The Charity Commission has published revised guidance on common investment funds and common deposit funds, two types of specialist fund which only charities can invest in, and has promised to continue regulating them.
CIFs and CDFs are registered charities, enjoy charitable tax breaks, and are regulated by the Commission. However they are run by commercial investment managers, who are subject to oversight by the Financial Conduct Authority.
A new European directive called the Alternative Investment Fund Managers Directive (AIFMD), which governs fund managers, comes into force next week, and the Commission has had to make changes to its model documents to comply with those regulations. It recently consulted on those changes.
The Commission has previously examined the possibility of removing CIFs and CDFs and replacing them with other types of fund, or transferring primary responsibility for their regulation to the FCA. However it says it has now “recommitted” to continuing to regulate CIFs.
But it warns that the tax advantages of CIFs are no longer as great as they were, and that Commission regulation should not be seen as a stamp of approval.
Jane Hobson, head of policy at the Charity Commission, said: “We know that these investment funds are well used, with over 30,000 charities investing in either a CIF or CDF. Figures given to us by the funds show their combined net assets to be in excess of £9bn and such a significant amount of money properly deserves the protection of regulation by the Financial Conduct Authority.
“However, we accept that charities also feel assured by our regulation of the funds as charities and so we have recommitted to this. But we must be clear - our role as regulator should not be viewed as a mark of endorsement of the funds for use by charities.
“Trustees must continue to make informed decisions about how to invest charitable funds, and they should consider taking professional advice where necessary.”
The full revised guidance is now available on the Charity Commission website.
