How to review your investment policy
Review your investment policy using our key questions. Use our model investment policy and examples from trusts to benchmark your own policy.
- Key facts
- What this policy needs to do
- 3 key questions to challenge this policy
- Model policy from The Key
- Examples from MATs
Key facts
- This policy is statutory for academies and free schools
- It's not included in the Department for Education's current list of statutory policies, but the requirement is set out in the Academy Trust Handbook (paragraph 2.22).
- We recommend that your full governing board approves it
- You're free to set your own review cycle, though the policy should be reviewed regularly
- Trust leaders will write and be responsible for the implementation of this policy
What this policy needs to do
Academy trusts must have an investment policy in place to manage and track their financial exposure and ensure value for money, as set out in the Academy Trust Handbook (paragraph 2.22).
As well as having the policy, the trust must also:
- Make investment decisions with care and skill, taking advice as appropriate from a professional adviser
- Invest so that security of funds takes precedence over maximising revenue
- Make sure investment decisions are in the trust's best interests
- Review both the investments and the policy regularly
You'll want to see that all of these duties are reflected in the policy. To make this clear, the policy should include:
- Who is responsible for tracking and reporting on investments, forecasting cashflow and making decisions on investments
- Some tasks could be given to the finance committee, some to the chief financial officer (CFO)
- A statement of investment principles and procedures
- The monitoring arrangements for the policy
3 key questions to challenge this policy
1. What are your investment principles based on?
You'll want to hear that your trust leaders have taken into account the requirements in the Academy Trust Handbook mentioned above – so the emphasis should be on caution, risk reduction and the best interests of the trust.
2. How did you decide on the frequency of the policy's review cycle?
You want to know whether reviews will be regular enough to make sure the policy stays effective, and feel assured that changes will be made when needed.
3. Do those responsible for tracking and reporting on investments, forecasting cash flow and making investment decisions have the necessary skills and experience?
Your trust leaders should explain how they know this is the case, and whether and further training is needed.
If your CFO has specific responsibilities around investments, ask whether this is reflected in their job description.
Further questions
See more questions to ask when reviewing any policy.
Model policy from The Key
Our model investment policy is from our sister service, The Key Leaders, and:
- Has been approved by Forbes Solicitors
- Is designed for your trust leaders to adapt to suit your context
All of our model documents take account of relevant requirements and good practice.
You can use our model document to see what a good policy might look like and benchmark your own policy.
Examples from MATs
The Community Academies Trust has an investment policy which includes precise details of how funds should be invested – see the 'policies/data' column.
The Tudor Grange Academies Trust has a reserves and investment policy which sets out the roles and responsibilities of the finance and personnel committee (FPC). You can find the policy in the 'policies finance' section.
The STAR Multi-Academy Trust features its investment policy in the 'finance, estates and operations policies' section. The policy sets out the powers given to the trustees and how this is delegated to the finance and risk committee.