Charity Commission consults on reforms to common deposit funds

The Charity Commission has begun an eight week consultation on proposals to amend the schemes that it makes to establish Common Deposit Funds (CDFs).

In essence CDFs are a type of investment fund.  They are deposit-taking schemes which only charities can invest in and they are deemed to be charitable in law.  CDFs accept deposits from charities and pool these monies together to be deposited on the money market.  As a pooled and larger sum, the deposit may secure a higher rate of interest for the depositing charities than each charity would otherwise obtain if undertaken separately.

CDFs are established by the Charity Commission scheme.  The Commission intends to amend its model schemes because of changes in how managers of some investment funds, including CDFs, are regulated.  These changes derive from the Alternative Investment Fund Managers Directive, which came into force in July 2011.  Transitional provisions may remain in place until July 2014.

The Commission expects to have the new model scheme in place in sufficient time to enable managers of CDFs to comply with the Directive.

For more information please contact Joanne Davison or call 0191 211 7958.