With interest rates remaining high, but potentially on the way down following the Bank of England decision to cut the base rate by 0.25% to 5.0% from 1 August, the coming months may be the last opportunity for academy trusts to fully maximise their investment returns.
We have seen some trusts make sizeable investments returns over the past year by carefully investing surplus funds that they do not require for day-to-day operational matters. Often the interest that has been earned has far exceeded the other self-generated income the trusts have been able to make from lettings and other such sources.
The Board of Trustees’ principal duty is to further their academy trust’s purposes, and this means that boards must make your investment decisions to further those purposes.
Investments may include overnight and short term deposits, and, subject to ensuring funds are safely managed, more professional investment funds.
The Academy Trust Handbook requires trusts to have an investment policy in place and to always take advice as appropriate from a professional adviser.
Exposure to investment products must be tightly controlled so security of funds takes precedence over revenue maximisation, and investment decisions must always be in the trust’s best interests. Trustees also need to ensure that they regularly review any investments that have been made and the investment policy.
The Charity Commission CC14 guidance for trustees on investing charity money might be a useful resource.
Use platforms that can give investment advice
Here at UHY we are unable to give investment advice, but there are platforms available that allow trusts to make deposits with multiple banks, in a safe and secure manner, with all accounts visible and able to be fully managed from one on-line banking portal. Using platforms like these enable trusts to diversify their cash reserves, using a range of term options that meet your liquidity requirements.
So, if you’ve not reviewed your trust’s investment strategy recently, then now might be the time so that you can take full advantage of the high interest rates before these begin to fall further.
The next step
Please get in touch with Allan Hickie on a.hickie@uhy-uk.com or your usual UHY academy adviser if you have any questions regarding the above.
