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Most Ontario charities invest surplus funds under the prudent investor rule in the Trustee Act, but specific investment powers in founding documents, gift agreements, or incorporating legislation can override or supplement that standard — making a review of these documents essential before any investment policy is adopted.
Boards also need to address delegation of investment decision-making, diversification requirements, and disbursement policies for investment proceeds, particularly where endowed funds are involved.
A growing number of charities are making social investments under the Charities Accounting Act (Ontario) or program-related investments under CRA Guidance CG-014, and the failure to distinguish between these two overlapping but distinct regimes — and comply with both — is one of the most significant and underappreciated investment compliance risks facing Canadian charities today.
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