CCLA works in the shadow of St Paul’s Cathedral in the heart of the City of London. It is a beacon of integrity and sound investments for churches, charities and local government.
A few years ago, I wrote a blog about the nice men in the City that I work with. I am inspired to write about them again because for the next 3 days I will be on their stand at the LGA Conference in Birmingham to encourage councils to invest in their funds.
The nice men, of course, work for CCLA an organisation which works to invest funds in a variety of ways for none-profit making organisations. That’s what their name CCLA stands for Churches, Charities and Local Authorities. I sit on the Board of LAMIT, which is the local authority part of the operation. Local councils like other big organisations need to invest in the short, medium and long terms. CCLA operate three funds for local councils in each of these areas:
Public Sector Deposit Fund. This is where you keep your cash until you need it. Most councils have cash balances at some time because the income never quite matches the expenditure and we have a tendency to have more cash available to us at the start of the financial year. This fund brings together a lot of those small to medium size cash accounts and pools the cash to create a larger amount of money to enable a higher rate of interest to be negotiated. This fund was set up after the financial crash to help those councils who nearly had their fingers burnt by cash investments in Icelandic Banks.
Diversified Income Fund. This portfolio is actively managed and invests in a wide range of potential assets. The control of relative risk will be an important influence on structure and strategy. The Fund is suitable for longer term investors seeking a balanced return of income and capital growth for whom control of relative risk is important.
Local Authority Property Fund. Unlike other property fund investments or even direct property purchases, investment in the Fund does not count as capital expenditure for English or Scottish local authorities. Dividends are treated as revenue but the General Fund is protected from fluctuations in the unit price. The investment is treated as an ‘available for sale’ financial asset.
You can find full details of these funds at www.ccla.co.uk. In total CCLA is now looking after more than £1.5 billion of council money with our longest-serving fund – the Property Fund recently topping the £1billion of investment.
As a councillor myself I believe that we should carefully look after every penny of our taxpayer’s money. By pooling our resources through these three funds we can collectively get much better bargains and rates than we can achieve as individual authorities. I have concerns at the investment strategies of some councils including my own. These councils are entering the commercial field with relatively small holdings. In some cases, I doubt the knowledge levels of officers and members alike to make the type of long term and assured investment progress made by the specialised CCLA staff.
Because their investments are in two or three properties the outcome of one of those investments going wrong would have a major effect on the ‘balance sheet’ of the council and the totality of profits made from overall investments.
We benefit from the ‘city’ expertise of some people who are committed to getting a good deal for the none-profit making bodies that they serve. We pay them well but at levels far, far below those of other people of their ability who run similar sized investment funds in the City. In total they have more than £8 billion invested in funds for the three sectors.
That expertise is giving us good returns. The Property and PSDF offer highly competitive returns which in most cases exceed industry benchmarks. The DIF, which is the new kid on the block with its mixture of investment routes is already doing well although it has only been in existence for about a year.
These funds are for all levels of local government. They have minimum thresholds for investment but have investors from small town or parish councils through to counties; cities and the Corporation of London. The funds I have described above are broadly replicated in the church and charity sectors but need to be kept apart for legal or financial reasons.
For a variety of reasons, the funds are unique. Many of the accounts cost CCLA to run them as the churches and smaller bodies are regularly moving small sums around. A fully commercial, profit making operation would close these accounts but CCLA continues to service them because of their proud ethos of commitment of the provision of financial services to these sectors.
I am not a financial adviser but I can read a graph and see how well, these funds do for the three sectors. Call and see me at the CCLA stand and I’ll introduce you to the men and women who really understand both our council sector and the ‘city’. If you cannot see me there and whichever sector you are in contact me at firstname.lastname@example.org or 07885 626913. I can then put you in touch with the right people to talk to.