City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 1
The assets of the City Parochial Foundation derive from the
BRIEF philanthropy of the people of London. Around 1,400 separate
HISTORY charitable gifts and bequests, some of them 400 years old, were
held by the 112 parishes within the City of London, to be used for
the benefit of the churches or, more often, the poor of those
parishes. During the 19th century, the City grew to be a world
financial centre and the income of these charities, many endowed
with City properties, rose substantially. In contrast, the numbers of
beneficiaries fell. Some parishes had no residents at all.
On 10 August 1878, a Royal Commission was appointed to
investigate the parochial charities of the City of London. Its report
resulted in the City of London Parochial Charities Act, 1883. This
Act provided that the five largest parishes should continue to
manage their own charitable endowments, but that the bulk of the
remainder should be administered by a new corporate body, to be
known as the Trustees of the London Parochial Charities, with
perpetual succession and a Common Seal. The Act further
provided that the Charity Commissioners should prepare Schemes
for the proper application of these funds. It defined the area of
benefit as the City of London and the Metropolitan Police District
of London, the largest boundary definition available for Greater
London. The outcome was a Scheme promulgated on 23 February
1891 which brought all the endowments together into two funds, a
City Church Fund and a Central Fund. Together these constituted
the City Parochial Foundation, with the Trustees under the 1883
Act serving as the Foundation's Central Governing Body.
In 1986 the Foundation became the Trustee of the Trust for London.
At the outset the Trust was endowed with £10m derived from the
sale of the Greater London Council’s assets. It targets small locally
based community organisations which are independent of larger
The Foundation is governed by the 1891 Central Scheme and
various subsequent amending Schemes and orders.
At 1 January 2002 a single Common Investment Fund was
established to pool the investment assets of the Central and City
Church Funds and manage the endowment in a more effective and
The entitlement of the two participating funds in the Combined
Fund at 1 January 2002 was 60% Central Fund and 40% City
Church Fund, such proportions being settled by reference to the ten
year historical average of distributable income of each fund prior to
that date. The entitlement of the two funds may change over time.
By an Order of the Charity Commissioners dated 10 November
2003, the Foundation was authorised to adopt a “Total Return”
approach to the management of its investment portfolio. The
Trustees made this important change to enable them to exercise
more effectively their statutory duty to be even-handed with their
treatment of both present and future beneficiaries of the Foundation
and elected to initiate this approach with effect from 1 January
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 2
The Central Fund and the City Church Fund receive funds from the
ORGANISATION Combined Fund into their income funds. Use of income from the
OBJECTIVES Central Fund is restricted to the area of benefit. It cannot be used
for the advancement of religion but may be spent on furthering any
AND POLICIES charitable purpose which is directed to the assistance of poor
inhabitants in the area of benefit. The income may also be applied
to assist poor persons who are for the time being located within the
area of benefit. In furtherance of these objects, the Trustees make
grants to charitable organisations or projects that work, directly or
indirectly, to benefit poor inhabitants of that area.
In 1992 the charity applied funds to the conversion of a property to
house the Resource Centre (London) Limited then known as the
London Voluntary Sector Resource Centre Limited at 356
Holloway Road, London N7. This branch of the charity is itself a
registered charity and is incorporated as a company limited by
guarantee. The objective of the Resource Centre is to provide
office accommodation, and meeting and conference facilities for
London voluntary sector organisations.
In 1997, the charity took direct control of Bellingham Recreation
Project Limited. The Project operates playing fields owned by the
Foundation in Lewisham, London SE6, for the benefit of the local
Income from the City Church Fund, apart from a number of minor
prepayments, is applied in the following proportions: one third is
given to the City churches within the City of London and two thirds
to the six Dioceses of the Church of England, in whole or in part
within the area of benefit, in such proportions as are determined by
the Church Commissioners. These proportions have always been
according to population. The purposes to which the City Church
Fund has to be applied are essentially religious including repairs to
churches, the maintenance of services and the payment of stipends.
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 3
The 21 Trustees, who make up the Central Governing Body of the
TRUSTEES, Foundation, also serve on six main Committees in order to ensure
OFFICERS AND that the policies of the Foundation are implemented and that the
work is properly managed. The Trustees are appointed by a variety
ADVISERS of nominating bodies and only four Trustees are directly appointed
by the Foundation itself. Unlike many other grant making trusts, it
is guided neither by the spirit of a founder nor by family pride or
ethos. It is more akin to a public body. The Trustees are always
concerned to take a long-term view, particularly important in
relation to property endowments, and to work to ensure that all its
activities benefit the poor of London. The Trustee body has an
appropriate balance of skills and experience in the field of estates
and finance, as well as that of grant-making.
A staff team, currently 14, works to the Trustees providing
appropriate input into the policy debates, and the means of
implementing all the decisions taken. In addition another 6 are
employed by the Resource Centre and one at the Bellingham
Whilst the more visible part of the Foundation’s work relates to
grant-making, the work of the financial and administrative staff is
equally important; any ineffectiveness in that area has the direct
consequence of reducing the money available to benefit the poor of
London. Efforts continue within the Foundation to develop the
staff team as a whole, emphasising the contribution that each and
every one makes to the ultimate purpose of the Foundation.
The advisers to the Foundation, namely the Solicitors, the Property
Investment Managers and Surveyors, the Investment Managers and
the Auditors, play a vital role in raising issues and working with the
staff on preliminary policy papers. The close collaboration between
staff and advisers is important in the light of the demands made
upon the voluntary sector through the Charities Act 1993 and other
accounting regulations including the Statement of Recommended
Practice – Accounting and Reporting by Charities (SORP 2000),
with which the financial statements comply. The more collaborative
the relationship between the Foundation, Trust and advisers, the
more effective the Foundation and Trust become.
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 4
The Trustees (as at 7 May 2004)
The Foundation’s Trustees are appointed by the following bodies:
The Crown Ms Maggie Baxter (Vice-Chair until 30/01/04, Chair
as from 30/01/04) A,E,F,G,I,S
Professor Julian Franks A,E,I
Mr Peter Williams A, G,I,S
Ms Elahe Panahi E,G
Mr Nigel Pantling (Vice Chairman as from 30/01/04) A,E,F,G,I,S
Corporation of London Vacant
Mr Charles Edward Lord G,S
Mr Ian David Luder A,F,I
Church Commissioners The Archdeacon of London
Mr Peter Dale A,E,F,I
Council of the University of London Mrs Gillian Roberts A,F,S
University College London Professor Gerald Manners (Chairman until 30/01/04) A,E,I,S
City and Guilds of London Institute Mr John Barnes G,E,S
Bishopsgate Foundation Mr Miles Barber F,I
King’s College London Mr John Muir A,F,G,S
City Parochial Foundation Mrs Jyoti Munsiff I
Mrs Lynda Stevens E,G
Mr Albert Tucker F,G
Ms Jane Wilmot F,G
Association of London Government Cllr Raj Chandarana
Greater London Authority Vacant
All the Trustees are appointed on a six-year term by their nominating body. Their period of appointment
commences on 4 April.
Key to Committees
A Asset Allocation Committee E Estate Committee
G Grants Committee F Finance Committee
I Investment Committee S Staffing & General Purposes Committee
Clerk to the Trustees Mr Bharat Mehta Director of Grants & Programmes Mr Martin Jones
Director of Finance and Administration Miss Carol Harrison
Solicitors Farrer & Co, 66 Lincoln’s Inn Fields, London WC2A 3LH
Managers and Surveyor CB Richard Ellis, 64 North Row, London W1K 6DA
Property Valuers Cluttons, 26-28 Albion Place, Maidstone, Kent, ME14 5DZ
Auditors KPMG LLP, 8 Salisbury Square, London EC4Y 8BB
Bankers Lloyds TSB Bank plc, Public and Community Sector, 25 Gresham Street, London
Investment Managers RCM (UK) Ltd, 155 Bishopsgate, London EC2M 3AD
S G Asset Management UK Limited, 100 Ludgate Hill, London EC4M 7NL
Veritas Asset Management (UK) Limited, Elizabeth House, 39 York Road,
London SE1 7NQ
Morley Fund Management, 1 Poultry, London EC2R 8EJ
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 5
The charity’s investment powers are governed by a Scheme sealed
INVESTMENT on 16 September 1988. Under the Scheme the Trustees are not
POWERS required to divide funds in the manner specified in the Trustees
Investment Act 1961.
The investment powers of the charity apply to both funds. All
investments acquired by the Trustees have been acquired in
accordance with these powers.
TOTAL Over recent years, the Foundation has seen the value of its
Endowment Fund grow much faster than the Retail Price Index,
RETURN while the increase in its investment income has failed to keep pace.
The impact on the Foundation’s beneficiaries has been to put those
seeking grants at a disadvantage compared to future beneficiaries,
contrary to the Trustees’ statutory duty to maintain an even-handed
approach. The Trustees therefore determined to apply to the Charity
Commission for permission to change to a “Total Return” approach
to investment management.
The Total Return approach enables the charity to supplement its
investment income with a proportion of the capital gains that have
accumulated. To do so, the Trustees are required to identify the
“Unapplied Total Return", that is the proportion of its assets n
excess of the endowment uplifted for the effects of inflation. The
Trustees selected 31 December 1942, the earliest date on which all
property owned by the Foundation was valued, as the basis for this
calculation. As at 1 January 2003 the Unapplied Total Return
represented £77 million of the £158 million in the Endowment
The Trustees then considered the proportion of the Unapplied Total
Return that should be retained to cover future possible reductions in
the endowment fund. From the balance, they decided to allocate an
additional £2 million for grant making for each of the four years
beginning 1 January 2003 (adjusted for inflation), subject to annual
confirmation. In addition a capital grant of £1.2 million paid during
this year to the Bellingham Recreation Project, a wholly owned
subsidiary of the Foundation, has been treated as a reduction in the
Unapplied Total Return. At the year end, the Unapplied Total
Return stood at £69.8m.
In reaching these decisions the Trustees have sought professional
advice from their investment and property managers. The Trustee
body itself includes individuals with wide experience and skills in
both investment and financial matters. The Trustees’ objective
remains to keep the value of the endowment and the income
available for grant giving constant in real terms using the Retail
Price Index as the benchmark.
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 6
REVIEW OF Income from investment properties represented 43% of the
Foundation’s incoming resources. The total income from
ACTIVITIES investment properties fell from £5,299,699 in 2002 to £4,958,923 in
YEAR Bank and other interest fell to £869,276 in 2003 from £1,006,987 in
2002. Income from listed investments rose from £1,636,245 in
2002 to £1,868,691 in 2003. The decrease in bank and other
interest related to a decrease in cash holdings and lower interest
rates. The equity income was partly offset by the tapering of tax
A commentary on the Resource Centre’s and the Bellingham
Recreation Project’s activities is given below.
Cost of generating income
Expenditure on generating income was £704,130 (2002: £945,629).
This includes property management costs of £333,994 (2002:
£487,348) and investment management costs of £191,462 (2002:
£250,029). The latter costs are based on the value of the investment
portfolio. Of these management charges, £174,646 (2002:
£223,443) has been charged against the endowment funds as
relating to those funds.
Total grants payable in the year were £ 8,876,210 (2002:
£7,235,324). Of this amount £ 5,092,005 (2002: £4,245,703) was
payable from the Central Fund and £3,784,205 (2002: £2,989,621)
was payable from the City Church Fund.
Grants made from the Central Fund
2003 is the second year of the present quinquennium 2002-2006
during which the Trustees are allocating grants with the following
• Organisations providing advice, information and
• Organisations developing, promoting and providing
education, training and employment schemes;
• Organisations that are attempting to develop initiatives that
tackle violence and hate crimes against the target groups.
The Trustees also appreciate the importance of back up or
development work for the voluntary sector and fund the following:
• Core Costs and Management Costs;
• Policy Change;
• Second Tier and Infrastructure Organisations;
• Collaborative responses.
• Alliance Funding
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 7
The Trustees also have a Small Grants programme and may provide
continuation funding for work funded by the Foundation under the
previous quinquennial policy.
In addition to the grants made from the Central Fund, a capital grant
was made of £1,200,000 to the Bellingham Recreation Project.
An analysis of grants made from the Central Fund in 2003 other
than that to Bellingham is shown in the chart below:
The Analysis of Grants by Category
Quinquennial Categories 2002 - 2006
initiatives Information and
Small Grants Advocacy
Second Tier &
Core Costs Education,
Reduce & Employment
/Tackle Violence Schemes
/Hate Crimes 24%
The policy of making mainly revenue grants was continued with
99% of the grants falling into this category.
The boroughs receiving more than £100,000 of grant money were:
Barnet, Brent, Ealing, Hackney, Hammersmith and Fulham,
Haringey, Hounslow, Islington, Lambeth, Merton, Southwark,
Tower Hamlets and Westminster.
An analysis of grants made from the Central Fund is published in
the Annual Grants Review which is available from the Clerk on
A reconciliation of grants shown in that publication is given below:
Grants detailed in
Grants Review 5,229,234 4,555,708
Grants written back (135,431) (263,125)
Other (1,798) (46,880)
Net Central Fund grants 5,092,005 4,245,703
No. of grants made 205 183
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 8
Grants made from the City Church Fund
The Trustees divide the income from this fund between the Church
Commissioners, the six Metropolitan Dioceses and the City
Churches Grants Committee in accordance with the City Parochial
Foundation’s governing instruments. One third of the income is
allocated to the City churches and, after a contribution of £96,000
towards prior charges made by the Church Commissioners, two
thirds of the income is payable to the six Dioceses in the
proportions listed below:
London 44.37 Rochester 6.18 Chelmsford 15.30
Southwark 29.05 Guildford 2.27 St Albans 2.83
As given in note 6, the grants payable from the City Church Fund
Church Commissioners and
Dioceses 2,522,803 1,993,081
City Churches Grants Committee 1,230,262 965,400
Schedule VII payments to City
Churches 31,140 31,140
The Trustees allocate funds to the salaries and assisted costs of
employing a team of field staff and their assistants. It is the
Trustees’ view that proper assessment and monitoring of charitable
priorities in London cannot be achieved without this work. In
addition the Trustees employ consultants to help, support and make
more effective the grants made from the Central Fund of the
Foundation. The costs of such work and a representative proportion
of overheads are charged to Support costs.
Management and administration
Expenditure on Management and Administration was £207,768
These costs have been split across the various headings under
The Trustees have decided not to split realised and unrealised gains
on listed investments, as allowed by the Charity Commission.
THE RESOURCE The performance of the Resource Centre, a subsidiary of the
Foundation, is shown within the Restricted Funds of the charity.
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 9
CENTRE Some 2,300 organisations used the Centre during the year and the
conference facilities remain in high demand.
The accounts of the Resource Centre show incoming resources of
£929,684 (2002: £867,142) and resources expended of £846,613
(2002: £780,349) making net incoming resources £83,071 (2002:
£86,793), after payment of £283,851 (2002: £220,698) to the
Foundation as rent for the premises.
The full statutory accounts of the Resource Centre are available
from the Clerk to the Foundation at 6 Middle Street, London EC1.
The Foundation owns property in Lewisham, London SE6. The
BELLINGHAM Bellingham site comprises a 12 acre playing field. The playing
fields are the direct responsibility of the Foundation through its
RECREATION subsidiary, the Bellingham Recreation Project Limited, a registered
LIMITED The Project had net incoming resources of £4,384,533 (2002:
£140,145) after receipt of grants of £1,250,121 (2002: £51,653)
from the Foundation. The Project has successfully completed and
opened a new sports and healthy living centre on the site at Easter
The principal funders are Sport England, the Foundation itself and
Lewisham Borough Council.
The Bellingham Recreation Project Management Company
Limited, a wholly owned subsidiary of the Project, did not trade
during the year (2002: winding up activities £125).
The results of the Project are incorporated in these Financial
Statements as a branch of the Foundation as defined by SORP
Accounting and Reporting by Charities.
INVESTMENT There are no restrictions on the Foundation’s power to invest. The
investment strategy is set by the Trustees and takes account of
POLICY demand for funds. The summary of the policy is given on pages 28
INVESTMENT The Trustees employ the services of property investment managers.
PROPERTIES CB Richard Ellis Limited (formerly CB Hillier Parker Limited),
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 10
manage the property investments on a non-discretionary basis and
have been set targets to reduce the size of the Foundation’s
portfolio in absolute terms, as opportunities arise; to diversify the
nature of the portfolio (which is currently heavily focused on City
of London properties); and to increase the yield of the portfolio to a
level that is more consistent with the Investment Property Databank
The investment property portfolio was valued at 31 December 2003
by Cluttons. This has been shown in the accounts at an open
market value of £65,418,686 (2002: £76,229,183). Following a
property disposal of a long leasehold in the year of £825,000
showing a realised loss of £16,000, the remaining portfolio showed
an unrealised loss of £10 million.
Trustees have established the IPD index as a basis for monitoring
the portfolio’s performance. The results for the previous year saw a
negative total return (-2.5%), which placed the Foundation’s
performance 65th out of 67 in the chosen IPD sample. The results
for this year also showed a negative total return (-6.0%), which
compares to an estimated IPD Annual Index total return of 11%.
This poor performance was almost entirely due to the concentration
of the portfolio on a single sector, the City of London. So long as
the Foundation maintains a preponderance of property in the City
the performance of the portfolio will reflect the volatile economic
performance of the financial companies located there. The
Foundation’s progress in achieving its overall objectives is
summarised in the table below:
Position as at 31
December 2000 2001 2002 2003
Portfolio value £107.9m £86.5m £76.2m £65.4m
% in Central London 91% 81% 78.5% 79%
Annual income £5.3m £5.5m £5.3m £5.0m
INVESTMENT The Foundation acquired further units in the Falcon Property Unit
Trust at a cost of £1,398,950 bringing the total value at the year
PROPERTY UNIT end to £3,466,714. The total return has been 13.4% (2002: 10%).
INVESTMENTS The Foundation employs the services of investment managers.
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 11
RCM (UK) Ltd managed part of the assets of the Combined Fund
through index tracking Common Investment Funds. The portfolio
thus replicates the performance of relevant market indices for
different asset classes and aims to match the performance of the
WM Charity Fund Index for the portfolio as a whole. The total
return for the year has been 17.5% (2002: -17.8%). SG Asset
Management UK Limited managed listed investments of the
Combined Fund and had an active mandate to out-perform the
FTSE and other Global indices over rolling three year periods. The
total return for the year has been 20.5% (2002: -22.2%).
Veritas Asset Management (UK) Limited managed a smaller fund
(originally £10 million) against the Global FT World Enquity Index
on a slightly more ambitious target. The total return has been
10.3% (2002: -14.9%).
The market value of the passive endowment held as listed
investments including uninvested cash rose to £27,550,073 as at 31
December 2003 from £24,312,839 at 31 December 2002 in line
with improved market conditions.
The market value of the active listed investments including
uninvested cash rose to £40,877,601 at 31 December 2003 from
£35,611,273 at 31 December 2002.
The Trustees also invest liquid funds in the money market. At the
year end £18,196,554 of Combined funds were held in a cash
portfolio which was managed by Morley Fund Management. The
total return for the year has been 3.45% (2002: 4.02%).
TRUST FOR The Trust for London is a charity connected to the Foundation but
whose accounts are not consolidated with the Foundation. It was
LONDON formed in 1986. It has an expendable endowment fund which at 31
December 2003 stood at £14,966,782. This fund produced an
income of £630,969 in 2003 (2002: £628,584). Grants are applied
to projects which target small locally based community
organisations with charitable purposes and which are independent
of larger bodies.
There have been no material events since the year end.
ACCOUNTING There were no changes in accounting policies.
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 12
RESERVES It is the Trustees’ policy to distribute fully that amount adjudged by
them to be the maximum under total return distributable.
The Trustees intend to continue a measured diversification of their
FUTURE assets out of investment properties into listed investments. They
also intend to continue their existing policy of diversifying their
DEVELOPMENTS property portfolio out of Central London office property and into
other forms of property investment. They will monitor the income
returns from different asset classes and have regard to the effect of
asset allocation on the income available for grant making.
The Trustees have undertaken a restructuring of the Foundation’s
constitution with a view to seeking incorporation by registering as a
charitable company limited by guarantee at the end of 2004.
Law applicable to charities in England and Wales requires the
GOVERNANCE Trustees to prepare financial statement for each financial year
which give a true and fair view of the state of affairs of the charity
AND INTERNAL and of the group at the end of the year and of its financial activities
during the year. In preparing those financial statements Trustees
CONTROLS are required to:
• select suitable accounting policies and then apply them
• make judgments and estimates that are reasonable and
• state whether applicable accounting standards and
statements of recommended practice have been followed,
subject to any material departures disclosed and explained
in the financial statements;
• prepare the financial statements on the going concern basis.
The Trustees have overall responsibility for ensuring that the
charity has appropriate systems of control, financial and otherwise.
They are responsible for keeping accounting records which disclose
with reasonable accuracy at any time the financial position of the
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 13
charity and which enable them to ensure that the financial
statements comply with the Charities Act 1993 and have been
properly prepared in accordance with the Central Scheme approved
by Her Majesty in Council on 23 February 1891 and subsequent
amending Schemes and orders. They have general responsibility
for taking such steps as are reasonably open to them to safeguard
the assets of the charity and to prevent and detect fraud and other
The systems of control are designed to provide reasonable, but not
absolute assurance against material misstatement or loss. They
• an annual budget approved by the Trustees;
• regular consideration by the Trustee of financial results,
variance from budgets, non-financial performance
indicators and bench marking reviews;
• delegation of authority and segregation of duties;
• identification and management of risks.
The Trustees have, with advice from their auditors, introduced a
formal risk management process to assess business risks and
implement risk management strategies. This involved identifying
the types of risks the Foundation faces, categorising them in terms
of potential impact and likelihood of occurrence, and identifying
means of mitigating the risks. As part of the process the Trustees
have reviewed the adequacy of the Foundation’s internal controls.
By order of the Trustees
Ms Maggie Baxter
7 May 2004
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 14
REPORT OF We have audited the financial statements on pages 15 to 27.
THE This report is made solely to the charity’s trustees, as a body, in accordance
with section 43 of the Charities Act 1993 and regulations made under
INDEPENDENT section 44 of that Act. Our audit work has been undertaken so that we
might state to the charity’s trustees those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent
AUDITORS TO permitted by law, we do not accept or assume responsibility to anyone other
than the charity and the charity’s trustees as a body, for our audit work, for
THE TRUSTEES this report, or for the opinions we have formed.
OF THE Respective responsibilities of Trustees and Auditors
You are responsible as the Trustees for preparing the trustees’ report and, as
described on page 13, the financial statements in accordance with applicable
CITY United Kingdom law and accounting standards. Our responsibilities, as
independent auditors, are established in the United Kingdom by Statute, the
PAROCHIAL Auditing Practices Board and by our profession’s ethical guidance.
FOUNDATION We have been appointed as auditors under section 43 of the Charities Act
1993 and report in accordance with regulations made under section 44 of
that Act. We report to you our opinion as to whether the financial
statements give a true and fair view and are properly prepared in
accordance with the Charities Act 1993. We also report to you if, in our
opinion, the trustees’ report is not consistent with the financial statements,
if the charity has not kept proper accounting records or if we have not
received all the information and explanations we require for our audit.
We read the other information accompanying the financial statements and
consider whether it is consistent with those statements. We consider the
implications for our report if we become aware of any apparent mis-
statements or material inconsistencies with the financial statements.
Basis of opinion
We conducted our audit in accordance with Auditing Standards issued bv
the Auditing Practices Board. An audit includes examination, on a test
basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and
judgments made by the Trustees in the preparation of the financial
statements, and of whether the accounting policies are appropriate to the
charity’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and
explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the financial
statements are free from material mis-statement, whether caused by fraud
or other irregularity or error. In forming our opinon we also evaluated the
overall adequacy of the presentation of information in the financial
In our opinion the financial statements give a true and fair view of the
charity and group’s state of affairs, as at 31 December 2003 and of their
incoming resources and application of resources, in the year then ended
and have been properly prepared in accordance with the Charities Act
8 Salisbury Square
London EC4Y 8BB
7 May 2004
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 15
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City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 28
SUMMARY OF The Foundation’s permanent endowment requires Trustees to
preserve the capital value of their investments in real terms whilst
THE maximising the income available to their beneficiaries without taking
The Foundation is authorised by the Charity Commission to pursue a
POLICY total return approach to investment. This gives the Foundation
greater flexibility in the allocation of investment returns between the
trust for investment and the trust for application for the purposes of
the charity. The Trustees seek to be even-handed as between present
and future beneficiaries
Paying due regard to investment risks, the Investment and Estate
Committees seek to manage the Foundation’s investment and
property portfolio with a view to maximising its total return, that is,
the income generated by, and the capital growth of, the Foundation’s
The Asset Allocation Committee considers and determines targets for
the future allocation of the endowment between the various asset
The Central Governing Body retains the Foundation’s overall power
of investment but has delegated investment powers to its Asset
Allocation, Investment and Estate Committees.
The Asset Allocation Committee has delegated authority to make
decisions regarding the medium and longer-term objectives of the
Foundation’s investment policies, and the short and medium term
objectives of the Investment and Estates Committees
The Investment and Estate Committees in turn have delegated
authority to appoint, monitor and, if necessary, dismiss the
Foundations’ Investment Managers and/or Property Advisers. They
review investment performance at regular intervals. These
Committees are supported by staff of the Foundation.
The policy is powerfully informed by the recognition that, in the past
and over the longer term, equity investments have provided better
total returns than other investment classes but acknowledges that
there are constraints upon the speed at which the portfolio can be
prudently diversified away from a base that was historically 100 per
The current targets to be achieved by 31 December 2006 by asset
class are: -
• 35 to 45 per cent property including property unit trusts
• 35 to 45 per cent equities
• 10 to 20 per cent cash and gilts
whilst maintaining a directly managed property portfolio of between
£62 and £77 million at December 2002 values.
Investment in any hedge instruments, derivatives, foreign currencies,
warrants or other leveraged securities or investments would require
the specific approval of the Investment Committee/Asset Allocation
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 29
The Foundations’ performance targets are:
• For investments - to outperform or match set benchmarks over
rolling three year periods
• For property - to diversify the portfolio away from City of
London offices, raise the yield and move closer towards the
total return of similar-sized portfolios as recorded by IPSD
• For property unit trusts - to outperform the IPD All Monthly
and Quarterly Valued Funds.
The performance of the Foundation’s investments is reviewed half-
yearly by the Investment and Estate Committees against these agreed
Investment Manager and Property Advisers
There are currently two discretionary investment managers, one
index-tracking investment manager and a cash manager.
The objective of the larger of the two discretionary managers is to
outperform the FTSE, S&P, Topix and Saloman Bros. indices over
the given asset classes by one per cent (net of fees) on a rolling three
year basis. It has been agreed that equities form 70 per cent to 90 per
cent of the portfolio.
The objective of the smaller discretionary manager is to outperform
the FT World Equity index by two per cent (gross of fees) on a
rolling three year basis.
The objective of the index-tracker manager is to match the
performance of the WM Charity Fund Index (ex property) on a
rolling three year basis.
The objective of the cash manager is to outperform the three month
London Interbank Bid Rate (LIBID) by 0.75 per cent (net of fees).
The maximum allowable portfolio duration is three years.
The objectives of the property adviser are to reduce the portfolio in
absolute terms, over time, and as attractive opportunities arise; to
diversify the property mix in the portfolio away from City offices;
and to raise the yield and move closer towards the total return of
similar sized portfolios as recorded by IPD Indices.
The suitability of the managers and advisers is reviewed every five
Half-yearly, the Asset Allocation Committee reviews the current
asset mix of the Foundation’s portfolio in order to monitor the
progress of the Investment and Estate Committees in moving towards
the agreed asset allocation targets.
At regular intervals, the Investment and Estate Committees: -
• Review their portfolios
• Review the current economic outlook and investment plans of
the Investment Manager, Property Manager or Property Unit
• Receive and consider statistics on the investment performance of
City Parochial Foundation Trustees’ Annual Report and Consolidated Financial Statements 2003 page 30