The Comic Relief investment scandal of 2013

The choice between principle and profits is not of concern for the third sector but ethical decisions and transparency on the other hand? 

The fine balance between trust and a tarnished reputation can wobble when a charity fails to consider if its financial decisions align with its overall mission. 

As told on episode 1 of Uncharitable podcast (Listen below)

This is exactly what happened to Major UK Charity Comic Relief when BBC docuseries Panorama 

produced by Declan Lawn broadcasted their investigation titled “All in a good cause” 

The accusations that arose claimed that between 2007 and 2009, money was put towards investments that appeared to contradict several of its core aims. 

Although Comic Relief operates as a partner to thousands of charities, it doesn't run its own projects. Instead, it pays out grants to approve projects after a vigorous application process.

Its money is usually drip-fed, over time, once approval has taken place, to ensure long-term support, so this means that at any given time, Comic Relief can hold tens of millions of pounds.

To ensure long-term survival, it seeks options to financially stabilise its operations too.

The charity began using several managed funds that invested the money on their behalf which led to unethical industries becoming a part of their portfolio. 

Despite proudly stating on its website that it has a long history of supporting refugees displaced by conflict the charity had £630.000 invested in weapons firm BAE Systems. 

A further £300,00 was invested in Diageo   A British alcoholic beverage company founded in 1997. 

And despite giving just over £300, 000 to Target Tuberculosis  a charity that, like The World Health Organisation, recognises the increased risk of contracting the disease in those who smoke. 

Comic relief ploughed even more into tobacco funds in 2009, an estimated 3 million. 

As the scandal broke, Comic Relief faced an immediate public relations crisis. Forcing their hand to announce a full review of their investment policy. with a promise to disclose the findings from an independent review within eight weeks.

The following year, the charity confirmed all investments within the Arms Tobacco and Alcohol industry had ended. 

"Public trust is the cornerstone of the charity", said Comic Relief chairman Tim Davey. However, a full ban on unethical companies would not go ahead over the concerns of reduced options available for investment.

But as a gesture of goodwill, the charity wanted to set aside a small proportion of money for social investment and follow all 5 recommendations suggested by an independent review which are as follows: 

1.      To no longer invest in companies associated with tobacco, arms or alcohol.

2.      To continue to set aside a small proportion of capital for social movement.

3.     Sign up for the UN Principles for Responsible Investment. 

4.     To build stronger links between its investment committee and the trustees to ensure policies are aligned.

5.     To be more transparent about its investments in published annual accounts. 

"We would be nothing without our many supporters to whom we have listened and will keep listening” claimed Tim Davie We now have an investment policy that is firmly in line with the ethos of the charity, at the same time as making sure that the money we raise can go further to change lives both here in the UK and abroad."