Jane Hobson, head of policy at the Charity Commission, has said that charity trustees need to carefully weigh up the risks involved in investing in social investment, as it currently has a low level of regulation compared to mainstream investments.

Hobson was speaking at the Charity Investment Forum 2012 on the Commission's revised guidance on charities and investments -  CC14.

Late last year, the Charity Commission produced new guidance clarifying that it is amenable to allowing charities to choose investments that provide social as well as purely financial benefits.

Hobson told delegates at the Charity Investment Forum that a significant minority of charities were interested in this area, but she warned:

"It is a developing market, not regulated like mainstream investment. So trustees need to weigh up the risks of these investments carefully."

Examples of social investment which Hobson gave included programme-related investment where charities used investment to directly further their object while making a possible return, and mixed-motive investment. Hobson also highlighted that the new provisions in CC14 on traditional financial investment clarified that charities could invest to have a shareholder activism role.

"A charity can buy shares in a company to encourage it to adopt behaviour in line with its objects," she said.

Hobson said that the Commission had received a largely positive response to its CC14 guidance, with stakeholders pleased it took an enabling tone. She added that some hoped that the new guidance will help develop a social investment market for charities.