Charity Authorised Investment Funds (CAIFs) have been developed by a working group including the Charity Investors Group, the Charity Law Association and the Investment Association, the trade body for asset management firms working alongside the regulatory authorities.
The structures could save charities up to £12m a year* in VAT and offer the advanced protections afforded by an FCA-authorised fund.
They will continue to offer the same benefits as the existing unauthorised charity fund structure, the Common Investment Fund, which include the ability to smooth income levels over multiple years.
Common Investment Funds are estimated to have assets of £12.3bn** with 13,000 charities invested***.
The Charity Authorised Investment Fund offers the following new benefits to charities:
Like the existing regime, CAIFs will only be open to investment from charities and will themselves be registered as charities and so enjoy full charitable tax status.
Peter Capper, Fund and Investment Risk Specialist at the Investment Association, said:
“We firmly believe that this is a positive development for the Charity sector and the effective management of Charity assets.
"This new structure combines clear tax efficiencies and full regulatory protection in a tailor-made product suited to the asset management industry’s clients in the charity sector, which clearly need every advantage they can get in order to deliver for good causes.”
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Notes to Editors:
The Investment Association has made available a model trust deed, produced with the assistance of the Charity Law Association, available on its website along with a basic guide to the structure: http://www.theinvestmentassociation.org/investment...
More detail on the regulation of Common Investment Funds can be found on the Charity Commission website: https://www.gov.uk/government/publications/common-...
* Source: State Street, based on Common Investment Fund assets under management as at 31st March 2016 and an average investment management fee of 0.5% per annum and assuming all existing CIFs convert to the CAIF structure.
** Source: State Street as at 31st March 2016.
*** Source: Charity Commission Guidance, according to 2012 annual returns.
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