Once the redistribution decision had been made, there were immediate implications for Lankelly’s investments.

It was clear straight away that the investment philosophy which we’d had in place wouldn’t be suitable because it was based on us being around for the long term.

That assumed time horizon was a factor in us taking on particular types of investment risk. For example, we were comfortable being exposed to higher volatility in asset prices because we thought we had time to ride out periods when there might be difficult market conditions. We had a very strong focus on sustainability and again, recognised that there would be times when those investments wouldn’t be performing as well.

The strategy was financially unsuitable because of the issue with volatility; if the market was in a unfavourable condition for our types of investments, we only had a short time to wait for things to swing back.

It was also philosophically unsuitable because it was based on a belief that we could work within the financial system to affect change and pursue our mission.

By 2022 and the time of the transition pathway decision, Lankelly’s analysis was that investment in financial markets and the accumulation of capital were intrinsically opposed to our mission. Our auditors wanted to see alignment between the investment strategy and our stated mission and intentions.

In practice, this meant we needed to immediately revisit the investment strategy.

This was challenging when we didn’t know what the transition pathway would look like.

The organisational intention was to create space for a co-design process to reimagine resourcing infrastructure for social justice work. Lankelly didn’t have a model in mind that it wanted to execute – this was not the point.

Managing the investments in this context was challenging as we didn’t have clear answers to questions about what the time horizons would be, what sort of vehicles might be needed and what funds might need to be available at short notice. We didn’t know how likely it was that the endowment would be passed on in full or in part, or ‘spent down’.

Despite these uncertainties, decisions did need to be made.

We modelled different options and reached clarity on what we could, including the asset base, outstanding grants liabilities and operating costs for the foundation to 2028 – the year of closure. We came up with a timeline of possible drawdowns.

A priority for the board was to have as much certainty as possible over the value of the assets that would be available for redistribution. This meant we needed a very low volatility structure. We also needed to have quite a lot of flexibility.

We were able to structure a portfolio around these decisions. It wasn’t going to have much exposure to equities because they are more suitable for a long term time horizon. Instead, the portfolio was predominantly made up of bonds.

There was an open question about how much to build in mission alignment, which had previously been central to our thinking about the endowment.

However, Lankelly had reached a point of much lower conviction about the possibility of actually finding alignment within the financial system. The decision was made to avoid egregious clashes with our values and mission, and to prioritise simplicity and ease of administration to ensure that the money would be readily available to support the transition pathway design process.

Given Lankelly’s priorities, we decided to allocate all of the remaining assets to one of our existing fund managers. They put in place a portfolio which meets the trustees’ objectives and needs, and to the extent that it is possible, doesn’t introduce conflicts with our mission.