The Charity Authorised Investment Fund, a new model for charities to pool their funds and make investments, has been launched today.
Plans for the new CAIF model were initially announced in last year’s March budget and was developed as an alternative to the Common Investment Fund (CIF), which enables smaller charities to pool funds for investment purposes.
The new CAIF will offer some of the same benefits as the CIF – including tax benefits for registered charities - as well as additional benefits, such as improved regulatory oversight and exemption from VAT on investment management fees. The investment manager, State Street, estimates that savings on investment management fees will in the region of £12m per annum.
The launch of the fund follows “years of work” by the bodies, according to a joint statement by the Charity Law Association and Charity Investors Group.
A spokesman for the Charity Commission said the regulator welcomed the introduction of the fund and said he “strongly encouraged existing Common Investment Funds to consider taking advantage of the benefits offered by the CAIF structure, including the more effective regulation of invested charitable funds”.
The spokesman said charitable funds invested in the CAIF would “benefit from dual regulation by the Commission and the Financial Conduct Authority, providing essential oversight in their respective regulatory roles”.
This morning the investment bank, Cazenove confirmed it would transfer its four existing CIFs to CAIFs “subject to gaining the relevant approvals”.
“This will ensure the most appropriate financial regulation for our charity clients and will also allow our investors to benefit from an exemption from VAT on investment management fees, thereby reducing the cost,” it said.
“We congratulate the Charity Investors Group and our colleague Kate Rogers, in her role as chair, on championing this important development as we recognise that both effective financial regulation and value for money are key considerations for charity investors.”
The CIF was previously criticised for its adverse tax treatment, relating to VAT on management fees.
Related articles
