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VAT for Charities Workshop – Tony Capon

Last week I attended a really useful ‘Foundations in Investing’ workshop being run by the Charity Finance Group. Despite being only an hour long, the session offered a lot of useful reminders regarding practice around investing and how charities can safely manager their long-term assets and reserves in order to get the best return. Here is a useful summary of some of the key information that will hopefully be helpful for your charity too:

Why do charities have investments?

  • To grow capital ahead of inflation – ensuring that your reserves (particularly where held in an account over a longer term) continue retain their value in today’s market.
  • To generate a (growing) income stream to carry out your objectives – maybe your reserves aren’t quite where you need them to be, or perhaps your board envisage the need to draw upon reserves in the coming years to help support services. In which case ensuring steady growth through investment will help you achieve this objective.
  • To have an impact – perhaps your organisation is saving fund for a specific cause such as purchase of property or equipment, in which case investment can offer an opportunity to help you reach your longer-term goals.

Can your charity invest?

The Trustee Act 2000 provides charities with wide investment powers via a ‘general power of investment’ clause, therefore subject to a ‘duty of care’ principle, Trustees may now invest as widely and freely as they wish with the charity’s money (unless your governing document specifically prohibits this, do double check to ensure this is true for your charity). The ‘Duty of Care’ required by Trustees involves the need to:

  1. Take appropriate advice.
  2. Apply standards for investment criteria, namely: are the investments suitable? And are the investments suitably diversified?


What options are available to you?

There are several options known as ‘core asset categories’ when it comes to compiling an investment portfolio, these include:

  • Cash – holding cash in a bank account, subject to any standard interest rate at the time
  • Government Bonds – a loan to a government/company for which you receive a coupon (i.e. a fixed rate of interest) and a Principle (i.e. the return of your capital at a specified date, known as the redemption or maturity date).
  • Corporate Bonds – similar to a government bond, however are generally higher risk and less liquid.
  • Equities – part ownership (share) of a business for which you receive a dividend (variable according to performance of the business). These can either be UK or global based businesses.
  • UK Property – ownership of ‘bricks and mortar’ for which you receive rent or the potential for capital appreciation (i.e. the property value increasing).

The hosts of the session (Sarasin & Partners) helpfully provided a useful summary of the risks/potential return for these different types of investment as follows:

In order for Trustees to fully consider any approaches to investment and what might be the right thing for their charity, it is important to firstly draft an ‘Investment Policy Statement’, here is a quick guide to the areas this should cover:

Next steps?

Here at BVA, we’re always on hand to support our members with the development of policies and procedures including helping you to access specialist third party advice where needed. If your organisation is considering putting together an Investment Policy Statement and need a helping hand, why not get in touch today and one of our Voluntary Sector Support Offices will be delighted to assist.


Telephone: 01256-423-816

Notice of thanks:

The above details summarising the investment workshop attended along with the accompanying images are reproduced with thanks to Sarasin & Partners, the hosts of the event. They specialise in charity investment and full details of their services can be found here: all information outlined in this article is for purely informational purposes only and is not intended to constitute professional investment advice.


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