Recent research by wealth management group James Hambro & Partners has revealed that almost half of those charities who responded have sold property or other assets in order to continue activity. This was as a result of a cash shortfall caused by the impact of the Covid-19 pandemic.
The report surveyed 100 senior executives of large UK charities and found that 45% had sold assets such as property or investment portfolios as a way to boost their cash income. Many of these large charities also reported a drop in income of over a third since the start of the pandemic, as their traditional sources of income have felt the strain. The report showed 64% of charities with £1m of investable assets said they had to sell or cash in on investments during this time.
Investment income is a key source of funds for many charities and therefore any decision to sell investments in the short term may affect future returns, so charities are having to take this into account before making their decisions final. The report also showed that although the financial markets have bounced back after the initial shock of the pandemic, income and dividend levels during 2021 were reduced.
The reduction in the level of income received in donations from individuals has further impacted the charity sector. The report surveyed 1000 people, 36% of whom stated they have cut back the amount they donate to charity since the pandemic.
With the cancellation throughout 2020 of traditional ways of raising funds such as sponsored and fundraising ‘in person’ events, the sector has had to look for other sources of funding; many grant making foundations have been busy supporting the charity sector. This has been widely appreciated by trustees and beneficiaries.
Thankfully there are some ‘green shoots of recovery’ for charities - in recent weeks we have also seen the return of large scale events, such as The Great North Run, which generate hundreds of thousands for local and national charities.
The financial markets have also started to rebound from the initial shock and slowly returns are starting to filter back down to individual investors. Many in the sector are keeping their fingers crossed that some certainty is returning to life, and those in need will receive the support they require.
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