As a management consultant with significant experience of working with clients in the charity sector the safest routes to the maximisation of Unrestricted funds is to invest in the short term money market deposits.As trustees are guardians of the charities they have to be careful in keeping funding as liquid as possible and at the same time maximise the investment return. This comes down to my favourite subject of risk appetite, which depends on the size of the charity. If the charity is big and has significant unrestricted funds then it is more than likely they would invest the funds in the financial instruments with better returns. Although, maximising the investment is important but trustees shouldn’t loose the sight of the unexpected and start investing in institutions like ‘Icelandic’ financial institutions where funds ‘freeze’ forever.
Just to conclude, in my opinion, the charities with significant unrestricted funds should seek appropriate investment advice from professional investment firms. For the charities which are smaller or insignificant unrestricted funds to think of investment other than in money market deposits would be risky and beyond their resource capability. I think the best investment for any organisation is to invest in re-engineering the process to achieve efficiency. I have seen many charities really struggle with getting the required information from the systems so in my opinion to have better systems in place would give them better returns on their investments.
Fayaz Malik
WWW.Planenterprise.com
