Charity investments performed strongly in the second quarter up to June, gaining by just under 5 per cent, according to the latest figures from WM Performance Services.
The results mean that charity funds have risen by 7.5 per cent since the start of the year and by 16.7 per cent over the past 12 months.
The second-quarter results represent an improvement on returns for the first three months of 2005, which saw returns of 2.2 per cent.
"Compared with the modest returns seen in the first quarter, the second-quarter returns were excellent for charities," said George Urquhart, a WM consultant.
"The average charity is now looking at a return of 7.5 per cent for the first half of 2005 against a comparatively benign inflation environment.
With cash delivering substantially lower returns in the year to date, charity funds will have benefited by being as fully invested as possible."
WM says that for the past three years the average charity fund has recorded a return of 7.7 per cent a year, an after-inflation rise of 4.5 per cent.
The highest equity returns during the second quarter were 9.9 per cent in the Pacific region.
North America returned 7.6 per cent. The UK and Europe both posted about 5 per cent.
Bonds rebounded from negative returns in the first quarter to record results of 4.7 per cent for UK government bonds and just above 4 per cent for index-linked bonds.
Property maintained its reputation as a steady performer - gaining by just over 4 per cent.
Over one-year and three-year periods, funds constrained by an income requirement have performed better than unconstrained equities, having invested more in high-performing UK equities and fixed-interest securities.