More Than Half of Charities Need Tailored Investment Advice, According to SEI Study

10 January 2019

More Than Half of Charities Need Tailored Investment Advice, According to SEI Study


LONDON, 10 Jan., 2019 – Advisers are failing to tailor specific charity spending needs with investment objectives, according to a study conducted by SEI (NASDAQ:SEIC).  Analysis of 212 of the largest U.K. charities’ annual reports revealed that 53 percent share common investment targets, with 62 percent of those charities underspending on charitable activity compared to their listed asset growth over a five-year period.1

More than half of respondents share common investment targets, namely asset growth of RPI or CPI, and have a charitable spending target of three to four percent. On average, spending growth for the group trailed the growth of income-producing listed assets by 44 percent. This finding implies that if asset growth had moved at the same pace as spending growth over a five-year period, an additional £1.65 billion could have been made available for charitable spending.

SEI’s proprietary research also reveals that 38 percent of endowments had overspent against their asset growth, further demonstrating the need for investment advice to be aligned with each charity’s specific income and spending requirements.

Pradeep Kachhala, Director U.K. Charities, SEI’s Institutional Group, said:

“As government spending is reduced and the demand for resources increases, the charity sector is experiencing challenging times. With the potential for an additional £1.65 billion of charitable spending, our research further supports the need for many advisers to work better with Trustees to understand their spending needs and align financial objectives appropriately.

“There is a real opportunity to alleviate some of the pressure on the charitable sector by providing charities with the opportunity to optimise spending without taking on any excessive risk. Advisers must create customised investment objectives that are unique to the client’s risk and return requirements. Working closely with a client to identify unique investment goals is paramount, and utilising technology to put spending triggers in place helps safeguard against overspending, as well as identifying necessary additional spending for the client.”

A full copy of the research findings can be found on SEI’s website.

About SEI’s Institutional Group

SEI’s Institutional Group is one of the first and largest global providers of outsourced investment management services. The company delivers integrated retirement, healthcare and non-profit solutions to more than 485 clients in 12 countries. Our solutions are designed to help clients meet financial objectives, reduce business risk and fulfil their due diligence requirements through implemented strategies for the management of defined benefit plans, defined contribution plans, endowments, foundations and board-designated funds. 

About SEI

After 50 years in business, SEI (NASDAQ:SEIC) is a leading global provider of investment processing, investment management, and investment operations solutions that help corporations, financial institutions, financial advisors, and ultra-high-net-worth families create and manage wealth. As of Sept. 30, 2018, through its subsidiaries and partnerships in which the company has a significant interest, SEI manages, advises or administers $920 billion in hedge, private equity, mutual fund and pooled or separately managed assets, including $339 billion in assets under management and $576 billion in client assets under administration. 

1A total of 212 charity accounts were analysed from June 2018 to September 2018.