To maximise the return on these hard-earned funds, investing carefully is vital. Through investing, charities have the potential to generate growth to protect their assets from inflationary risk and create a sustainable source of income, helping to further their charitable aims. EFG Harris Allday currently manage or advise on assets for over 200 UK based charities, ranging in sectors such as education, arts and culture, and sport.
We have created a short guide for trustees below, with key areas to consider when it comes to making well informed investment decisions.
1. Understand your responsibilities as a Trustee
Trustees are responsible for their charity’s investments; decisions made should be in the best interests of the charity. Many charities can appoint an Investment Manager to undertake the day-to-day management of an investment portfolio, whilst providing ongoing guidance and expertise based on an agreed strategy.
2. Create an investment policy statement
It is important to understand and keep a record of reports and valuations to monitor your charity’s investment performance and support policy decision making.
An investment policy statement provides a record of financial goals and objectives, which should be reviewed on a regular basis. Keep an up-to-date document which can support decision making in the annual report.
3. Understand and comply with the legal requirements
Ensure that the charity follows its governing document and fulfils its legal requirements. A governing document may show restrictions when it comes to the use of power of investment – these are normally set out in the articles of association. Always seek guidance.
4 Consider reputation and purpose
Reputation is key. Investments should be carefully considered as they could impact the charity’s reputation. Consider the purpose of your charity – are there any investments which do not align with your charity’s mission? Poorly managed investments could impact a charity’s level of trust with the public in the long-term.
5. Ask for guidance
Many trustees choose to further their knowledge through training, mentorship, and trustee networks. When it comes to investment management support, discuss your thoughts and concerns with an experienced professional.
For charities registered in England and Wales, further information can be found on the Charity Commission website: www.gov.uk/charity-commission
The value of investments and any income from them can fall and you may get back less than you invested. Past performance is not a guide to future performance.