Review Trustee and Charity Investment Portfolios

Many Trustees and Charities do not hold investments as part of their portfolio. Trustees should be aware of the requirements of their Trustee Duties which may give direction in this regard.

For Charities opting to keep their capital in the bank which can, in contrast, restrict organisations from improving their capital position and supporting their charitable endeavours.

Fundamentally, when cash is kept idle, it fails to generate significant returns (especially during bouts of high inflation) and therefore loses value in real terms over time. Periods of economic volatility and currency fluctuations can also impact the value of cash holdings.

The lack of significant investment return from cash reserves can slow down the progress of charities, hindering their ability to fund their objectives and missions, particularly if they have an un-tailored and inflexible strategy in place to achieve their goals. The Charity Commission’s published data, based on the annual returns of 12,973 charities during 2022 with annual income of over £0.5m, shows that 7,551 do not hold any long term investments.

That’s 57% of the largest UK charities holding only cash and fixed assets such as land, buildings, equipment and vehicles. Surprisingly, 59% of the assets held by these charities are unrestricted – meaning that they can be invested as the trustees see fit to benefit their charitable purpose. That’s £147bn in the UK economy that could be used to generate returns, drive impact through investing and provide charities the ability to increase societal benefits.

It a Trust or Charity does hold investments it is important that these are aligned with your objectives which may be social, ethical, sustainable.