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Silver - Silver

Selling the family silver

Charities are required to have reserves and Reserve Policies to justify why money is being kept from their beneficiaries. One of the best reasons is to help see the organisation through hard times, and if now is not a hard time for charities and their beneficiaries, when will be? Now is the time to draw on reserves built up in easier times.

It cannot have been easy for the Royal Opera House to put its Hockney portrait of one of its earlier directors up for sale, nor can it have been easy for New York’s Metropolitan Opera House to sell the works it commissioned from the French artist Marc Chagall, but what good is owning an asset like that if there is nothing left to celebrate because the organisation itself has closed? The paintings would be sold in any case, but for a liquidator, not a mission. So what good are reserves if you never use them when you need them?

The chart below shows the growth in the UK equity market between 2014 and 2019 and compares it to the growth in the top ten wealthiest foundations, as measured by the Association of Charitable Foundation’s Giving Trends annual publication.

Clearly no investor would invest exclusively in the UK equity market so this is something of a rough comparison. What the chart shows is that whilst stock markets have grown strongly over the last five years, charity reserves have grown faster, even after increasing their spending as many have done. If one assumes that other endowed grant makers’ behaviour will not be out of line with that of the top ten foundations, and that according to the Charity Commission, English charities currently have £143bn of long term investments, there’s a lot of extra money available to be spent on doing the charity’s work. All it takes is a decision by Trustees to set aside a sum, perhaps large enough to be painful, and to spend it on the urgent needs facing their beneficiaries. After all, it’s what we spend that makes us charitable.

An Aesop’s fable is apposite here:

There was a merchant who was so worried about the safety of his possessions that he sold them all and bought a lump of gold which he buried on the outskirts of town. He had no greater pleasure than to visit it and to muse or dream. He did not own the gold, but the gold owned him. One day he found the gold gone. He was distraught and told a neighbour of this loss.  The neighbour told him to put a stone in its place – “since you never meant to use it, the stone will be just as good for you as the gold”.

Aesop’s moral is that the value of money depends not on its accumulation but on its use and it remains as true today for trustees and advisers as it did 2,500 years ago.

At Yoke we look at charities from the charity side of the table and know that the money is there for the good of beneficiaries. We are independent and do not manage money for clients so we have no conflict when it comes to recommending withdrawing investments to fund spending. So if you want help in accessing your historic reserves, or support in persuading the powers that be, then get in touch so we can share our deep experience of making sure that future is never held hostage by the past.

James Brooke Turner (     Website: