April 2008
For charities, finding the money to advance their missions is often a far from straightforward process. Yet, charities rightfully focus on sourcing new funds, they sometimes do not pay sufficient attention to the assets already under their control; if invested wisely, then they too can be an excellent source of income.
For that reason, we commissioned a report on this issue, "Investment Matters", a study of 60 UK charities with endowments of £10million or more, examines their investment strategies, highlights the most effective among them, and provides recommendations for their further development.
The report found that, despite greatly varying rates of investment return – between 22.1% and 3.7% over five years – almost all of the charities, some 96% of them, expressed satisfaction with their performance. It also found that there was no real correlation between investment return and size of endowment; the connection which it did reveal, by contrast, was that those charities with better returns tended to be those with investment committees and diversified portfolios.
Where, then, is it suggested that we go from here? Among a series of recommendations, “Investment Matters” calls for the updating of the relevant Charity Commission guidance, to decrease emphasis on risk aversion and include advice on alternative asset classes: it also proposes greater sharing of information between endowed charities, so that organisations of all sizes can share best practice.
Given the breadth and depth of its analysis, we are very pleased that “Investment Matters” is the subject of the first gathering in our ThinkPhilanthropy series. We conceived of ThinkPhilanthropy as a series of high-level discussions, working groups and publications that would help to build a vibrant and dynamic philanthropic sector in the UK; we did so to build upon the fine legacy left by the Institute’s founder, Hilary Browne-Wilkinson, in whose honour the grants for ThinkPhilanthropy were made. We look forward to sharing the findings of “Investment Matters” with you, and to further papers of this type, as we continue our work to increase effective philanthropy.