Analysis: Charities can use the slowdown to their advantage, say the experts

Charity finance experts have predicted that the sector's investments will weather the recent slowdown in the financial markets - and that market conditions could even provide charities with buying opportunities.

Charles Nall, corporate services director of the Children's Society and chair of the Charity Finance Directors' Group, said charities, including his own, had seen the benefits of good diversification policies.

"The Children's Society saw a small positive return," he said. "Our portfolio did exactly what we wanted it to: it rode out the tough time."

Nall said investors that held portfolios for the long term, including charities, could afford to view the current crisis as "a storm in a teacup".

Charles Mesquita, charity specialist with investment management company Rensburg Sheppards, supported this view. "Most charities are long-term investors," he said.

"If you look at it from a long-term risk perspective, the current volatility in the market is less relevant. Short-term movements should not be giving people sleepless nights.

Mesquita claimed that charity trustees had shown in the past that they could withstand short-term movements in the market and were very clear about what they were trying to do. He said: "If anything, when you get market movements like this, it offers opportunities. You should not be a rabbit in the headlights."

Biman Mittra, finance director of children's charity Coram, agreed that the situation could be used by charities to their advantage. "This is a once-in-a-decade opportunity to make money if you invest now," he said. "There's been a severe market correction. The market is now throwing up real buying opportunities."

He cautioned against moving into real estate, saying that he did not believe the UK market had hit bottom, and suggested diversifying by moving into equities abroad.

He added that his charity was looking at investing in smaller hedge funds, which he said were "hungrier for success".

The UK's wealthiest charity, the Wellcome Trust, said its investments had seen positive returns and that it remained on course for its grant target of spending £4bn over the next five years.

"Financial and economic conditions will remain difficult," said Danny Truell, the charity's chief investment officer. "It is more important than ever for charities to ensure that their investment activities are well-resourced and effectively governed."

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