Charity Treasury

Comprehensive support in managing and selecting investments and borrowing solutions to achieve sustainable returns and reducing financing costs through tailored strategy and market timing. We also offer ESG analysis, including reviews and screening of funds to align investments with your organisation’s values and sustainability goals.

Extensive risk management support delivered in conjunction with our broader advisory services help charities safeguard assets, assess counterparty creditworthiness, and build resilient treasury strategies in a changing risk environment.

With a proven track record of navigating major credit events since the financial crisis, we continue to support clients through rigorous counterparty analysis and informed, ongoing suitability assessments.

Leveraging our experience advising on over £7bn of investment balances, Arlingclose provides strategic support to help charities optimise liquidity and cash effectively. Our services include guidance on appropriate liquidity instruments such as money market funds as well as the design of tailored treasury strategies, cash flow forecasting, and ongoing monitoring to ensure funds remain secure, accessible, and aligned with your organisation’s operation and strategic needs.

TMP 1 of the 2021 CIPFA Code encourages charities to consider ESG in their treasury policies. Arlingclose supports this through ESG reporting, fund analysis, and guidance to help charities navigate ESG developments and shape responsible investment strategies.

Rigorous macroeconomic analysis and tailored forecasts covering interest rates, inflation, growth, and policy developments, designed to help charities navigate financial uncertainty and make informed decisions around investment, funding, and long-term planning.

We provide charities with independent consultancy and due diligence support, helping them assess financial resilience, funding strategies, partnerships, governance and risk. Our advice combines sector insight with practical analysis, enabling confident decisions that protect long-term sustainability and support charitable objectives.

Working closely with clients to develop strategies that reflect their financial position, risk appetite, and desired outcomes, Arlingclose helps organisation establish prudent treasury policies and effective governance frameworks. Regular engagement ensures treasury activity remains within agreed boundaries, responsive to emerging risks, and fully compliant with regulatory standards, including the Charity Commission’s guidance (CC14).

Keeping around three months’ forecast expenditure set aside as cash is a good rule of thumb for most organisations, but it is not necessarily the most efficient way to structure your investment portfolio. To determine an optimum balance between adequate liquidity to protect against unforeseen shocks without limiting yourself from maximising long-term investments to generate income, there needs to be a clear reserves policy in place that identifies strategic objectives and potential scope for stickier balances to be invested.

Bank accounts are a necessity for any organisation as this is the only way payments can be easily made and received. However, they often do not offer the best risk adjusted returns and many organisations miss out on potential opportunities to increase return and reduce credit risk by diversifying across multiple institutions and investment vehicles. There is a variety of practical high credit quality short-term investments that can boost returns and better protect funds without compromising liquidity.

A robust treasury policy should provide clear guidance to treasury teams when making investment and borrowing decisions without limiting operational flexibility. At a minimum there should be defined counterparty restrictions such as a minimum creditworthiness requirement and a limit for investments per counterparty as well as benchmarking and monitoring methods that demonstrate how the organisation stays within these restrictions. These can include minimum credit ratings or a portfolio average credit score as well as details on how these are monitored and on what frequency. Treasury policies should be reviewed regularly to ensure they are still appropriate for the charity’s current financial position and the wider operating environment.

ESG and ethical considerations can play an important role in shaping a charity’s investment strategy, particularly where trustees want investments to reflect the organisation’s purpose, values and wider social objectives. This can include excluding certain sectors or activities, assessing the ESG credentials of counterparties and fund managers, or considering social investments that seek to generate both a financial return and a positive social impact. The challenge is balancing these objectives with the charity’s requirements for security, liquidity and return, particularly from treasury cash. A clear investment policy can establish appropriate ethical and ESG parameters, while robust due diligence can help trustees understand the financial risks, expected returns, social impact and any additional reporting or monitoring requirements associated with different investment options.

Arlingclose has a strong track record of using rigorous counterparty due diligence to help clients identify and manage emerging credit risks. This has included advising clients to exit or avoid exposures to institutions prior to a credit event, such as Icelandic banks and more recently Credit Suisse. We undertake in-depth credit analysis using a broad range of quantitative and qualitative indicators. These can include financial statement and scenario analysis, bail-in risk, financial market data, credit ratings, news coverage, and peer comparison. When advising clients, we look at how individual exposures perform in the aggregate, helping charities understand concentration risk, diversification, liquidity and the overall level of credit risk within their investment or operational arrangements.

Changes in interest rates can have a significant impact on both the return available on investments and the relative attractiveness of different investment options. When rates are rising, charities may benefit from keeping greater flexibility so that cash can be reinvested at higher yields. When rates are expected to fall, fixing investments for longer periods can help protect income by locking in current rates. The right approach depends on the charity’s cash flow requirements, risk appetite, investment objectives and budget requirements. Regularly reviewing the maturity profile of investments can help balance liquidity, security and return while reducing the risk of making investment decisions based solely on short-term market movements.

Financial stress testing can be a productive exercise for charities to understand how resilient its finances are under a broad range of scenarios. A well-designed stress test can identify high risk areas before they become problems, showing how changes could affect liquidity, reserves, investments, borrowing capacity and financial commitments. For charities, this is particularly important where income can be uncertain or reserves are restricted. Stress testing can also help trustees understand how much financial headroom exists, which risks require closer monitoring and prepare corrective actions before performance deteriorate.