Assist Finance Launches Independent Charity & Not For Profit Review Program.

In light of two recent landmark class actions, Jason Di Iulio, Managing Director of Assist Finance Corporation Limited, has launched their Independent Charity and Not for Profit Review Program to keep charity and not-for-profit investments safe.

Earlier in 2012, Wingecarribee Shire, the Southern Highlands of New South Wales, won a landmark class action suit against Lehman Brothers Australia, awarding them an initial AU$9 million settlement out of an AU$21.4 million loss on investments.

It was found that Lehman Brothers were not transparent and failed to give sound financial advice to Wingecarribee Shire and other councils, thus exposing them to high-risk investments.

On November 6, 2012, another case was settled for similar reasons. This time, Central West Councils in New South Wales have been vindicated in a class action against Standard and Poors, investment bank, ABN Amro, and Local Government Financial Services.

The Federal Court found that the councils had been misled into investing in investment bonds which had initially carried a triple A rating, losing the councils a joint AU$15 million dollars.

As with councils, charities have money to invest to further the interests of their service and the people who rely on those services. They need sound, independent financial advice to guard against loss and to avoid high-risk investments.

“Charities and not-for-profits invariably tender out their investment management or outsource their investment decisions. This creates a two fold problem,” said Di Iulio.

“Firstly, independence in the investment decision process is lost as there is no independent mechanism of reviewing what is being recommended as an acceptable investment or strategy. Secondly, board members often do not have the financial skill sets to decipher what, at times, can be quite complex investment recommendations, and as a result they may be blinded by the proposed high returns.”

Graeme Kirkwood, Founder and Director of Sydney-based Global Church Solutions, a charity management consultancy, says that even smaller charities are looking to alternative investments due to a downturn in philanthropy. “These charities are choosing alternative, higher risk investments in order to maximise the shortfall experienced through giving fatigue in the philanthropic market."

“This widening of the investment base is admirable, but in the absence of pro-active and broad based, qualified advice and risk assessment, I’ve seen it lead to several cases of significant loss to these organisations,” said Kirkwood. 

Such cases have raised concern for Di Iulio, inspiring the launch of the independent review program through Assist Finance.

“As an independent advisor, we can analyse investment recommendations from a wide range of asset classes and direct a charity or a not-for-profit organisation toward the safest, most secure funds while enabling the highest potential return. Independent advice allows full transparency and lowers risk, misrepresentation and dishonesty, thereby protecting valuable assets,” said Di Iulio.