UK – Charities with investment portfolios are becoming increasingly concerned about market volatility as well as declining capital and income returns, suggests the latest 2002 Survey of Charitable Funds.
The survey sought the views of 141 charitable funds in the UK, which have combined total assets of around £17bn (€27bn).
The report finds that, other than market uncertainty and falling returns, over two thirds of respondents are concerned about both sector and stock risk. Benchmark risk is also a worry for almost half the funds surveyed.
Says Kevin Sims, partner at the Charity Fund Partnership: “Issues relating to the funding of charities, whether from donations, legacies, investment income or capital growth clearly dominate the concerns of charities.”
Elsewhere, nearly half the charities polled said that they have their own policy regarding socially and ethically responsible investments, whilst a third said that the level of service they receive from investment managers is excellent.
As far as asset allocation is concerned, very few charities invest in real estate or venture capital and private equity. Only one in ten use external consultants to advise on investment strategy and just 8% employ an independent custodian.
Adds Sims: “One thing that is very clear from this research is that the benefits of independent custodianship are largely unrecognised in the charities sector. Indeed, 16% of respondents said that they did not even know which custodian is holding their assets. This is a very disturbing finding.”