News
29 July 2009
Charity investment income falls by £239 million
As charities continue to report falling income from a drop off in donations and legacies, new research conducted by Cordea Savills, the international property fund manager and Rensburg Sheppards, the investment manager reveals that the credit crunch has reduced charities’ investment income by an estimated £239 million1 across England and Wales.
“Property is one of the highest yielding asset classes and it adds diversification to a portfolio.”
The findings, based on research amongst charities managing an aggregated investment portfolio worth £5.6 billion, reveal that charities’ investment income has fallen by an average of 6% since the credit crunch began.
Almost three-quarters (73%) of charities were concerned about how the economic downturn would impact on their income receipts over the next 18 months. More than one in three charities (37%) said they were ‘very’ or ‘extremely’ concerned2.
Andrew Allen, Director of Research and Strategy at Cordea Savills said: "Charities’ reliance on investment income has put them at the mercy of the recession. Falls in corporate and individual donations have compounded the problem and it’s hardly surprising that many charities have already announced budget cuts and job losses at a time when their services are often in greater demand."
As pressure to generate income continues to mount, nearly two thirds (64%) of charities were positive about the prospects of investing in property in helping to secure their required income and 41% plan to increase their allocation to property over the next 18 months.
Andrew Allen continued: "With income generation a key priority, property is becoming an increasingly popular investment option for charities. Yields of over 7% are now available on UK property and such property can provide substantial income protection for the investor when reliable tenants are secured over long-time periods.
"As the main asset classes continue to struggle, property is one of the highest yielding asset classes and it adds diversification to a portfolio. Rental income is protected by lease structures and upward-only rent reviews. It’s also a relatively transparent investment both through assessing individual properties and tenant quality."
The Charities Property Fund is a diversified commercial property fund with a focus on providing an attractive level of income while preserving capital values. The Fund is managed by Rensburg Sheppards in conjunction with Cordea Savills.
Launched in 2000, the Charities Property Fund was the first Common Investment Fund available to all charities in England and Wales, and more recently to all UK charities, that invests directly in UK commercial property. With a growing property portfolio, The Charities Property Fund has been specifically designed to meet the needs of charities, allowing them access to professional property investment and management while avoiding the time and expense of property administration.
ENDS
1
Source: Based on data published by:
The Charity Commission for England and Wales reports total annual income of £49,943 billion in March 2009. The UK Civil Society Almanac reports that investment income represented 8% of total charitable income as of 2006/07. According to Cordea Savills / Rensburg Sheppards charities survey conducted amongst 22 charity investment managers and direct charities, managing investments of £5.6 billion investment income has dropped by an average of 6% since the credit crunch.
2 Source: Cordea Savills / Rensburg Sheppards charities survey conducted amongst 22 charity investment managers and direct charities, managing investments of £5.6 billion
Notes for editors
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Cordea Savills is an international property fund manager with offices in London, Milan, Munich, Stockholm, Luxembourg, Paris, Singapore and Bangalore, India (via its joint venture Cordea Nichani)
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As at 31 March 2009, Cordea Savills managed £2.7 billion (€2.9 billion) of assets.
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Cordea Savills is the brand name for entities in the Cordea Savills group, including Cordea Savills LLP, Cordea Savills Investment Management Limited, Cordea Savills Advisors Srl, Cordea Savills SGR SpA and Cordea Savills GmbH.
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Cordea Savills LLP is a limited liability partnership registered in England No: OC306423.