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INVESTING IN YOUR COMMUNITY

Seed growing in earth
Seed growing in earth

Investment for lasting impact in Scotland’s communities

We currently manage around £40million in charitable endowments, on behalf of around 80 different donors who hold invested funds with Foundation Scotland. More and more communities are now looking to invest their funds too. To provide a sustainable income for their community in the long term. 

What is a Community Endowment?

A community endowment is a sum of money (capital) invested over the long-term to benefit a defined geographical community. Any financial return can then fund charitable activity within that community. The return from the invested capital is produced in a combination of dividends, interest and capital growth. 

How could this benefit your community?

Investing your funds will provide a more sustainable income for your community in the long term. It will enable your community to fund more projects in the future and could also provide capital for more ambitious projects that arise. 

But there are other non-monetary benefits too. Building and planning your community endowment is great for community-building, as together you can grow your skills, knowledge and financial acumen. Plus, the extra funds available to distribute to local projects will contribute to your community’s wellbeing in many ways, from its economy to its spirit.

Are there any risks?

While it may feel riskier than putting your money into a savings account, our 25 years of experience managing endowments have shown the value of an endowment will grow above the level of inflation over time. That’s assuming only modest funds are withdrawn and put towards community projects each year.

The performance of all endowments we manage is closely monitored by FCA regulated investment managers appointed by our Finance & Investment Committee. At all times, we aim to maximise the return on your investments – both from income and capital growth to maintain (or grow) your original endowment.

Although funds can be withdrawn at any time, a community endowment aims to build its capital value for later distribution. A community might decide not to withdraw any funds in the interim, or perhaps just for occasional (‘exceptional’) transfers linked to specific projects. This will reduce the capital value of the endowment, maybe significantly.

It’s important to recognise this is a long-term, future-orientated strategy. In the short-term, stocks can dip – and even drop considerably – which can cause anxiety. However, when viewed over the long-term, history shows that this approach yields growth and income. 

How are community endowments set up? 

To get started we draw up an Endowment Agreement between us and a formally constituted community body or association such as a Community Panel from your area. We will agree on the charitable purposes of the endowment and how much you’d like to invest.

Our investment managers will then pool your endowment with others. This enables efficient management of all investments and the potential of a greater return than an investment could achieve alone. Each endowment has a defined value within any pool, which determines the precise amount of the overall return. 

Bonarbidge
Bonarbidge

Creich Community Council has used Foundation Scotland to manage a Community Endowment Fund for a number of years. We’ve found them to be efficient, informative, straight forward to deal with and, in a difficult financial market, as rewarding as could possibly be expected. The fund is added to annually, from a local windfarm, and will be able to provide income in the long-term for our community once the planned life of the wind farm is completed. The fund allows us the flexibility to withdraw money at any time to suit our needs. We would highly recommend this service to any other community organisation.

Pete Campbell, Creich Community Council Chair

Frequently asked questions

  • Are there any set up or management costs for endowments?

    Foundation Scotland asks for an annual contribution to cover the ongoing governance and administration of your endowment. The level of contribution is determined by the size of your endowment. For the current levels of contribution please contact finance@foundationscotland.org.uk