Our Approach to Responsible Investments

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As a foundation we take a place-based approach to offering opportunity to children and young people in our nine London boroughs through our eight programme areas: from supporting emotional well-being projects to empowering youth clubs and activities; from investing in parenting to supporting those with special educational needs (SEND).  As custodians of an endowment, we endeavour to use all our assets, including investments and properties, to have the greatest possible positive impact on children and young people in our Beneficial Area.

We recognise the importance of environmental, social and corporate governance issues in the selection and management of investments within our portfolio. We require all our fund managers to have an environmental, social and governance policy in place and recommend they adopt at least one of the following guidelines – the UK stewardship code or the United Nations principles of responsible investment. We also ensure that environmental, social, governance and ethical factors are a standard part of our selection process when appointing new fund managers. 

Investments

The underlying principle of John Lyon’s Charity’s is that it should be an exemplar Foundation, existing in perpetuity with education at the heart of its cause.

The financial objective of the Charity is to at least maintain the real value of its assets whilst generating a stable and sustainable return to fund grant making.

The Charity holds assets invested in a variety of financial instruments, residential and commercial property. Both income and some capital are used to finance the grant making activities under a Total Return Policy (TRP).

The Charity has adopted a TRP that calculates the amount of its investment return that it can spend annually by reference to an agreed percentage of the Charity’s assets. The amount is calculated by taking the average of the previous four year’s total net assets as at 31st March and apply the agreed percentage to that. The current agreed percentage used (as of 1st April 2019, adopted by a resolution of the Trustee dated 23rd March 2019) is 3.5%.This means the Charity typically grants £10M to £12M

The Charity takes a long-term view of its assets and this is demonstrated through the market positions it takes with regard to both financial and property investments. Providing short-term gain is not the objective; rather sustainability of the assets is fundamental to ensure longevity of grant giving and sustainability of returns.

The investment objective of the property portfolio is to generate a level of net yield in real terms of at least 3.5% across the combined property portfolio.

The Charity seeks to produce the best financial return within an acceptable level of risk. The investment objective is to generate a total return of inflation (CPI) plus 4% per annum over the long term, (after expenses) for the financial investment portfolio.