Tailored investment management services for charities

We help a number of charitable causes, just like the Alba Caledonians Hockey Club (or Alba Callies, if you’re a local), every year. Read on to learn about how we helped them to navigate the economic challenges of COVID-19, and set them up with a financial plan for the years to come. 

A stalwart of Scottish grassroots sport

The Alba Callies is a Scottish Charitable Incorporated Organisation (SCIO), whose trustees came to us in 2020 because they needed to preserve and grow the assets that were essential to guarantee the club’s future.

When we met the trustees, the club had funds in the bank, and the prospect of recurring annual income from other teams and clubs renting their AstroTurf pitch. At that stage, interest rates on bank accounts had fallen to 0% due to the COVID-19 pandemic, with no knowing when they might increase. If the Alba Callies wanted their money to grow, they needed a new solution. Left in the bank, it wouldn’t even keep up with inflation.

The pitch is the club’s main asset, but the Astro carpet has a lifespan of just 15 years. It will likely need to be replaced in 2030, at a cost of around £150,000, so the club needed to be ready with that sum when required.

The plan of action

We talked to Angela, the club’s Treasurer, and discussed how specialist investment management from Adam & Company could help them. They were understandably cautious, as we were well into the COVID-19 pandemic at the time, so they decided to start by investing £10,000 in a ‘fund of funds’, gradually adding more to build up their investment. Over the last three years, they have entrusted us with over £100,000.

The Dickson McCunn Trust* was set up in 1922 to help combat child poverty. In those days its main aim was to provide sturdy boots and hot meals for disadvantaged children in Scottish cities. It was created with a large endowment, which was then invested, with the stipulation that the charity’s work should be funded by the interest from the investment portfolio.

Looking forward

Over the years the charity’s remit has grown to include fighting child poverty in Scotland in all its guises, but the board of trustees felt that in some ways it was still stuck in the last century. They wanted to raise the Trust’s profile and make it more relevant, including modernising their fundraising techniques and employing a full-time professional fundraiser.

This would incur costs above and beyond the charity’s regular spending on its vital work with children, and the new expenditure could not be covered from the regular income produced by the investment portfolio. 

Plan of action

To create the extra income, the trustees needed agreement from their regulator, the Charity Commission, to move from a ‘permanent endowment’ to a ‘total return approach’. This would allow them to take some capital from the portfolio each year.

We had been advising the trustees on their portfolio for some time, and now we worked closely with them to help them achieve their new goal.

We advised them what long-term capital returns they might reasonably expect from the portfolio, so that they could establish a sensible level of annual capital withdrawal. As their portfolio had recently benefited from several years of very strong capital growth, it was important to remind the trustees not to expect the same returns in the future. Following much discussion, the trustees approved a resolution to adopt a prudent total return approach, which was approved by the Charity Commission.

*Names have been changed for reasons of confidentiality.