Charities also obtain money from foundations and investments, some of them historical and some set up specifically to fund charities.
Some charities get income through grants from foundations or government. Foundations are charities whose main purpose is to fund other charities. They get their money from companies or wealthy individuals, or long-term investments. Different foundations will have different focuses for their giving – such as medical research or the environment.
A few charities have endowments – a large sum of money which the charity spends over a long period, or spends only the interest from. Donations by wealthy philanthropists several hundred years ago are still earning interest and supporting the work of many charities.
In general, charities try to maximise the financial returns from their investments, in either the short or long term. This means they have more money to spend on their work.
Charities can choose to invest ethically in return for a lower level of investment return if they have a particular reason for avoiding a company or type of business. This usually happens if investing in an area would conflict with their aims or principles, or might damage their reputation. However there’s no obligation for charities to do this – it’s up to their trustees to decide.