With a charity’s reputation arguably being its most valuable asset, it comes as little surprise to see Comic Relief blacklist arms, tobacco and alcohol companies from its investment programme following the criticism it received from the Panorama programme. 

In December last year, Panorama broadcast a programme reporting on how Comic Relief invests its funds. It was revealed that in 2009 the Charity had an investment portfolio worth £97 million, £300,000 of which was invested in shares in the alcohol industry, £630,000 was invested in BAE Systems and £3 million was invested in tobacco companies. 

Although the amounts invested in these controversial markets were a relatively small proportion of the overall portfolio, Comic Relief were criticised for supporting industries that go against its vision and purpose. 

The backlash the charity received from the programme reflects the public’s expectation that a charity’s duty to act for their benefit should be considered when making investment decisions. 

The other side of the coin to this is that it could be argued that the Trustees have a responsibility to manage charity assets so as to achieve the best possible return and in some cases, ethically screened investments may not provide the most attractive risk/return profile. To counter this argument, Panorama identified a number of ethical funds that avoid investing in alcohol, weapons and tobacco, all of which out performed Comic Relief’s portfolio over the three year period. 

The lesson to learn from the Comic Relief example is that in the interest of preserving reputation, the safest course of action for charities to take when making investments is to adopt an ethical investment policy.