Pandemic pressures forcing charities to sell investments
Melanie May | 14 December 2021 | News
64% of charities with at least £1 million of investable assets have had to sell or cash in some of their investments during the pandemic because of a fall in income, new research shows.
The research, from the charity investment arm of independent investment manager James Hambro & Partners, reveals that four out of ten charities (42%) say they have been forced to do this to meet growing demand for their services during the pandemic.
James Hambro & Partners surveyed 100 senior executives of UK based charities in the summer, with a combined £3 billion in investible assets (stock market related investments).
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With investible assets relied upon to bring in an income, 18% said that the funds they generate has fallen dramatically since the pandemic started, and a further 52% said they have fallen slightly. Only one in ten said the income generated from their investments had risen while 20% said there had been no change.
In addition, looking at the value of these assets, 15% of those surveyed said that since the pandemic began the value of their investment assets had increased dramatically, and a further 59% said they have risen slightly as stock markets around the world have risen. Only 15% said they have fallen in value, with the remainder saying there has been no change.
Nicola Barber, Partner-Head of Charities, James Hambro & Partners said:
“For those charities with investment assets, not only are they important to their overall financial strength, but they also provide a very important source of income to help them meet their objectives and provide the services they offer. Although stock markets have risen, portfolios that were targeting income suffered as dividends were cut or cancelled. Our analysis of FTSE 100 companies reveals that last year, 32 dividends were cancelled, 9 were cut and 13 were suspended.
“The continued fall in bond yields has also added to the challenge for income investors. In our experience charities that have been able to take a total return approach, targeting returns through capital growth as well as income have fared better.”
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About Melanie May
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 thepurplepim.com.