The Foundation was formed as a grantmaking charity from a generous endowment by John Reeves Ellerman, 2nd Baronet in 1971. Investing our endowment provides us with greater capacity to make grants to charities in the long term.
Our overall approach is to invest and manage our funds in a way that balances the desire to maintain the financial capacity for grantmaking over the long-term, with direct support for our aims through our investment activities.
Our financial objective is to generate a total investment return sufficient to enable the charity to carry out its operations continuously over the long-term with due and proper consideration for future needs and the maintenance of, and if possible, enhancement of, the real value of the portfolio. The current financial objective is to achieve a real return of 4% per annum (calculated as a Total Return target of 4% + CPIH) in the long term. CPIH is an inflationary measure and is defined as the Consumer Prices Index including owner occupiers' housing costs.
The value of our investments varies with movements in financial markets. At the end of our last financial year, 31 March 2023, the portfolio value was £146 million.
You can read our full Investment Policy by clicking here, and a summary of the key points is shared below.
Looking after our money
Our Trustees are responsible for the endowment and the management is delegated to our Finance and Investment Committee. This Committee sets the investment strategy for the endowment. The funds are managed by carefully selected active managers and are diversified across a range of asset classes. We currently have six fund managers who determine the asset allocation of their own portfolios. The Committee also takes advice from specialist consultants.
Spending rate
Our level of proposed spending for the coming year is discussed at the February Finance and Investment Committee Meeting, before being approved by the Board of Trustees in March in the same year. Historically, the agreed policy has been an annual total expenditure budget of 4.5% of the Foundation’s net assets (net of investment management fees) averaged over the quarter end values of the last three calendar years. In the case of a grant under or overspend, the Trustee Board makes a decision that year as to whether to carry forward the balance to the following year. However, in the last few years we have struggled to reach our financial return target and expect this to continue to be challenging. We have therefore reduced our budgeted expenditure very slightly for 2024/25 and will continue to keep this under review annually.
Our approach
As a long-term investor, our approach evolves. Since 2020, we have developed our thinking on investment so that we now take account of non-financial outcomes alongside financial returns. We refer to this as a “total impact approach". Non-financial impact may advance or conflict with our aims and values. We therefore seek through our investment activity to challenge actively the practices of companies that damage our mission and to promote investment in companies whose activities are supportive of our mission.
We aim to:
- Invest in a sustainable way i.e. to support long-term environmental and societal sustainability, with particular focus on helping address the systemic impact of the climate and nature emergencies.
- Be a responsible investor i.e. to take full account of environmental, social and governance (ESG) issues in our investment activities, considering both the implications for a company’s financial value, as well as the underlying risks of a company’s impact on our mission.
- Be transparent, accountable and effective.
- Actively engage with our underlying investee companies where specific issues are identified that we feel are misaligned with our organisational aim, values and approach.
- Work with other actors, including trusts and foundations, in the financial system in the transformation of systems and institutions for managing investments and responding to consultations on policy and regulatory changes through avenues such as the Charities Responsible Investment Network and the COP26 Asset Owners Declaration.
- Ensure that the fund managers we employ to take day-to-day investment decisions on our behalf share our beliefs about the relevance of ESG factors in investment, and take a systematic and effective approach to stewardship and engagement.
- Allocate capital to investments that act in support of our aims.
- Achieve the above in such a way that any positive non-financial impact from our investments exceeds any financial returns foregone to achieve them.
All our investment activity is intended to be long term, responsible and sustainable. We want a diversified portfolio suitable for our objectives. We take expert advice where necessary and review the portfolio regularly. We believe we have a responsibility to be an active asset owner, promoting effective stewardship that will produce sustainable financial, environmental and societal benefits.
Our investments are made in both primary and secondary markets. Primary markets are those where shares, bonds and other relevant asset classes are sold to investors and are available to purchase for the first time; they enable companies, governments and other investors to obtain further financing through debt-based or equity-based securities. The majority of our investing is in the secondary markets, where investors buy and sell securities and the trades take place between other investors and traders – not directly with the parties that issue the securities. After securities are sold on the primary markets, they may end up on secondary markets when they are sold again.
We are currently invested in products with the following fund managers:
CCLA
Charities Property Fund
Fulcrum Asset Management
GMO UK Limited
Newton Investment Management Limited
Ruffer LLP.
We receive investment advice from our investment advisors at Stanhope Consulting.
We aim to advance the wellbeing of people, society and the natural world by focusing on the arts, environment and social action. We believe these areas, both separately and together, can make an important contribution to wellbeing.
Find out more about What we fundFind out more
Take a look at the grants we've made since 2013, covering all of our funding categories.
Find out more about Grants listFind out more