An increasing proportion of charity boards are failing to back top table diversity in their organisation, as their commitment to stopping investment in fossil fuels stalls, a survey is warning.

The survey of UK charities found that the proportion which feel diversity is adequately reflected on their board has fallen for the second year in a row.

Just 36% of charities say diversity is being reflected on their board, down 3% on the previous year and following an increase from 38% to 44% between 2018 and 2020.

The survey was carried out by Newton Investment Management between May and July this year.

Despite the fall in board level commitment to equality and inclusion, there has been an increase in charities demanding their partners demonstrate diversity in their own organisations. This has risen from just over half making such demands last year, to 62% this year.

A separate survey released by charity leaders' body ACEVO this week found that just 7% of charity leaders are from Black, Asian or minority ethnic backgrounds.

Meanwhile, action to ensure charities’ investments are tackling climate change has stalled, this latest survey found.

It has emerged that still only 29% of charities excluded fossil fuels from their portfolios in the financial year to March 2022, compared to 28% the previous year.

Newton's survey suggests there is potential for improvement next year as the number of charity leaders discussing green investment has risen to 33%, compared to 23% in 2021.

However, 38% of charities say they have not debated fossil fuel free investing at all in 2022.

This found that charities already involved in green investment are looking to expand this strategy to cover their whole portfolio.

“Of those that are already excluding fossil fuels, there has been a significant expansion in the scope of those exclusions, in line with the trends seen within wider ethical exclusion policies in the sector,” said Newton Investment Management.

“While the full prohibition of all extraction industries and related companies is still the smallest bracket of the three types of exclusion, it has seen significant growth this year, indicating that charities are now switching from partial to full exclusion.”

Investment portfolios losing value

The survey also found that initial signs of recovery in investment returns during 2021 “have been overturned by the events of this year”, most notably the cost-of-living crisis.

One in eight (12%) charities have seen their investment portfolio lose value in the financial year to March 2022, a 10% increase on last year’s figures.

There has also been an increase in lower rates of return, of between 0% to 3%.

In addition, the proportion of charities seeing a rise of more than 15% has fallen from 30% in 2021 to just 3% this year.

Inflation is the biggest concern among respondents when thinking about their charity, including wage rises and increasing demand for services.

The conflict in Ukraine, a loss of income due to the cost-of-living crisis as well as online threats are among other concerns.

Climate change and the longer-term impact of the pandemic are among other significant fears facing charities, the survey found.

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