As charities continue to report falling income from a drop
off in donations and legacies, new research reveals that
the credit crunch has reduced charities’ investment
income by an estimated £239 million across England
The research by Cordea Savills, the property fund manager
and Rensburg Sheppards, the investment manager show that
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’ concerned.
The findings are 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.
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
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.
Allen added: “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.”