Growing the Value Delivered by Your Charity

By Ross Sheerin (CFPCM, AFA, B.Soc.Sci. (Econ), Member IFA),
Private Wealth Adviser, Trustees Executors Limited


Many charities dream of growing the services and benefits they provide but lack the resources to do so. Often it comes down to a question of enough money. If we accept that money can be just an idea then sometimes it can be just a question of changing your thinking and ideas in order to find new money or making better use of what you have.

Here are a few things you could think about:

  1. Reviewing why it is you exist and the charity’s aims;
  2. Is your charity or charitable trust governance and management aligned to best practice?
  3. Avoiding undertaking activities that do not support the charity’s aims or put the charity’s reputation at risk;
  4. Take an inventory of all real and financial assets — are they giving the best return possible toward the aims of the charity: short-, medium- or long-term? and
  5. Would external professional advice about fundraising, governance, management, investment or grants administration help you?

Good leadership of any organisation involves developing clarity of purpose and communicating that in order to provide direction and a sense purpose. For a charity this might mean communication to staff, volunteers and the members of the wider community — be they donors, recipients of benefits from your charity or just the public-at-large.

An important part of your ongoing strategy will be to ensure your charity’s future sustainability by making the right investments in order to further the aims of your organisation. There can be a number of components of this. Does your organisation own a lot of property? Is this property really needed? Many businesses rent their properties rather than own them. They have figured they get a better return on capital from their business operation than being a property investor. Many large companies like the banks, the Warehouse and Bunnings have sold their property and leased it back for these very reasons.

Funds in the bank have a part to play in any household or organisation. But is there cash needlessly lying about in many different bank accounts earning low returns? I have seen one national charitable organisation with many branches each with cash sums which when added up amounted to many hundreds of thousands of dollars. Much of this cash was not needed in the shorter term and could have been invested for better return and the consequent improvement in the charitable capacity of the organisation.

A number of charities rely on holding their assets in cash in order to avoid investment risk. This is not always appropriate as it exposes this wealth to a number of other types of risk which are not always obvious, particularly the erosion of spending power through the effects of inflation. Low returns from cash will obviously provide less money to meet the charitable objectives of the organisation.

While investment can be a major source of funding for charities it can expose the charity to other risks if not approached in the right way. Often trustees serve the board in a professional capacity, but may not possess the investment experience or skill. In some cases, they do have the relevant skill but can’t afford the time. This is where trustees can find value in engaging a third party experienced provider who can offer advice, resources and support when it comes to making decisions that are right for them when investing charity assets.

A specialist investment adviser will take you through a structured process designed to arrive at recommendations matched to the charity’s needs.

Steps in this process will include:

  1. Understanding your charity’s short-, medium- and long-term aims; identifying issues and barriers, and how they might be addressed to assist with your growth strategies
  2. Taking stock of assets, liabilities, income and outgoings and the organisation’s tolerance and capacity for investment risk;
  3. Developing a written Statement of Investment Policy that reflects aims and financial and investment capacity, including drawdown and ‘reserving’ strategies;
  4. Developing specific written recommendations as to what investments to hold, with a view to taking full advantage of the tax-favoured status of registered charities; specific ethical considerations should also be canvassed and addressed; and
  5. Making recommendations on future reporting and management of the investment fund.


This process should lead to a situation where funds are available when needed although subject to investment returns at times. The latter issue can often be addressed over time through constraining spending in times of good returns to a level that allows capital growth over inflation. Development of a separate reserve fund is also another option.

It’s important you feel confident that your charity’s investments are being well managed to your specific brief and agreed strategy. An agreed process of reporting and adjustment of the portfolio will greatly assist with this.

One of the few things we can rely on these days is that things will change. Investment policy and portfolio assets must adjust to the changing circumstances of your charity and the external economic environment. They should also be able to cope with new funds through campaigns and bequests.

Another money idea is to invest some of your financial resources into your charity itself. If more income is needed, then often you need to spend some money to bring this about. Consider engaging a suitably qualified fund raising consultant. Can’t afford it? Perhaps if you consider the potential of a return of $5.00 – $10.00 for every dollar spent on a well-structured and directed campaign then perhaps use of an external consultant becomes a good investment.

Running a charity well requires the same approach, and thinking, as running a business well. Good business owners know that you need to spend a dollar to make a dollar. However, good business people do not do this in any haphazard manner. They have goals and strategies, budgets and financial reporting to measure progress. A good business person will also know their strengths and weaknesses and will be prepared to bring in outside assistance to help achieve certain results.

Is your charity a good business? Need more money? Sometimes more money is about changing your thinking.

As the author of this article is an AFA, his disclosure statements are advised as being available upon request, free of charge. The article is of a general nature only, and does not take into account any individual’s particular circumstances, financial or otherwise. Readers should obtain professional, independent advice relevant to their individual circumstances before making any legal, financial or investment decisions.


Growing the Value Delivered by Your Charity



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