Asset management is relevant to all parts of the charity sector, and potential donors, finds a new report into charity asset management.

Investment Matters: In search of better charity asset management, written by researcher Beth Breeze for the Institute for Philanthropy, examines asset management by 60 UK charities holding at least £10m in assets.

Based on original quantitative and qualitative research from July 2007 to January 2008, the report found that the importance of investment issues is widely under-estimated, and that the investment process is often under-resourced.
A wide disparity in investment performance among the 60 charities was revealed - annualised rates of return over the last five years ranged from 3.1% to 22.1%, with a median of 8.7%. Yet 96% of respondents reported satisfaction with their investment returns.

The report also identified a relationship between higher returns, the presence of an investment committee and a more diversified portfolio of assets.

The research found that investment returns generally remain a low priority in the charity world and an “unexpectedly high degree of informality” and arbitrariness in selecting and recruiting trustees and fund managers.

Amongst its recommendations the report said charities should make an effort to recruit suitably qualified trustees and to place more emphasis on trustee training in investment issues.

“Major donors do care how charities manage assets – especially those who have made their money in the financial sector,” Breeze told Philanthropy UK. “Because if they don’t have faith in a charity’s ability to invest successfully,  then the donors will hang onto their money, or give it to a charity that can.”