INVEST IN YOUR COMMUNITY
Community Invested Funds
As a charity, we understand the importance of a sustainable income stream to deliver long-term support and impact.
Foundation Scotland regularly invests funds to support the long-term needs of the voluntary and community sector. An increasing number of communities are now looking to invest their funds to provide a sustainable income for their community in the long term. We call these Community Invested Funds, which can contribute significantly to building community-owned wealth.
A Community Invested Fund is a sum of money (capital) invested to benefit a defined geographical community over the long term. 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.
Why work with Foundation Scotland?
Working with Foundation Scotland has multiple benefits:
- Responsible Investment: Funds will be invested with the Rathbones Charity Growth & Income Fund - a diversified multi-asset fund which balances growth with reduced volatility.
- Experience: If you don't have any specialist investment experience within your community, don't worry. You will receive full support in setting up your invested fund, with fund performance being monitored by Foundation Scotland's experienced Investment Committee. We're also happy to signpost you to other communities that have gone down this route so you can learn from their experience.
- Cost-efficient: The size of Foundation Scotland's combined investments means that your fund will benefit from lower fees than those incurred setting up your own investment portfolio.
- Transparency: You'll have 24/7 access to your fund via the Rathbones portal, offering you visibility of the fund's performance.
- Security: Your fund is ringfenced - with its purpose protected and any withdrawals and additions to the fund driven by you.
Where are funds invested?
We see it as our responsibility to invest for everyone’s tomorrow – doing the right thing for our communities and for wider society.
Community Invested Funds are managed by Rathbones, as part of their Charity Growth & Income Fund. Rathbones aims to deliver long-term value for investors while contributing to positive change.
They integrate environmental, social and governance (ESG) analysis into all investment decisions, ensuring that sustainability factors are assessed alongside financial analysis. Their framework of eight sustainable development themes is linked to the ambitions of the UN Sustainable Development Goals (SDGs) but focus on areas where companies and investors have the greatest potential to create change. The Charity Growth & Income Fund applies exclusionary criteria to prevent investment in areas that we understand to be of widespread concern to charity investors.
Are there any risks?
While it may feel riskier than putting your money into a savings account, our 25 years of experience managing invested funds have shown the value will grow above the level of inflation over time. That's assuming only modest funds are withdrawn and put towards community projects each year.
Rathbones and our Investment Committee will closely monitor the performance of all invested funds in our Fund. All funds benefit from broad diversification of investments minimising risk. At all times, the aim is to maximise the return on your investments – from income and capital growth to maintain (or grow) your original fund.
As with all investments, future returns cannot be guaranteed. However, the Fund is diversified and aims to provide consistent returns over time while still targeting long-term growth above inflation. The investment objective remains aligned with growing the real value of endowed funds.
Although funds can be withdrawn anytime, an invested fund 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 fund, maybe significantly.
It's important to recognise this is a long-term, future-orientated strategy. Before making any investment decisions, we recommend researching multiple options available for investing funds.
How do you get started?
If you're keen to find out more, please contact our finance team, and we will happily provide more information. We'd also be happy to meet and discuss this opportunity with members of your community. If you decide to progress with a Community Invested Fund, we draw up an agreement between Foundation Scotland and either a formally constituted community body, or group such as a community panel from your area. We then agree on the fund's charitable purposes and how much you'd like to invest.
Foundation Scotland asks for an annual contribution to cover the ongoing governance and administration of your Community Invested Fund. The size of your investment determines the level of contribution. For the current contribution levels, please get in touch with our finance team.
Contact information
Creich Community Council has used Foundation Scotland to manage a Community Invested Fund for a number of years. We’ve found them to be efficient, informative, straightforward 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 wind farm, 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, Former Creich Community Council Chair
