Charitable foundations see asset values tumble

Finance | Gareth Jones | 5 May 2009

Two of the UK’s leading grantmakers have seen the values of their portfolios tumble as a result of recent turmoil in the stock market.

The Wellcome Trust (pictured), the UK’s largest charity investor, saw its investment asset value fall by a massive £1.88bn to £14.05bn, ensuring its investment income fell by £17.5m to £255.1m.

In its annual report for the year ended 30 September 2008, the Trust said that “the depth of the financial crisis has exceeded our expectations”, and revealed that it suffered a negative return of 11 per cent.

In particular, it describes a 20 per cent fall in the value of its equity portfolio as “disappointing”.

In order to protect the value of its endowment, the Trust extended its equity sale programme to £4.5bn and eliminated a bias towards UK equities.

It also reduced its exposure to commercial property and raised liquidity to “high levels”.

Esmée Fairbairn reduces funding

Meanwhile, the investment assets held by the Esmée Fairbairn Foundation fell from £955m in 2007 to £740m last year.

This had a knock-on effect on investment income, which dropped from £35.6m in 2007 to £31.4m in 2008, but it was the realised and unrealised returns on fixed asset investments that really took a beating. These fell from a profit of £13.9m in 2007 to a loss of £216m last year.

The funder gave out grants totalling £21.4m in 2008, a drop on the previous year’s total of £23.2m, but said this was not connected to the drop in income. In its annual report, it said: “The reduction in our grant-making spend in 2008 was due to a slow build in the first part of the year following the introduction of a new approach to grant-making”.

Chief executive Dawn Austwick added that the Foundation intends to return to pre-2008 spending levels in 2009.

Who's Who: Tania Mason | Gareth Jones

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Barbara Lawton
Funding officer
Age Concern Cheshire
11 May 2009

As funders receive more and more applications from charities seeking grants, and with the loss of investment income as this article details, it IS undoubtedly going to get tougher for us funding officers in the sector to get grant monies.

It is unfortunately a fact of life. We will all have to become more creative with our projects, our user groups, etc.

[Reply]

David Sturt
Finance director
Bankers Benevolent Fund
6 May 2009

This article is overdoing the hype. I cannot comment on Esmee Fairbairn's fixed asset portfolio, but these are both large grant givers who can easily ride out short-term fluctuations in both capital and income. Both have taken action that they see as appropriate to adjust for the downturn, but neither is panicking and neither need others in the charity sector.

[Reply]

Martin Davies
Fundraiser
The Glebe centre
6 May 2009

Yes, both big organisations and both having to reduce what they can pay out.
The trusts won't go under but the charities relying on support from trusts may.

[Reply]

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