The value of investments and any income from them can fall and you may get back less than you invested.

Signs of the times

In the charity investment world, we often cite CC14, the Charity Commission’s guidance and legal framework for the management of charitable investments. Though not all the legal requirements apply outside England and Wales, it is often taken as a good practice guide in other areas.

Trustees and others working with them cannot rely solely upon CC14 for all guidance on the good stewardship of assets. There is a raft of other useful guidance we think worthy of reading, including CC19 (Charity Reserves; building resilience) CC26 (Charities and risk management), often referred to in our trustee training seminars. There are other useful documents we have been looking at and wish to commend. One is the fairly short and succinct ‘Charity Finance; trustee essentials’, which contains a good insight into setting a reserves policy and things to be considered; as well as guidance on some investment issues, internal financial controls, land, financial difficulties and insurance.

Last year, the Commission also produced a valuable set of questions Trustees should be asking at their meeting table. In summary, the key questions are below:

CHARITY GOVERNANCE, FINANCE AND RESILIENCE: 15 QUESTIONS TRUSTEES SHOULD ASK

Source: Charity Commission, March 2017

DATA PROTECTION

The new data protection regime that applies to us in all walks of life comes into effect on 25 May 2018. It is the most common topic we have covered at our own events and seems to be the number one topic across the charity sector.

Whilst all charities must grapple with the subject (and comply with the law), many do not have a large number of staff nor an appointed Data Protection Officer in their fold. The Information Commissioner’s Office (ICO) has set up a dedicated advice line to help small organisations to prepare for the new law. They can be reached on 0303 123 1113 (then select option 4). Frequently asked questions and can also be found on their website at: https://ico.org.uk/for-organisations/ charity/charities-faqs

 

WHAT THE RESEARCH IS TELLING US

Late last year, Brewin Dolphin published its first ever research into the investment concerns of charities and the wider context in which they are operating. The research was commissioned by Brewin Dolphin but conducted by independent researchers. The purpose was to examine how UK charities are dealing with today’s investment and other challenges.

The findings, published in the report What matters most?, reflect the views and experiences of more than 120 charities across the UK. Key findings confirm that the financial stresses being felt include concerns about financial sustainability and income, the low growth environment and the increased burden of regulations at a time when needs for support continue to grow. Their other key finding, which very much reflects our own conversations with charities, was the focus charities have upon finding the right balance in their investment solutions between the purpose of the investment and the range of risks.

We recognise that charities are many and varied and need to be treated individually, albeit many have similar requirements. We wanted to understand better how the investment concerns may differ between those who make grants and those providing services. The key distinction is the reliance grant making charities have upon their investments for all or most of their income; and the more varied income sources and financial issues faced by those raising funds and receiving other forms of income. The main concerns of grant makers were low interest rates, investment risk and the risk of a global recession, with their main investment risk worries being low growth, volatility and absolute loss. For service providers, the main concerns were political uncertainty, followed by low interest rates and investment, with the key investment risk concerns being liquidity and inflation. 

If you would like a full copy of Charity investment: What matters most? Please email us at: charities@brewin.co.uk

TAKEN ON TRUST

The report Taken on trust (November 2017) is an illuminating piece of research into the awareness and effectives of trustees. It recognises, rightly, the immense contribution trustees make to the management and output of over 165,000 charities and the responsibility they have for more than £75 billion of assets. More than 700,000 trustees steward these assets and the report comments upon board diversity, skills and other areas that may assist charities in their thinking and their planning.

 

Perhaps not surprisingly, the survey showed that nearly a quarter of trustees sit on more than one charity board and overall devote an average of 4.88 hours a week. More than a quarter are feeling undue pressure and considering if they wish to remain in the role. There are statistics and comments about the need to diversify the skills on the board and some of the areas of expertise they require. All of which suggest that many more trustees and of a more diverse nature may be sought in the sector, particularly in smaller charities, where trustees regularly fulfil more than one role and where there are often no staff to take on day to day activities.

Taken on trust can be found at:

https://www.gov.uk/government/publications/taken-on-trust-awareness-and-effectiveness-of-charity-trustees-in-england-and-wales (Please note, the research in this link only covers charities in England and Wales).

Ruth Murphy

Head of Charities

The information contained in this article is believed to be reliable and accurate, but without further instigation cannot be warranted as to its accuracy or completeness.

The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin Ltd.

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