Ethical dilemmas and the third sector

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This week, I examine the importance of ethical investments within the third sector and how, even with a charity’s best interests at heart, the public may still disagree with its practices.

The recent Co-Operative Bank saga has given rise to much discussion around ethical investment and how businesses make their money. Charities are very much faced with wanting to make as much money as possible from their investment – to of course reinvest in essential service delivery – but both businesses and third sector organisations have not always been made aware of how their investments are managed or placed.

Charities are quick to be placed under closer scrutiny for the decisions they make, irrespective of the fact so many other private sector businesses operate far more unlawfully. Where there’s a prime-time documentary looking at ethical decision-making, you can usually guarantee a charity will unfortunately be at the centre of the investigation.

At the heart of a recent Panorama investigation was Comic Relief. Panorama revealed the charity held multi-million pound investments in tobacco, arms and alcohol companies – all considered to offer the best returns for investment portfolios.

The public responded negatively (and vocally!) to the investigation via social media and as a result Comic Relief has since pulled 95% of funds from those unethical areas.

Does this investigation mark the first of many to come? Once again is this a case of a charity finding itself between a rock and a hard place when it comes to attempting to do their best to generate funds to plough back into essential services – but what ethical price comes from wanting to generate the best return?

Comic Relief declared: “The most important thing for us is to keep the trust and faith of the public. We would clearly be keen to be in ethical funds if they match other funds and that’s something our committee will look at”. Financial decisions can unfortunately collide with public opinion and it is the donating public that charities are keen to keep on side – demonstrated only too clearly by Comic Relief’s fund portfolio changes.

Charities deserve support and more clarification over the rules around ethical investments; perhaps there is a task for the Charity Commission here regarding more specific guidance surrounding these issues.

Third sector organisations work hard to uphold unblemished reputations and it seems particularly unjust that the actions of trustees can cause them to come under scrutiny.

May the case of Comic Relief be one to consider, and prompt an opportunity to review decisions which often have the best interests of charity beneficiaries at heart but can sometimes give rise to public backlash.

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