Charities hit by stock market woes

15Jan

It’s been a tough year for charities with financial reports revealing the sector has been affected by stock market losses.

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The Fred Hollows Foundation has denied a report that it lost $2 million in investments that went bad in the global financial crisis.

Fairfax newspapers reported that just over $271,000 was lost outright by the charity, while a further $1.8 million was stripped from the value of the charity’s investments.

The money had been invested with merchant bank Goldman Sachs JBWere in 2008 despite some opposition from international board members of the Fred Hollows Foundation, Fairfax reported on Monday.

Hollows Foundation ‘recovered losses’

But the chief executive of the Fred Hollows Foundation, Brian Doolan, has denied the investments were risky, and says the money has since been recovered.

“In relation to the value of the shares, the market value of the shares, it was written down at the end of 2008 by $1.6 million,” he told ABC radio on Monday.

“All of that has been recovered, up to October of this year, in fact the real loss of $270,000 has been recovered … more than recovered. We in fact made $350,000 in income.”

Investments essential to growth

The body that represent charities in Australia has defended the industry’s foray into the stock market.

Chris McMillan from Fundraising Institute Australia said investments were important to help grow assets and provide a stream of income in the form of dividends.

“They’d be silly to leave those dollars sitting there and not have those dollars invested in a portfolio to maximise the return, they owe that to the cause they support,” McMillan said.

Anglicare, the charity arm of the Anglican Church’s Sydney Diocese, is one charity that has sizable investments on the stock market. It reported its portfolio fell by $12million last financial year, more than double the amount of donations it received in the same period.

The tumbling stock market has also caused a shortfall in the charity’s budget of almost three million dollars. Despite this, it says services haven’t been affected.

Gabriel Lacoba from Anglicare told SBS reporter Johnny Luu that the organisation was “very prudential” with its investments and had the appropriate risk mitigation measures in place.

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