You’ve been paid in advance so what do you do? Spend it, put it somewhere safe, or wait to till you’re asked to give it back?

That’s not very different from where charity investors are these days who have enjoyed excess returns in recent years from many asset classes. If you look at a forecast of returns from a variety of different investment firms, you will see that both bonds and equities are expected to make low returns or potentially lose real value, every year, for the next five to ten years with a few exceptions. This is called ‘giving it back’, but in stock markets you don’t actually have to give it back if you’ve spent it, so the sooner you spend it the safer it is. 

Investors often don’t see money like this. Charities are told that they will lose the value of their assets from here, but not how much they’ve made over the last few years, or that they are twice as rich as they expected to be? It all depends on what your start date is but we invariably reset the clock to now. This gives us the wrong idea of thinking about what we might lose, not what we have gained. It’s like saying that our current maximum asset value is also our normal value. That’s an oxymoron.

The serious point is that most charities have done well out of pandemic related monetary support, and before that, the support arising from the 2007/8 Global Financial Crisis. Notwithstanding the decline in markets during the first part of 2022, is it not time to take some profit and do some more good, especially if it is not going to last? After all spending on your purpose is one of the best investments there is.

To be sure of your charity's best plan for your future finances, contact Yoke for an initial discussion.

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)
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