companies whose representation might
prove damaging, directly or indirectly, to the purposes or reputation of the charity.
v) Investment performance benchmarking
The performance of the overall portfolio is to be monitored against the quarterly
returns reported by WM Performance Services in respect of the “unconstrained”
charities under their review.
Income that has accrued in each quarter is to be transferred to the charity’s bank
account within 30 days of the respective quarter end. The trustees may, at their
discretion, re-credit all or part of these payments to the portfolio’s cash account.
vii) Funds held on deposit
Cash retained on deposit by Williams de Broë as part of the ongoing management of
the portfolio should be held in accordance with the terms of the contract between
Williams de Broë and the charity. It is understood that interest earned on cash
deposits will be not less than 0.5% below the Bank of England’s base rate; the
trustees are to be advised in the event of any changes to these arrangements.
As already stated, the trustees may, from time to time, seek advice from Williams de
Broë concerning cash balances held outside the portfolio.
viii) Use of nominee facilities
The investments are to be held by Williams de Broë’s nominee company.
ix) Appointment of the charity’s investment “agent” (investment manager)
Williams de Broë, a suitably authorised person within the meaning of the Financial
Services and Markets Act 2000, is the appointed investment manager, subject to the
terms of both this investment policy statement and subsequent amendments to the
statement, and the contract entered into between the charity and Williams de Broë
relating to the latter’s appointment.
The basis of Williams de Broë’s remuneration will be that detailed at the time of their
being appointed investment manager. One month notice should be provided to the
trustees in the event of Williams de Broë intending to amend its fee and commission
xi) FRAG 21/Insurance cover
Williams de Broë will provide on request both evidence of the company’s insurance
cover and a copy of its FRAG 21 document or its equivalent.
xii) Reporting requirements
A contract note and detailed explanatory letter is to be provided at the time that each
transaction is undertaken. At the end of each calendar quarter a valuation and
accompanying report is to be provided encompassing the following:-
A list of all investments held together with their respective book costs, current market
value, and estimated income and yield
A performance analysis for the period covered by the report (quarterly) providing the
statistics necessary to comply with the performance requirements detailed in the
investment policy statement.
A transaction schedule detailing both purchases and sales.
Details of any non-market transactions and rights issues, capitalisations or other
A detailed review of the market environment for the period including specific
comment on the individual holdings in the portfolio and any other economic
considerations that are relevant.
A separate report will be prepared at the end of the charity’s financial year, 31
March, providing such information as is required by the trustees to meet their
The trustees will require the nominated investment manager to attend meetings at
the offices of either Williams de Broë or the charity, as dictated by the trustees, as
frequently as is required but, in any event, at least every 12 months.
xiii) Required periodic reviews of both the written investment policy statement and
the provision of investment management services
The investment policy statement will be subject to reviews as required by the
trustees, and amendments will be advised in writing to Williams de Broë. In any
event, the investment policy statement will be reviewed at least once a year to
ensure that it remains compatible with the charity’s objects and requirements.
It is anticipated that the investment management services provided to the charity by
Williams de Broë will be formally reviewed every two years, or at such time as
deemed appropriate by the trustees. No notice period will be given by the trustees in
respect of termination of the services provided to the charity by Williams de Broë.
xiv) Exercising delegated investment functions
In addition to complying with the specific requirements detailed in the investment
policy statement the appointed investment manager must pay heed to the general
power of investment embodied in Section 3 of The Charity Act 2000. All investments
should be suitable and, overall, constitute a degree of diversification as required by
Section 4 of The Charity Act 2000.
xv) Powers delegated to an investment sub committee
While the charity’s investment policy has been set by the Board of trustees as a
whole responsibility for ongoing investment issues has been delegated to an
investment sub committee whose members are listed below. The minute relating to
this delegated authority is enclosed.
xvi) Authorised persons
The persons listed below constitute the charity’s investment sub committee.
Instructions relating to either investment issues or cash payments must be
authorised by two signatories, at least one of whom must be a trustee:-
Joe Bloggs : Treasurer
John Smith : Clerk to the trustees
Richard Adams : Trustee (Vicar)
Caroline Cox : Trustee (Church Warden)
Andrew Ramen : Trustee
Joan Metcalfe : Trustee
(on behalf of The Example Charity)
The Example Charity
1 High Street
(on behalf of Williams de Broë Limited)
Williams de Broë Limited
Austin Friars House
2-6 Austin Friars
London EC2N 2HD
This publication has been prepared by Williams de Broë Limited. The information and opinions contained herein are based upon sources believed
by Williams de Broë Limited to be reliable and no guarantees, representations or warranties are made as to its accuracy, comp leteness or suitability
for any purpose. Any opinion or estimate expressed in this publication is our current opinion as of the date of this publication and is sub ject to
change without notice. The value of investments and the income from them can go down as well as up and the capital values will therefore
fluctuate. Changes in rates of exchange may have an adverse effect on the value, price or income of investments denominated i n currencies other
than sterling. Past performance and the level basis of taxation may change, which could, in turn, affect investment advice. Williams de Broë Limited,
which is authorised and regulated by the Financial Services Authority and a member of the London Stock Exchange, is a wholly owned subsidiary of the
Evolution Group plc. WDB-IPTFC 07/08