KCHC Annual Review 2023-24 WEB Singles - Flipbook - Page 34
2023/24 Financial Review
Investments
The Trustees take a long-term view of investment
returns, which is the basis for the investment strategy
agreed upon with CCLA (the Charity’s investment
advisers and managers).
Investment strategy
Reserves
Our investment objective is to generate a consistent
and sustainable return from our investment portfolio
to finance spending on grants and running costs while
maintaining the purchasing power of the underlying
investments over the long term and subject to the
appropriate balance of risk.
A) Unrestricted general funds
Following an investment manager review, the
Trustees appointed CCLA in the year. The value of
the investments was transferred from Rathbones in
January 2024 and the funds were invested in the COIF
Charities Ethical Investment Fund.
The Finance, Audit, Investment and Remuneration
Committee (FAIRC) regularly reviews the performance
and composition of the investment portfolio to ensure
that it remains appropriate for the commitments and
future funding expectations of the Charity.
The strategy is to balance return and volatility by
delivering CPI plus 5% over the long term and to pay a
sustainable distribution from the total return.
Investment performance
During the year, the Charity’s investments generated
income of £1M (2022/23: £0.7M) and there was a net
overall surplus in the value of the investment portfolio
of £1.5M, following losses in 2022/23 of £2.3M,
reflecting improved market development around
inflation, receding recessionary pressures, high
interest rates and higher dividends.
The Board formally reviews its unrestricted general
funds (free reserves) policy annually, the implications
of which are reflected in the balance sheet at 31
March 2024. This review is intended to ensure that the
reserves arrangements continue to be appropriate in
the constantly changing strategic and financial context
and support the Charity’s strategy.
The objectives of our free reserves policy are to:
1. Safeguard the long-term financial sustainability
of the Charity by maintaining a minimum level of
general reserves;
2. Set aside and then release resources to fund our
strategic grants programme;
3. Support the investment required in the Charity’s
growth strategy;
4. Comply with accounting principles and
the Statement of Recommended Practice
requirements applicable to charities (FRS 102
Charities SORP); and
5. Comply with donor requirements where those are
specified.
The targeted level for the free reserves is reassessed
annually by estimating the potential impact of the
risks included in the Charity’s risk register on the longterm financial projections of the Charity. Specifically:
1. Risks that might result in a significant and
sustained downturn in income in the following
three years;
2. Risks that might result in unbudgeted
expenditures; or
3. The risk of a downward readjustment in global
investment values.
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S U P P O R T K I N G S .O R G .U K
