The Case for Collective Action: Rethinking Endowment Investment in UK Charities

Drawing on a substantial body of thought leadership by Director, Education and Academic Gordon Cox, this article (Rethinking Endowment Investment) marks the second in a three-part series exploring some of the most critical and often overlooked aspects of fundraising for endowment in UK charities (universities, schools, education, arts, heritage, museums, environment, health, animal welfare, international development and more).

The opening piece focused on the importance of good endowment management. This second article explores alternative approaches to determining who should manage your endowment investment, and the third and final article will consider fundraising for endowment, offering practical suggestions and provocations for institutions ready to think beyond the next budget cycle.

The Argument for Pooled or Collective Endowment Models

If we’re serious about strengthening the financial resilience of charities (no matter the sub-sector), we need to think beyond individual institutions. A model in which you manage your own modest endowment, often with limited scale and capacity, may not deliver the returns or strategic clarity we need. There is great value in considering collective investment for charities as a way of improving endowment returns and donor confidence in endowment funds.

The Challenge of Managing Endowments Alone

• Pay advisors to tell them where to invest
• Then pay again for the investment management itself
• Still fall short of the returns achieved by larger pooled endowment funds

Why? Because scale matters. Institutions with less than £1 billion under management often struggle to access the same investment opportunities or achieve the same levels of efficiency as larger funds. The result: lower returns, higher costs, and weaker fundraising narratives.

This is not just a financial inefficiency; it’s a missed opportunity.

How Collaboration Improves Impact, Stewardship and Donor Confidence

What if we pooled a portion of these endowments into a shared vehicle, professionally managed, ethically governed, and aligned with the sector’s long-term interests?

The benefits could include:

• improving endowment returns through scale and diversification
• Lower fees through collective bargaining
• Stronger messaging to donors about stewardship and impact
• Greater resilience across the sector, especially for newer or less well-endowed institutions

This isn’t about losing institutional identity or control. It’s about recognising that collaboration can unlock value that no single institution can achieve on its own.

A Call to Action: Leading Change in Endowment Investment

Move from passive acceptance to active leadership. That means:

• Raising the conversation with your charity leaders, Finance Directors, and Trustees
• Benchmarking transparently across the sector
• Exploring models already in use, such as pooled endowment funds
• Putting donor intent first, ensuring that any collective investment for charities’ honours the spirit and purpose of each gift

Endowment is not just a financial tool; it’s a long-term promise.
To fulfil that promise, we must think boldly, act collectively, and steward these funds with the imagination and integrity they deserve.

Endowment: Simple in Theory, Complex in Practice

Endowment can appear deceptively straightforward, yet it is often complex, unless broken down clearly or approached holistically. This short piece highlights a few areas to consider regarding investing an endowment for UK charities. Two further articles will follow, exploring management and endowment fundraising in more depth.

The range of stakeholders involved can make an endowment feel almost impossible to navigate. You may think you know endowment, but there is always more to learn. Improving endowment returns is to your advantage, as it will only increase donor confidence in endowment funds under your charity’s stewardship. There is an art to condensing its complexity into simplicity, and even the most experienced fundraising operations encounter unexpected challenges.

Next Steps: Strengthening Endowment Management in Your Organisation

If you would like to explore these issues further or discuss how endowment could strengthen your organisation, I would be delighted to continue the conversation. Whether you are seeking clarity on governance, confidence in charity endowment investment messaging, or inspiration for fundraising, there is huge value in approaching endowment as a shared journey.
Email me at gordon@philanthropycompany.com.

Definitions:

• Endowment: An endowment is a gift of money that is made to an institution or community in order to provide it with an annual income. (Collins Dictionary)
• Expendable endowment: capital can be spent
• Permanent endowment: capital can’t usually easily be spent
• Capital: original gift, subsequent gifts and historic unspent income
• Income: dividends, interest, rent etc. Not just interest.
• Total Returns: Put simply, this approach allows any increase in the value of an investment to be used as income. (Charity Commission)