Foundations of a Robust Charity Investment Strategy: Risk, Return and a bit of maths

28 February 2024

This article continues our exploration of Strategic Investment Framework for Charities, a series of articles for charity trustees and executives that we develop in collaboration with Robert Hayes, a senior consultant to PMCL Consulting.

In our last two papers we discussed objectives and risks in terms of ‘what’s the money for?’ and ‘what are you trying to avoid?’ – the key points being that charity investments need to be aligned with their commitments and that risk needs to be broadly defined to cover a range of financial and non-financial items. For a large number of charities however the requirements are pretty broad and there are not many constraints. The question therefore becomes ‘how much return can we generate and what might be the implications?’.

In this note we therefore develop the concept of risk and return and propose some rules of thumb for thinking about it.

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