Fundraising Leaders Survey 2021

This year Fundraising Magazine is running a Fundraising Leaders Survey to gain some insight into how the pandemic has affected income and fundraising across the sector. Please take a few minutes to complete this important survey

Charity investment returns halved this year, says survey

08 Oct 2018 News

Charities have seen half the financial returns generated by their investments this year compared to last year, a survey has suggested.

Newton Investment Management surveyed 97 UK charities, with assets amounting to over £11bn, and found that in the year to 31 March 2018, the average total return for charities was 4.2 per cent, compared to 10.9 per cent in the preceding 12 months.

The majority of charities that responded feared the UK’s impending exit from the EU would have a negative impact on their portfolios, with four fifths saying it could affect both their capital and their income.

The survey found that more charities appear to be making withdrawals at a higher rate than they regard as sustainable.

In 2018, almost a quarter of charities took a withdrawal of 5 per cent or more to spend on their charitable activities, compared to an eighth of charities in the 2017 survey.

This has pushed the average withdrawal rate to 4 per cent in 2018, up from 3 per cent in 2017 and above the sustainable withdrawal rate, which charities believe is 3.4 per cent.

Three-quarters of charities that responded felt the legal and regulatory environment had become tougher over the last five years, with two-thirds also saying that this tougher environment had increased their charities’ costs.

The survey results suggest a lack of diversity of ethnicity and age. Just 4 per cent of trustee board members are from a black and minority ethnic (BME) background, and just 7 per cent are under the age of 40.

Ethical factors more important

Meanwhile, almost three quarters of charities in the latest survey, compared to almost two thirds in the 2017 survey, said that environmental, social and governance factors were important to them when considering the management of their investment portfolio.

On the whole, charities felt the issue was “quite important” rather than “very important”, with two fifths of charities expressing this view.

Jeremy Wells, senior client director of charities and institutions at Newton IM, said: “Over the last five years we have noted a steady rise in charities’ desire to see their ethical criteria applied to investments held in pooled funds as well as those held directly.

“The charities surveyed clearly showed that it is important to take ESG factors into account when investing, and to engage to change company behaviours.

“When asked what they felt was the best approach to dealing with companies that score ‘badly’ on ESG criteria, by far the most prevalent response was to engage with or pressure a company to change its behaviour, a response that was almost three times more popular than to exclude the company from an investment portfolio.”

For more news, interviews, opinion and analysis about charities and the voluntary sector sign up to receive the Civil Society News daily bulletin here



More on