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Newton Survey - Newton Survey
Last updated October 2020

Testing times: the 2020 Newton Charity Investment Survey

The coronavirus pandemic has not only affected charities’ investment returns and expectations for the future, but has also had major implications for charities’ activities and ability to raise funds. Notwithstanding the unprecedented challenges brought by this event, charities continue to attach increasing importance to ethical and socially responsible investing. These are among the conclusions from Newton’s annual survey of leaders and decision-makers in the UK charity sector.

The Newton Charity Investment Survey covers diverse aspects of the management of charitable portfolios, and provides an industry benchmark to see how aligned charities’ investment experience and intentions are with those of their peers. Key findings from the 2020 survey include:

30% of charities state that the pandemic has affected their future investment strategy

88% of charities whose investment strategies have been affected by the pandemic anticipate a drop in their investment income, and 53% are re-evaluating their reserves policy, while 27% state there have been changes to spending levels from their investment portfolios.

Charities’ investment expectations have become muted and, most strikingly, charities feel more uncertain than they have done at any point in the last six years

63% of charities anticipate returns of below 6% over the next 3-5 years, a 12% increase from the 2019 survey. From 2019 to 2020, the proportion of charities that don’t know what to expect from their annual return over the next 3-5 years has increased by 7%, reaching 11%.

The proportion of charities that are taking out only a very small proportion of their investment portfolio to spend each year has increased significantly in 2020

The impact of the shock of the pandemic can be seen in the sharp increase in the proportion of charities that take out between 0-0.9% of their portfolio each year, with 27% of charities stating that they withdraw less than 1% from their portfolio, compared to 17% in 2019.

A growing number of charities see the merits of engaging with companies to seek to change their behaviour

In 2020, the proportion of charities that feel that environmental, social and governance (ESG) engagement has an impact on investment performance has remained stable at 63%. Crucially, however, 69% of charities believe these impacts are positive, a 7% increase from 2019.

From just 4% in 2015, the proportion of charities excluding some or all fossil-fuel investments has risen to 20% in 2020, the highest proportion recorded during the survey’s history

The proportion of charities that have debated fossil-fuel-free investing has risen by 6% in the same period, reaching 31%. Moreover, 74% of charities that have debated excluding, but have not excluded, fossil fuels from their portfolios plan to return to the topic in the future.

2020 has seen significant progress towards greater diversity of charity trustee boards

The proportion of individuals on trustee boards who are black and minority ethnic (BME) is now 12%, which is not far off the 13% of the UK population that identified themselves as BME in the 2011 census. Female representation has reached 44%, a 7% increase on the previous high of 37% in 2018.

More about the survey

This year’s survey included 114 charities with investment assets of over £6 billion. Fieldwork took place between 4 May and 6 July 2020, with a record date for data on annual investment performance of 31 March 2020. For the majority of questions in the survey, seven years of trend data has now been collected on a wide range of issues, allowing for historical comparisons of attitudes and beliefs.

To download the full version of the survey report, visit newtonim.com/charitysurvey

For further information, please contact Rorie Evans, Client director, Newton Investment Management.

Email: Rorie.Evans@NewtonIM.com