As charities continue to report falling income from a drop off in donations and legacies, new research conducted by Cordea Savills, the international property fund manager and Rensburg Sheppards, the investment manager reveals that the credit crunch has reduced charities' investment income by an estimated £239 million across England and Wales.
The findings, based on research amongst charities managing an aggregated investment portfolio worth £5.6 billion, reveal that charities' investment income has fallen by an average of 6% since the credit crunch began.
Almost three-quarters (73%) of charities were concerned about how the economic downturn would impact on their income receipts over the next 18 months. More than one in three charities (37%) said they were 'very' or 'extremely' concerned.
Andrew Allen, Director of Research and Strategy at Cordea Savills said: "Charities' reliance on investment income has put them at the mercy of the recession. Falls in corporate and individual donations have compounded the problem and it's hardly surprising that many charities have already announced budget cuts and job losses at a time when their services are often in greater demand."
As pressure to generate income continues to mount, nearly two thirds (64%) of charities were positive about the prospects of investing in property in helping to secure their required income and 41% plan to increase their allocation to property over the next 18 months.
Andrew Allen continued: "With income generation a key priority, property is becoming an increasingly popular investment option for charities. Yields of over 7% are now available on UK property and such property can provide substantial income protection for the investor when reliable tenants are secured over long-time periods.
"As the main asset classes continue to struggle, property is one of the highest yielding asset classes and it adds diversification to a portfolio. Rental income is protected by lease structures and upward-only rent reviews. It's also a relatively transparent investment both through assessing individual properties and tenant quality."
The Charities Property Fund is a diversified commercial property fund with a focus on providing an attractive level of income while preserving capital values. The Fund is managed by Rensburg Sheppards in conjunction with Cordea Savills.
Launched in 2000, the Charities Property Fund was the first Common Investment Fund available to all charities in England and Wales, and more recently to all UK charities, that invests directly in UK commercial property. With a growing property portfolio, The Charities Property Fund has been specifically designed to meet the needs of charities, allowing them access to professional property investment and management while avoiding the time and expense of property administration.
Source: Citigate Dewe Rogerson