Community Sector Banking
MEDIA, JOBS & RESOURCES for the COMMON GOOD
News  | 

NFPs Lack Formal Investment Strategies - Report


Tuesday, 11th December 2012 at 1:57 pm
Staff Reporter
A new report finds that only 50% of Australian Not for Profits have a formal investment strategy despite experiencing greater demand for their services post the Global Financial Crisis.

Tuesday, 11th December 2012
at 1:57 pm
Staff Reporter


0 Comments


FREE SOCIAL
SECTOR NEWS

 Print
NFPs Lack Formal Investment Strategies - Report
Tuesday, 11th December 2012 at 1:57 pm

A new report finds that only 50% of Australian Not for Profits have a formal investment strategy despite experiencing greater demand for their services post the Global Financial Crisis.

The findings are the result of a survey conducted by The Trust Company.

The report, Do Not-For-Profits Need to Take More of a Risk?, was published by The Trust Company following consultation with 210 NFPs.

The report found investment strategy to be a lesser priority for NFPs than fundraising, regulations/compliance or administration/operations.

Formal strategies outlining investment goals, asset allocation and risk appetite were more prevalent for organisations with more than $25 million (75% prevalence) compared to smaller organisations with less than $1 million (only 20% prevalence).

With more than 40% of NFPs dependent on government grants as their primary source of funding, The Trust Company says investment management strategies with a focus on income and fixed dollar targets, rather than total returns, could be a viable solution.

Steven Marsh, General Manager Investment Management at The Trust Company, said: "There are many options for the sector to better support their fund flows. An investment strategy focused on delivering consistent income by investing in quality securities can assist NFPs to better meet their philanthropic commitments."

Despite 75% of organisations reporting they were 'extremely' or 'very concerned' about fundraising, few appear to be including income generating investments within their portfolios, with as much as 75% of NFP portfolios invested in cash and term deposits.

Marsh cautioned that NFPs need to remain alert to investment opportunities to ensure they do not miss out on a market recovery.

"Capital accumulation and wealth generation are equally important. The capital base of the portfolio needs to outgrow inflation over the long term, so that income continues to grow into the future. While NFPs may believe they are protected from volatility by investing in cash, in a declining interest rate environment such a strategy is unlikely to meet their increasing income needs or provide protection from rising inflation," Marsh said.

“We undertook this study to improve understanding of how the sector plans to meet the growing demands placed on it, how their funding models are evolving and whether organisations are giving due consideration to effective investment management to help meet their income needs,” the Head of Philanthropy and Community at The Trust Company, Simon Lewis said.
The Trust Company Group has almost $1 billion in charitable funds under administration.




Got a story to share?

Got a news tip or article idea for Pro Bono News? Or perhaps you would like to write an article and join a growing community of sector leaders sharing their thoughts and analysis with Pro Bono News readers?

Get in touch at news@probonoaustralia.com.au

Get more stories like this

FREE SOCIAL
SECTOR NEWS

Write a Reply or Comment

Your email address will not be published. Required fields are marked *



YOU MAY ALSO LIKE

The share of Americans giving to charity has fallen post-recession

Luke Michael

Monday, 28th October 2019 at 4:23 pm

UNDP setting the standard for SDG-enabling investment

Rosemary Addis

Thursday, 17th October 2019 at 8:38 am

Own your financial future project

Contributor

Tuesday, 6th August 2019 at 7:30 am

POPULAR

A sad and sorry history of Newstart

Luke Michael

Tuesday, 19th November 2019 at 8:00 am

Report finds NFP boards lack leadership in fundraising

Luke Michael

Wednesday, 13th November 2019 at 2:30 pm

Morrison government unveils plan for ‘last 20 per cent’ of NDIS rollout

Luke Michael

Monday, 18th November 2019 at 2:06 pm

Rethinking theory of change

Kevin Robbie

Tuesday, 19th November 2019 at 8:38 am

Community Sector Banking
pba inverse logo
Subscribe Twitter Facebook

Get the social sector's most essential news coverage. Delivered free to your inbox every Tuesday and Thursday morning.

You have Successfully Subscribed!