We have been living in a low interest rate environment for an extended time period globally. Investment managers are looking for alternative investments that will boost yields while balancing risk. Nowhere is there a more cautious set of money managers trying to crack this challenge than in the Charitable Cause domain.
Patrick Fietje, COO at Tavira Securities described the challenge faced by money managers in his address at a recent “Innovation in Philanthropy” event hosted by the Institute of Fundraising (IoF). “In a low interest rate environment charities are forced to look at their cash management models. By not seeking out an alternative to checking accounts held with high street banks, charities are not only providing a disservice to their donors but even more importantly the recipients of the funding”.
Today, there is £17 billion in cash sitting in the bank accounts of UK charities, earning just 0.1% per annum. Delegates at the IOF event learned how a unique collaboration between social investors and specialist investment managers was generating returns up to 3%.
Windover Bay, through its extensive connections in the financial services and the not-for-profit sectors, is rapidly building a model that gives charities a genuine alternative to investing their cash with better returns, while maintaining the safety and liquidity of their funds.
Richard Dutton, Director at Windover Bay, explained that Windover Bay has created a cash management model that transforms a traditional 2 party business model (with the charity simply depositing funds in the bank account) into a collaborative 4 party model involving a charity, social investor, investment manager, and bank account.
At the heart of the Windover Bay model and the case study shared by Michelle Stein, Senior Philanthropy Manager at WaterAid, is an approach which is rethinking business models and leveraging resources and relationships in order to maximize impact for investment managers.
Rejecting the approach of some fund managers to rely on synthetic investments which have been proven to carry significant risk, Windover Bay proposes a model founded in security and trust. As the English are prone to say “watch this space” if you are managing funds for a charitable or not-for-profit organization.