I joined a Finance Committee meeting a few minutes late and the investment manager was already in full flow. The meeting heard about the return of inflation (or not), the rotation from growth to value investing (or not) and the positive performance of the portfolio. They listened in that polite but uninterested way that we all occasionally adopt at parties when listening to someone else’s anecdote.

After about ten minutes there was a pause, at which point the Chair explained that the charity was coming to a point in its expenditure cycle where it was going to need some liquidity to fund its major activity. “Of course”, said the manager, “just let me know how much and I’ll let you know if that’s ok”.

After the manager left the meeting, I explained that as it was their money they could have as much as they want, or even close the account. The Finance Committee had become enthralled to the authority of the manager in dealing with their money and had completely forgotten that it was theirs to spend or invest as they chose. They did not need anyone’s permission to take money out. The manager had forgotten too but the point is so obvious and such an essential duty of a Trustee.

It’s not a one-way street. Many managers are encouraging their client to use some of their extraordinary investment gains of the last ten years and fund extra spending. After all, if now is not a good time to spend more, it’s hard to imagine when might be.

I suspect this happens too often, especially where a relationship has become so familiar that basic principles are overlooked, and Trustees become dependent on their advisers and stop thinking for themselves (and the advisers fall in with this too). What to keep and what to spend is a key Trustee decision, and only rarely is there an obligation to protect future beneficiaries (in permanent endowments), so the choice is usually an active one, driven by Trustee plans.

 If you find that your charity is not certain whose money it is, or who controls it, get in touch with us and we can offer you some low cost, independent help to get you back into the driving seat.

Get in touch to find out more

Yoke and Company is the trading name of Yoke Financial Consultants Limited, incorporated in England and Wales (No 10787996) and registered at 6 Normanhurst Road, London, SW2 3TA. Yoke Financial Consultants Limited is authorised and regulated by the Financial Conduct Authority (Financial Services Register reference number 826126)
Log in | Powered by White Fuse