Trustee Act 2000 On February 1, 2001 the Trustee Act 2000 came into effect. It applies to most charities in England and Wales and is intended to bring the statutory powers and duties of trustees up-to-date. A key element of the legislation is the introduction of a statutory duty of care, including a duty to take proper advice in relation to investments. In addition to suitable financial advice, this includes any relevant ethical considerations as to the kind of investments that are appropriate for the trust to make.   Under the Trustee Investments Act 1961, trustees were compelled to divide charity assets between narrower and wider range authorised investments. The narrower range was often fixed interest securities and the wider range investments were shares. Strict rules applied to the division of funds between ranges. The new Act replaces this complex system with a "general power of investment" that can be used in relation to any charity property held on trust. When exercising the general investment powers, the new Act requires trustees to: adopt a statutory duty of care take proper advice have regard to the "standard investment criteria" This "standard investment criteria" is outlined in Section 4(1) of the Trustee Act 2000. It states that trustees must have regard to the suitability to the charity of the investment proposed and recognise the need for the diversification of the charity's investments. This applies to both the exercise of the power of investment as well as when reviewing investments. It is this question of "suitability" that may have the greatest influence over the ethical considerations of your charity's investments. The Charity Commission's initial guidance on the Act's key effects explains: "Suitability relates both to the kind of investment proposal to be made or being reviewed and to the particular investment as an investment of that type. It will include considerations as to the size and risk of the investment and, in the case of endowed charities, the need to be even-handed between the interests of present and future beneficiaries of the charity. It will also include any relevant ethical considerations as to the kind of investments that are appropriate for the trust to make". Full guidance on effect of the Trustee Act 2000 can be found on the Charity Commission's website http://www.charity-commission.gov.uk It is also published in the revised version of their guidance booklet CC14 - Investment of Charitable Funds: Basic Principles. Back to top