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Financial concerns see charities rethinking investments, report shows

Financial concerns see charities rethinking investments, report shows

Need for income and the impact of political uncertainty are the biggest concerns for charities when considering their investments, a Brewin Dolphin study has found.

The Brewin Dolphin study Charity Investment: What Matters Most? looks at what UK charities take into consideration when making investment decisions, and what the drivers are for these decisions.

It found that 67% of charities cite the need for income as their main concern. The impact of political uncertainty was the second main concern with respondents worried about the potential loss of care workers and EU staff availability as a consequence of Brexit at a time when demands for charity resources and support are increasing.

The biggest investment risk concerns were low growth and low interest rates (49%), followed by volatility (41%), absolute loss (23%) and inflation (22%). Service-providing charities’ main concern was liquidity (71%) with grant making charities most worried about low growth (60%), volatility (59%) and absolute loss (57%). Overall, three quarters (76%) of respondents currently receive interest of 0.5% or less on their cash deposits.

Respondents were aware of the need to ‘put their money to work’ and keep their longer-term assets ahead of inflation and just under half (49%) had discussed a different approach to managing their portfolio income with their investment manager. More charities are also investing in, or considering investing in, alternatives to deliver returns with 36% of respondents currently invested in alternatives (including property), and 26% possibly interested.

More expert guidance is needed though: nearly 80% also agreed that the investment industry should do more to help by explaining the implications of volatility versus absolute risk and more than two thirds (70%) agreed their board would benefit from new trustees with more varied backgrounds and skills.

Ruth Murphy, Head of Charities at Brewin Dolphin said:

“The complex, fast-changing investment landscape makes it hard for all but the exceptionally well-informed to keep pace with the latest investment thinking and, whilst many have skilled investment professionals on their committees, we need to remember that both trustees and charity staff have many other responsibilities and roles.

“It is incumbent upon the investment industry to do all that we can to provide charities with the expert support they need and for policymakers to foster the conditions that will enable all parties to work together to help charities make long-term decisions with confidence. We in the charity investment management sector must retain focus on agreeing and implementing the sustainable investment policies on which charities and their beneficiaries depend.”

Melanie May is a journalist and copywriter specialising in writing both for and about the charity and marketing services sectors since 2001. She can be reached via

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