Value has not dropped - but many have had to sell investible assets to stay afloat

The value of charities investable assets has stabilised and, in some cases, improved over the last 12 months.

This follows a two-year period of voluntary groups being forced to run them down to meet day-to-day running costs due to a significant squeeze on income.

A study by wealth manager Rathbones, conducted with senior executives at UK charities with a collective £4.074 billion of stock market related investments, found nearly three quarters (73%) say the value of their investable assets has increased over the past two years, with around a quarter (27%) saying the value has stayed the same.

This time a year ago nearly two out of three (65%) said the value of their investable assets had dropped between 2021 and 2023 with 23% saying the value had dropped dramatically.

The biggest reason for the drop in value between 2021 and 2023 was forced sales to enable the charity to maintain services – 64% questioned said their organisation had cashed in or sold investments to compensate for a drop in income due to the impact of the cost of living crisis and the pandemic.

However, it was not just the income squeeze reducing charities’ investable assets between 2021 and 2023 – nearly a third (31%) blamed poor investment management decisions while 53% said the value of assets had been hit by stock market conditions.

Around 58% said the income they earned from their investments had dropped, forcing them to cash in on assets to compensate while 41% said increased demand for their services had forced asset sales to provide funds.

The study found a range of opinions on investment management advisers – around a fifth (21%) rate the service they receive as average, around half (56%) rate it as good, and almost a quarter (23%) rate it as excellent.

However, only one in six (16%) say the information they receive from advisers is 'very easy’ to understand.

The key area of concern however is how consistently investment management advisers meet the ethical concerns of charities – 40% are very concerned about advisers' ability to meet their ethical concerns while 58% are quite concerned.

Andy Pitt, head of charities at Rathbones, said: “The views on the quality of advice being received are concerning, particularly at a time when income is being squeezed and investments are playing a crucial role in underpinning charity services.

“The strength of the relationship between charity and investment manager has never been more important, as we help our trustees navigate through a challenging period and help them create a strategy that can meet their financial goals now, while also balancing the needs of the future.”