As a charitable foundation, Barnwood responds to the needs of the people it exists for. But what does this charitable purpose mean for the financial resources it holds in investments and assets?

In this blog, we explain how we manage Barnwood Trust’s invested assets[1]. We will also share some of our questions and challenges managing wealth alongside our charitable purposes.

How Barnwood Trust’s money is managed

Barnwood sold off the majority of its land for residential and commercial development in the 1970s and 1980s. Since then, the Trust has been a financially independent charitable foundation, using the income from its investment in stocks, shares and property to deliver its work. By only using the income and allowing the capital[2] to grow, Barnwood now has a sizable investment portfolio.

You can also read about our research into the origins of Barnwood’s money, going back to the 1800s.

Barnwood has always worked with professional investment managers to handle its investment portfolio. We hold investment managers to account by providing guidelines for risk appetite and setting targets for financial performance. Investment managers are given discretion to choose where to invest Barnwood’s funds.

Over time our investing practice has improved. We have sought to be an ethical investor, excluding companies which might cause harm or have negative outcomes; and we use Environmental, Social and Governance (ESG)[3] factors, screening for companies with high ESG scores in which to invest. Impact investing goes beyond ESG, as it looks to contribute to solutions to societal challenges.

What is impact investing?

On 30^th June 2024, Barnwood’s investment portfolio was valued at £93 million. This is a significant financial resource for Barnwood, with the potential to achieve positive social impact through this investment portfolio.

But, where to start in thinking about this? We wanted to understand impact investing and consider what it means for Barnwood. In particular, what happens when you look at this through the lens of disability and mental health? To help us with this, we considered The Bridges Spectrum of Capital, which aims to map out a range of risk and return[4] strategies.

Using this spectrum, we identified Barnwood as a Responsible Investor; that is ‒ an investor that maximises financial returns whilst seeking not to have negative outcomes for people and planet. As a strengths-based organisation, we recognise this doesn’t go far enough to match our values of Focused, Inclusive, Bold and Forward Thinking. So, this has led us to rethink our approach to investing, asking: how can we do more with the Trust’s resources in pursuit of our purpose as an agent for social change?

Positive outcomes for people and planet

As a first step, we want to move towards being a Sustainable Investor; that is ‒ an investor that seeks to maximise financial returns but, rather than simply avoiding negative outcomes for people and planet, it proactively seeks outcomes which benefit people and planet.

Our ultimate ambition is to become an Impact-driven Investor, but this will take time. Impact-driven investing means making investments that deliberately try to add solutions to societal challenges for people and/or planet. To adopt this approach we would need to put positive impact front and centre when deciding where to invest; the impact of the investment being equal to financial returns rather than secondary to the returns. We would still want to maximise our income but impact on people and planet would be high up on the list of things we want to get out of making the investment.

What are we doing now?

Having made a commitment to use our financial resources for greater impact, we are now working with the Impact Investing Institute to further develop our understanding of impact investing – how it differs from social investment, sustainable investment, and traditional investment practices.

We will look at what other charitable foundations are thinking about, and doing, in relation to seeking impact from their investments and other assets.

We will work with the Impact Investing Institute to identify and set impact goals for our investment portfolio. We will use the UN Strategic Development Goals (UN SDGs), a universal framework for social impact, and map our mission against it. This will enable us to work with our investment managers to explore new investment opportunities.

We will develop a Theory of Change[5] for our investment portfolio, to describe the change we want to see and set our plans for achieving that change. We will also consider who we need to work with to achieve the ambitions and goals that we set, and how we will monitor, report and tell the story of the impact being achieved through our investments.

Our learning so far

At the start of this journey, our sights were on better use of Barnwood’s financial resources to improve social outcomes for disabled people and people with mental health conditions. We were not short on ambition and energy, but we were naïve.

We might consider Barnwood to be wealthy, but its wealth is a drop in the ocean. This is especially true when looking to create change in capital investment markets. Investment markets are global, whilst Barnwood is Gloucestershire-based – we are a very small fish in an enormous pond.

There is a lot of jargon used in the investment world, which has taken time to decipher and understand how it is relevant to us. At times it has felt that every step forward in our learning has led to 2 steps back; almost like doing a loop the loop on a Hot Wheels track.

By working with others who are interested in this area of work, we are hopeful that we will be able to achieve the social impact outcomes we want for our investments. Connecting with other charitable foundations, investment networks and investment managers is our best chance of making waves and achieving our investing ambition.

[1] Investment in stocks, shares and property.

[2] Capital is the core amount of money which sits in the investment portfolio generating dividends, interest and gains which can be used as income for the charity. The capital amount grows if the gains are not used but instead is reinvested.

[3] ESG is shorthand for an investing principle that prioritises environmental issues, social issues, and how well companies are governed or managed. This is sometimes called ‘responsible investing’.

[4] Risk and return means balancing risk with the chances of investments doing well or not well.

[5]  A Theory of Change sets out a clear road map towards the social change an organisation wants to make. It informs strategic planning, ongoing decision-making and evaluation of the work.