IN one of the widest investment studies of UK charities in recent years, new research by wealth manager Brewin Dolphin - Charity Investment: What Matters Most? - found 67 per cent cite the need for income as their main concern, though 51 per cent had not discussed a different approach to managing their portfolio income with an investment manager.

The impact of political uncertainty was the second main concern with respondents worried about the potential loss of care workers and EU staff availability as a consequence of Brexit at a time when demands upon charity resources and support are on the rise.

Attitudes towards cash management and inflation highlighted the investment imperative – more than three quarters of respondents receive interest of 0.5 per cent or less on their cash deposits.

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Some charities have been compelled to re-think their approach, with one respondent saying: “We had a big sum of money sitting in deposit accounts earning nothing.

"We weren’t making the most of our resources and that had to change.”

With inflation now at 2.9 per cent, the research found charities were acutely aware they needed to put their money to work and keep their longer-term assets ahead of inflation.

For some, this raised a myriad of questions and nearly 80 per cent agreed the investment industry should do more to explain the implications of volatility versus absolute risk.

Richard MacAlister, head of the charity and institutional team at Brewin Dolphin, in Newcastle, said: “With so many charities being tasked to do more with less, risk management of assets and funds has become a key priority.

"Charities are understandably risk averse and can view cash deposits as the safest place to invest but cash cannot compete with inflation.

"So, it is not surprising that more and more charities are becoming reliant on the performance of their investments to plug the gap caused by the decline in other sources of funding and a continual increase in demand for their services.

“It is vital that charities balance the needs of beneficiaries now and in the future.

"This is often an issue for trustees who are trying to generate as much investment income as possible now, potentially changing the risk profile of their investments and putting pressure upon growth potential, which could disadvantage future beneficiaries.

“The complex, fast-changing investment landscape makes it hard for all but the exceptionally well-informed to keep pace with the latest investment thinking and, while many have skilled investment professionals on their committees, we need to remember both trustees and charity staff have many other responsibilities and roles.

“It is up to us in the investment industry to do all we can to provide charities with the expert support they need and for policymakers to foster the conditions that will enable all parties to work together to help charities make long-term decisions with confidence.”

The opinions expressed in this article are not necessarily the views held throughout Brewin Dolphin. No director, representative or employee of Brewin Dolphin accepts liability for any direct or consequential loss arising from the use of this document or its contents. Any tax allowances or thresholds mentioned are based on personal circumstances and current legislation, which is subject to change.