Eastern & Central Community Trust (ECCT) makes funding donations to community organisations in Poverty Bay, Hawke’s Bay, Tararua, Wairarapa, Manawatu & Horowhenua.
Annual Report
Community donor makes good of difficult year
The 2008/09 financial year saw the Eastern and Central Community Trust face its most financially challenging year since inception but it continued robust donation activity, providing $5.7 million to help groups throughout its area.
In its annual results, to March 2009, the Trust reported that 742 community and voluntary groups shared the $5.7 million, which is only slightly less than for the same period a year ago when donations totalled $5.8 million.
The Community Trust is an independent, charitable trust and distributes donations for the benefit of the communities throughout Poverty Bay, Hawke’s Bay, Tararua, Wairarapa, Horowhenua and Manawatu – a population of around 382,000.
“During the year the trustees were faced with the choice of shutting up shop by ceasing or dramatically scaling back distribution of donations, in order to preserve capital,” says Chairperson James Palmer.
“But trustees remained level headed in the face of economic uncertainty and have been determined not to further contribute to the strains in our communities by retrenching our community support,” he said.
The global economic crisis had a negative impact on the Trust’s core asset base, with net assets at 31 March 2009 being $115.8 million, and investment losses for the year $11.2 million. The overall deficit was $18 million, caused mainly by unrealised or paper losses on equity portfolios. However, the Trust made significant gains on currency through its move to remain unhedged, or not locking in overseas revenue at current exchange rates, while the dollar fell ensuring losses were significantly less than they could have been.
The bulk of the Trust’s losses were to its reserves, which are designed to act as a buffer in times of poor investment performance, a policy which has insulated the Trust’s core assets from the effects of the downturn.
“While the Trust was obviously disappointed at the erosion in the value of its assets, the performance of its investments compared favourably with other funds, such as the New Zealand Superannuation Fund,” said Mr Palmer.
Mr Palmer says the Trust is well positioned to emerge from the economic crisis with considerable strength as global equities regain value. The investment losses of 2008/09 have already been regained in the first four months of the 2009/2010 financial year. The Trust has continued to increase the level of hedging on currency exposure in order to lock in the currency gains and reduce exchange rate risk from a strengthening New Zealand dollar.
Despite the volatility in the value of the Trust’s investments, the average donation has steadily increased from $3,021 since 1998 to $6,932 in 2008/09.
“The Trust has worked hard to increase the support it provides to applicants by more than doubling the size of its donations over the past 10 years to a growing number of applicants.
“However, despite these efforts the Trust has not been able to keep up with increased community expectations and its assets have not grown at a rate that keeps pace with increased demand. The economic climate is further restricting our ability to increase donations, at least in the short term, but longer term the outlook is positive,” says Mr Palmer.
The Trust’s regions received the following donations during the year:
Poverty Bay, $650,000 (last year $606,600); Hawke’s Bay $2.33 million ($2.37m); Tararua $344,000 ($436,300); Wairarapa $723,100 ($480,500); Manawatu $$959,640 ($$1.35m); Horowhenua $582,379 ($275,260). Donations of $348,350 ($385,200) were made to organisations for regional benefit.
Two years ago the Trust increased its donations budget by an additional $1.3 million but has decided to return donations to the 2006/07 level during the coming year as interest rate reductions cut the expected income from cash and bond portfolios, and subdued economic activity impacts on expected dividends from shares.
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