Charities are looking to “take on more risk” with their investment opportunities after seeing interest on their bank deposits halve in recent years, according to a financial expert.

Research has shown that since January 2018 the average interest rate on a £10,000 charity deposit in a cash deposit account has almost halved from 0.54% to 0.28% this month.

The fall is similar for larger deposits, from 0.57% to 0.30% for deposits of £100,000 and a fall from 0.54% to 0.31% for those worth £1m.

In January 2018 there were 82 savings accounts open to charities with an interest rate of 0.5% or more on balances of £50,000, according to the research. But by this month this number had fallen to 29.

Nicola Barner, partner and head of charities at wealth management group James Hambro and Partners, which has carried out the research, said low interest rates and the Covid-19 crisis had prompted charities to look for riskier ways of achieving a return on their money.

“As charities come under greater financial pressure during the pandemic and many
are seeing a rise in demand for their services, we are seeing more voluntary organisations looking carefully at their reserves to consider if they can afford to take on more risk in order to generate a potentially better return,” she said.

Among charities to rethink how they generate a return on their savings is cancer charity Maggie’s.

Its finance director Alison Wood said that “with deposit interest rates at historically low levels” it has invested “in a number of differentiated multi-asset portfolios that meet our specific objectives taking into account our cashflow requirements and time horizons”.

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