Comments on: How do trusts & foundations react in a recession? http://www.thinkcs.org/2009/08/how-do-trusts-foundations-react-in-a-recession/ We are currently in BETA (please don't panic) Thu, 09 Feb 2012 04:16:31 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Bill Bruty http://www.thinkcs.org/2009/08/how-do-trusts-foundations-react-in-a-recession/comment-page-1/#comment-61 Bill Bruty Mon, 02 Nov 2009 22:17:26 +0000 http://www.thinkcs.org/?p=1085#comment-61 As the author of the Fundraising Training Ltd research into trust finances I feel that I ought to clairfy our findings (and add some more recent research). Firstly, trusts with an endowment of over £50 million tend to rely on dividend income to fund grant expenditure. Income or losses from share values have no impact - positively or negatively. Until 2008/2009 there had been no evidence of any reduction in dividends, hence few reductions in grant levels. However the FTSE 100 dividend values dropped by 9% in 2008/9, with many UK companies reducing their dividend for the first time in their history. This is bound to feed into grant making from 2011, especially if there is another fall in 2009/10. The impact will be eased by the common policy of 'smoothing' expenditure budgets (basing each year's budget on the average income levels over a preceding period. These horizons can vary from five to fifty years (as is the case for the National Trust). Consequently, I suspect that for these larger trusts there will be little change. The 20% increases in dividend values in 2007 and 2008 didn't lead to similar increases in grant expenditure, so a drop is unlikely to have a negative impact. For trusts with endowments of less than £50 million the picture is less certain - half of them tend to rely on 'top-up' donations to fund grants and it is clear that these donations have declined. As these trusts make up the numbers, but not the value of overall funding from trusts, it will sound like there is less money about. As the author of the Fundraising Training Ltd research into trust finances I feel that I ought to clairfy our findings (and add some more recent research). Firstly, trusts with an endowment of over £50 million tend to rely on dividend income to fund grant expenditure. Income or losses from share values have no impact – positively or negatively. Until 2008/2009 there had been no evidence of any reduction in dividends, hence few reductions in grant levels. However the FTSE 100 dividend values dropped by 9% in 2008/9, with many UK companies reducing their dividend for the first time in their history. This is bound to feed into grant making from 2011, especially if there is another fall in 2009/10. The impact will be eased by the common policy of ’smoothing’ expenditure budgets (basing each year’s budget on the average income levels over a preceding period. These horizons can vary from five to fifty years (as is the case for the National Trust). Consequently, I suspect that for these larger trusts there will be little change. The 20% increases in dividend values in 2007 and 2008 didn’t lead to similar increases in grant expenditure, so a drop is unlikely to have a negative impact.

For trusts with endowments of less than £50 million the picture is less certain – half of them tend to rely on ‘top-up’ donations to fund grants and it is clear that these donations have declined. As these trusts make up the numbers, but not the value of overall funding from trusts, it will sound like there is less money about.

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