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Foundations of a Robust Charity Investment Strategy: Starting with the Basics

Updated: Nov 28, 2023

Introducing our new series of articles on Strategic Investment Framework for Charities

We are excited to announce the launch of a new article series centred on the strategic investment framework for UK Charities, Endowments and Foundations. In collaboration with Robert Hayes, an esteemed independent advisor and recent addition to our team as a Senior Consultant, this series aims to offer insights into charity investment strategies.

 
Robert Hayes
Robert Hayes

Robert's extensive career spans roles as an institutional portfolio manager and investment strategist. His expertise lies in advising on asset allocation and risk management for charities, pension funds and global insurance companies. Previously an Investment Director for UK Charities and Endowments at BlackRock and CEO of BlackRock Fund Managers Limited, Robert now offers independent advice. In addition to working with PMCL, he serves as a Trustee and advisor for a number of institutions including the Goldsmiths’ Company and the University of Southampton.

 

When reviewing investment arrangements for Charities it can be easy to get lost in detail and confused by multiple conflicting ideas and issues. The last few years have been very challenging for many charities and there have also been significant changes in the investment and regulatory world.


The objective of these papers is to help equip trustees with a framework for reviewing, setting and implementing their investment policy which we hope will in turn lead to better outcomes for UK Charities and Endowments. We recognise that there can be a huge amount of jargon in investment so we have tried to set everything out in “plain English’. We also realise that some organisations may have sufficient skills and resource on their boards and investment committees to accomplish this work in-house, while others may benefit from involving investment consultants to assist them with the process.


The papers will be broken down into component sections so they can be read as a whole or used to address specific questions or topics as required.


What constitutes a ‘good’ investment strategy?

This first paper sets the scene by starting with the question of ‘what are the key requirements for a good investment strategy for a charity or endowment?’


Ultimately we believe that a ‘good’ investment portfolio needs to be aligned with six key factors, three specific to the Charity itself and three that are ‘external’.


The three Charity specific ones are:

Financial requirements

Your financial circumstances and requirements, in simple terms ‘what’s the money for, when might it be needed and what should be avoided’.

People and resources

The people and resources available for example, can you devote specialist time and attention to the topic or do you need to delegate to and ‘trust’ others outside the organisation.

Values and purpose

Your beliefs, values and purpose. To what extent can you align everything and especially can you avoid potential conflicts?

The ‘external’ factors that need to be accommodated are:

Legal position

The regulatory and legal position including, for example, any guidance from the Charity Commission that needs to be followed.

Macro environment

The overall macro economic environment which may impact the outlook for investment returns and risk including, for example, the level of interest rates.

Best practice

What might be considered ‘best practice and practical’ by your partners, suppliers and supporters, for example, having come up with a strategy can you actually implement it and at an acceptable cost.

Our Role in Supporting Your Investment Journey

At the outset, it is important to understand that all investments involve a degree of uncertainty and the judgements required by trustees and their advisors always will have an element of subjectivity. Therefore, (other than with the benefit of hindsight) there is no ‘perfect’ solution or single answer to the question ‘how should we invest our assets?’

By focussing on principles and process we are instead trying to set out a series of questions the answers to which will guide trustees to an appropriate portfolio.

Should your charity require professional support in any aspect of this process, we are here to assist. Our team is ready to discuss your specific needs and explore how we can contribute to your charity’s financial success. You can view client testimonials on our website for examples of the impact we've made with other clients.

Stay tuned for upcoming insights

Our subsequent articles will delve deeper into key topics:

  • First Steps: Setting your objectives and understanding your constraints

  • Developing the Plan: Transforming objectives and constraints into actionable policies

  • Getting into the Nitty-Gritty: Practical implementation and ongoing policy management.

We look forward to sharing these insights and supporting your charity's investment journey.



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