The vast majority of charities are still experiencing some form of pressure or negative impact from the cost-of-living crisis.
of charities have seen an increase in demand from last year, with
stating that demand is coming from both new and existing beneficiaries. However, the form these impacts are taking varies.
While the negative effects of the cost-of-living crisis are being felt widely, there is hope for the future within the sector, although uncertainty remains.
of charities do not think that the cost-of-living crisis will have a lasting impact on their investment policy, and a further
simply do not know. For those that do think there will be longer-term implications, two-thirds are re-evaluating their reserves policy.
This year, a growing number of charities are finding that the income produced by their investment portfolio is insufficient to meet their charity’s obligations.
of charities answered that their returns are sufficient to meet their obligations and commitments, down on the
which answered the same last year.
Charities are demonstrating uncertainty in terms of what they consider to be a sustainable withdrawal rate for their portfolio.
of charities had not set any withdrawal rate this year, and among those that had, there was no clear agreement on where it should be set. A growing proportion of charities are now unsure about what a sustainable withdrawal rate is likely to be over the long term – over a fifth of charities simply do not know where to set their rate.
Charities have faced a severe downturn this year; however, they appear to be adapting to these lower levels.
of charities have experienced negative returns, and a further
have seen returns of between
Nevertheless, the proportion of charities that say investment performance has not affected spending has remained relatively stable at just under
Ethical exclusion policies are becoming more commonly used by charities, but their approaches are increasingly targeted.
The proportion of charities with an ethical exclusion policy reached
this year – the highest we have seen over the last ten years of conducting the survey. However, the breadth of these policies has diminished, as charities are now focusing on more specific areas, rather than taking a blanket approach.
While charities continue to recognise the importance of investing responsibly, attitudes around the consideration of environmental, social and governance (ESG) factors are changing.
The proportion of charities that feel it is very important that ESG investment factors are considered in the management of their portfolios has fallen from
in 2022 to
this year.
Nevertheless, the proportion of charities that believe that ESG factors are either ‘very important’ or ‘quite important’ has remained roughly stable.
Charities are divided on how best to approach companies that are underperforming in terms of ESG issues, with half believing that divestment is most suitable and 36% opting for engagement.
However, charities’ approaches to climate change factors paint a different picture, with
of charities believing that engagement is the best approach to ensure that companies in their portfolios are aligned with their climate change values.
2023 has seen notable growth in the proportion of charities that feel it is important for their trustees to reflect their beneficiaries and their requirements.
After falling to
last year, this figure is now up to
However, there has been a
decline in the proportion of respondents that think it is important that investment managers demonstrate diversity.
Net zero is growing in importance for charities, but they remain split in terms of their commitments.
of charities have no net-zero commitment, while for the
that do have some sort of commitment, the form it takes varies.
Important Information
These opinions should not be construed as investment or any other advice and are subject to change. This document is for information purposes only. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell investments in those securities, countries or sectors. Issued in the UK by Newton Investment Management Limited, The Bank of New York Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England No. 01371973. Newton Investment Management Limited is authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN and is a subsidiary of The Bank of New York Mellon Corporation. ‘Newton’ and/or ‘Newton Investment Management’ is a corporate brand which refers to the following group of affiliated companies: Newton Investment Management Limited (NIM), Newton Investment Management North America LLC (NIMNA) and Newton Investment Management Japan Limited (NIMJ). NIMNA was established in 2021 and is comprised of the equity and multi-asset teams from an affiliate, Mellon Investment Corporation. NIMJ was established in March 2023 and is comprised of the Japanese equity management division of an affiliate, BNY Mellon Investment Management Japan Limited.