Healthy trust may offer extra million after bouncing back to sustainability

Shetland Charitable Trust proposes to make up to one million pounds a year extra available to fund good projects in the community after steering its reserves back to over £300 million for the first time since 2000.

The charity is set to spend up to £8.3m next year on bids that meet a clear need in Shetland or fill a gap in existing provision. This year’s grants budget was set at a maximum of £7.4m.

All groups receiving trust funding will have to show what they will do to help reduce the growing inequality and social exclusion in Shetland society.

The fresh strategy due to be considered at a meeting on 12^th September sets out the trust’s direction for the five years from 2020 to 2025. It follows a comprehensive internal review carried out earlier this year.

Changes in the approach to stock market investments and a tighter rein on spending have succeeded in returning the trust to the healthy position of being self-sustainable. The investment strategy implemented in 2016 saw a move away from local investments and an increase in the proportion of trust funds invested in world equities, from 50 to 75 per cent. That saw the trust’s external investments rocket in value by more than £100m in just over four years – from £204m on 31^st March 2015 to £307m by 30^th June this year. The extra income was offset slightly by reduced earnings from local investments of around £2.8m a year.

Since it began in 1976, the charitable trust has paid out over £320 million to organisations in Shetland, aiming to improve the quality of life for all people in Shetland. Priorities have remained the support of services to people in need, the elderly, children and young people, as well as contributing to maintaining and developing Shetland’s environment.

Thursday’s trust meeting in Islesburgh Community Centre will consider a financial plan for 2020-2025 recommending a maximum sustainable annual spending budget, including grants, of £10m in 2020/21, rising to £11.1m in 2024/25. The projections are based on an estimated rate of return on trust investments of 3.5 per cent above inflation.

In recent years the trust’s annual spending budget fell as low as £8.5m as trustees wrestled to restore the charity’s funds to a level where spending can be sustained without seriously depleting trust reserves for future generations.

Trust chair Dr Andrew Cooper said: “The trust was criticised for making the tough decision to squeeze spending and try to put its house in order. The wisdom of that approach is now there for all to see – and for the next generation of islanders to put to good use.”

The picture could have been spectacularly different had the trust not halted its chronic overspending habit of the noughties when grants of £16m a year were being disbursed to local trusts and community groups. With reserves plunging to £150m in 2008/09 after the stock market crash, trustees were spending themselves out of existence. Trust analysts calculate that failure to alter course would have seen the charity worth around £162m today – about half its current value – and able to afford less than half what it aims to pay out over the next five years.

The bulk of trust grant aid helps meet the annual funding costs of local organisations, including large and influential organisations like Shetland Recreational Trust, Shetland Amenity Trust and Shetland Arts, which will now have to demonstrate in their applications what they are doing to reduce inequality and social exclusion in the community. Trustees of the charitable trust consider these annual funding applications in November.

The trust is to put extra effort into ensuring that all the funding it awards meets its core aim of improving the quality of life in Shetland.

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