Fix the SIPO before another grant round gets quietly smaller

Community trusts are some of the most patient money in New Zealand. They have no shareholders demanding quarterly results, no redemptions to fund and an explicit mandate to invest forever. That should make them formidable investors. Too often it has made them comfortable ones, and every year of drift quietly taxes the charities, clubs and regional projects that depend on them.

BusinessDesk columnist Simon Robertson’s latest advice to trustees is refreshingly blunt: build a decent SIPO, add lots of low-fee ETFs, a few exceptional managers, and allocate most of it offshore. That this still needs saying in 2026 tells you something.

Money that is meant to outlive everyone

The scale is not trivial. In 2021, the country’s then-12 community trusts held a combined $3.9 billion in assets, most of it traceable to the sale of regional trustee savings banks in the late 1980s and 1990s. The deal was simple. Convert bank shareholdings into endowments, distribute a slice each year, and protect the real value of the capital for future generations.

Community Trust South’s policy documents show how that works in practice. Its capital base was fixed at $158.46 million in April 1996 and, once inflation-adjusted, had grown to $288 million by February 2023. Its own SIPO noted that a perpetual trust can hold a long horizon and tolerate high risk. In other words, it should behave like permanent capital, not a cautious cash reserve.

A passive fund already embarrassed the sector

The wake-up call came in 2021, when University of Otago researcher Helen Roberts found 11 of 12 trusts had failed to beat Simplicity’s passive KiwiSaver benchmark between 2017 and 2020, leaving communities roughly $128 million worse off. She also found fewer than 20% of trustees had prior financial experience, and complained the sector lacked common reporting standards.

Simplicity founder Sam Stubbs was scathing at the time, saying the trusts should be able to replicate our investment strategies at a lower cost than us. An independent adviser quoted in the same coverage countered that three years is too short a window for multi-generational funds, and that infrastructure, commodities and currency hedging complicate the comparison. Fair point. But a methodology quibble does not explain away trustee literacy or opaque reporting.

The best trusts show it can be done

Since then, performance has split sharply. Otago Community Trust’s 2024 annual report showed an 11.7% one-year return and a 10-year average of 14.43%. That is a genuinely strong record, and proof that a regional trust can run a serious portfolio.

Foundation North, the giant of the sector, took a hit in the year to March 2023, posting a -3.2% return against a -1.2% benchmark while lifting grants, which pushed reserves down to $432 million from $633 million. Yet its 10-year return to that point sat at 7.8% against a 6.3% benchmark. One bad year inside a disciplined long-run strategy is what permanent capital is built to absorb.

The ASB Community Trust offered a similar lesson in 2009, when it held more than $800 million and paused grants to let investments recover and protect its inflation-proofed base.

The rest are still missing their own targets

Others are lagging goals they set themselves. In 2025, Community Trust South reported a 5.5% return against a 6.5% objective, a five-year average of 6.7% against 8.4%, and net assets of $254 million, below its $312 million inflation-adjusted target. It has since restructured its allocations, which is the right instinct.

In 2024, Trust Waikato lifted its long-term return target to 7.04%, up from 5.05% the year before. A near 40% jump in ambition is welcome, but it raises an awkward question about how modest the old bar was. Nor is drift new. A 2018 Mercer survey found 54% of NZ endowment funds were reconsidering their objectives.

Nobody is keeping score

The deeper problem is that a business reader, donor or grant applicant still cannot easily rank these trusts against each other without digging through individual PDFs. Roberts flagged that in 2021. It remains unresolved.

That matters beyond the charity sector. These trusts fund regional sport, health, arts and community infrastructure that local businesses rely on to attract staff and customers. A two percentage point shortfall on a $250 million fund is $5 million a year that never reaches the regions.

Robertson’s prescription is the boring, cheap and benchmarked approach the best performers already run, with the bulk of capital offshore where most of the world’s GDP sits. The sector’s choice is straightforward. Adopt common, comparable reporting voluntarily and hold trustees to measurable targets, or wait until a future government decides to do it for them. Trusts that already perform have nothing to fear from a scoreboard. The ones that resist it are telling you why they need one.

Sources

• BusinessDesk: Investment advice for community trusts (2026-11-13)
• RNZ: Community trusts decry report’s claims of poor investments (2021-07-15)
• BusinessDesk: Simplicity founder ‘appalled’ by community trusts $130m ‘destruction’ (2021-07-15)
• Investment News: Foundation North digs into reserves in rare down year (2023-10-16)
• NZ Herald: Cutting back now to promote growth in better times (2009-03-04)
• Otago Community Trust: Annual Report 2024 (2024-03-31)
• Community Trust South: Financial results for 2025 (2025-09-01)
• The Waikato Community Trust: Financial Statements 2024 (2024-07-31)
• Community Trust South: Statement of Investment Policies and Objectives (2024-07-19)
• Investment News: NZ endowment funds risk/return rethink (2018-09-03)