It might be my age, but time seems to be passing at pace. It doesn't seem like six years since the credit crisis began, but it is. Perhaps it provoked a negative emotion strong enough to form an indelible memory, or perhaps the ramifications we are still living with - increased regulation in the financial sector, less lending by the banks and a slow, drawn-out recovery of the economy - act as a constant reminder.
The UK's GDP has still not recovered to the levels seen before the financial crash, but that hasn't stopped the markets. The low point for equities came in March 2009, when the FTSE 100 fell to 3,500.
Today, the same index stands at more than 6,600. Despite the slow and bumpy economic recovery, investors are feeling optimistic.
Charities investing their assets have seen values improve substantially - a welcome relief from the choppy markets in the first decade of the millennium. After much belt-tightening and concern over spending patterns, should charities be taking advantage of stronger investments to take some profits and increase spending? It comes back to the familiar question: to spend or to save?
This question is being asked by permanently endowed charities, which, since the start of the year, have been allowed the flexibility to adopt a total-return approach to investment without having to ask the Charity Commission for approval. This means that both capital and income returns can be allocated to expenditure, giving more flexibility in the level of spending and the investment strategy. Sounds like a no-brainer - right? But it's not that simple. Total-return investing for permanent endowments is appropriate only if there is already sufficient unapplied total return in the value of the endowment. This means that the value of the original endowment needs to be identified (or sensibly estimated). Any excess is historic capital return - or "unapplied total return", to use the terminology in the guidance.
This buffer needs to be large enough to withstand any negative market returns. If the value of your investment portfolio slips below the original endowment value, you can't spend anything at all. That is a pretty big risk for permanent endowments, and one that needs to be appraised carefully. The right level of the buffer might take into account your asset allocation and the projected volatility of your investments. For the average charity portfolio, this might mean that roughly half of the permanent endowment should be made up of unapplied total return at the outset.
So, to spend or to save? Research suggests that taking more out of investments in good times is a good idea, but only if the reverse - that you take less out in more difficult market environments - is also true. It is the latter that most charities struggle with. Times of market stress are often those times when charitable need is heightened. And stable spending is, of course, highly prized by charities.
If you can't cut your spending in bad times, should you increase it in good times? The answer depends on the overall aims of your investment strategy. Are you, like permanent endowments, striving for perpetuity, or can you take more risk with your longevity? Higher spending rates will decrease the likely lifespan of your investment portfolio. An alternative approach might be to bank some of the gains now in a spending reserve, to be dipped into in tougher times. If you are anticipating more choppy water ahead, this is probably something worth considering.
Kate Rogers is client director at Schroders