Four years ago, we wrote a blog when Yoke was a year old, highlighting what we had learnt then about charities. Sadly or not they all ring true today, so little changes. These are our thoughts after five years.

1.     Don’t stress about markets. The last highest value of the charity and its balance sheet is not the base value of the organisation. Cognitive financial biases incline trustees to believe that their charity is failing if their assets fall below the last highest value (think of your pension or property!). In 2022 we are learning that investments go down as well as up. That is OK and normal as we have seen in investing with charities for many years.

2.     Try not to stress about inflation. So many charities state they want to grow their endowment in real terms, i.e. in line with inflation after all spending and costs. Many charities are significantly ahead of this target over the long term while inflation has been low and returns good. No sensible investment will beat the current levels of inflation and your costs and pressure on grants are rising. You cannot have it both ways, so think in the longer term.

3.     Spend on yourself. Many charities have made good money over the past few decades if they have been investing. Don’t be afraid to take some of those profits and invest into the charity, either on your purpose or your infrastructure such as people, systems, fundraising, etc. Often the returns on these assets can exceed the profits of your investments.

4.     Keep calm. Yoke is regulated by the Financial Conduct Authority (the financial regulator). We often think we should be members of the British Association of Counsellors and Psychiatrists. While charity finances appear to be the problem, they often cover a deeper-rooted issues within the organisation and its governance.  We really enjoy using our wider charity experiences to help iron out some of these broader issues.  

5.     Have fun. So often we see pain on trustees faces as they grapple with the finances when running a charity. Frequently this is caused by over complication or adopting models which are too opaque and expensive. Volunteering for a charity should be rewarding and enjoyable. If it is not, we can often help you fix the problem and simplify your finances.

Statistics from the Office for National Statistics in the UK and the US Bureau of Labor Statistics suggest that over 60% of businesses fail after 5 years. We are proud that Yoke is still here and mildly profitable since our start. That is down to the charity sector, which we have spent most of our careers working for and we are proud to be part of.

We live and breathe by these five thoughts and hope you will too.   

We would be delighted to chat about how you see the charity sector. Please contact James and Guy.

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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