Digitalisation provides charities’ boards of trustees with valuable tools to overcome the challenges they face in terms of managing assets.
One of the biggest challenges facing a charity’s board of trustees lies in using and investing the charity’s assets appropriately. International transactions, assets invested abroad and the regulatory environment at play (Common Reporting Standard, CRS) can turn out to be particularly tricky. The current trend towards digitalisation opens up valuable opportunities for a charity’s board of trustees.
Digital bookkeeping means that banks need to supply data in digital form. This can represent a challenge, as banks use different formats and quality levels. It is necessary to develop
various electronic interfaces so that digital bank data can be processed automatically within the charity’s bookkeeping system. Suitable IT infrastructure brings numerous benefits, such as cost savings, the ability to create reports efficiently (annual reports, profit and loss accounts, and capital flow reports) and prepare for tax returns, etc.
Investment reporting gives boards of trustees a transparent overview of bankable and non-bankable assets. It needs to measure the performance of assets on a range of aggregation levels (e.g. on the level of asset classes or various portfolios through to consolidated performance). This form of reporting assesses performance using a suitable benchmark. . As a result, independent assessments are key. From the perspective of risk management, asset portfolios need to be assessed on an integrated, consolidated basis. The board of trustees needs to monitor the investments regularly and compare them to the investment strategy laid out by the asset management contract. Depending on the charity’s statutes, the competent supervisory authority may review the asset management strategy in line with the requirements of the Swiss pension provision plan (BVV2).
Ultimately, a full review of all cash flows, fees and charges is indispensable when assessing the performance of an asset manager. They need to be compared to the fees levied on the competitive market. Additional cost savings can be expected if different products (such as annual reports or investment reports) can be created using the same data.
Now, some Swiss fiduciary companies offer their customers digital bookkeeping solutions and investment reporting, which is why it is recommended that charities review their providers carefully.