An increasing number of not-for-profit groups are taking on bigger risks when investing their funds because the returns from cash deposits have slumped, according to a new study.

Many not-for-profit organisations are turning to investments such as stocks and shares as they scramble to support their income, according to the survey of 129 charities by PricewaterhouseCoopers and Key Capital.

Despite the majority of charities describing themselves as low-risk investors, the average proportion of their assets in equities is 38 per cent.

This contrasts with an average portion of equities of 22 per cent for a typical conservative portfolio managed by Key Capital.

Higher-risk Average investment returns for Irish charities' funds is 5.9 per cent, with some enjoying returns of up to 12 per cent through a higher-risk approach. This compares with average cash deposit rates of just 1.5 per cent.

Six in 10 of the charities rely on investment income to fund their ongoing activities. Almost half of the not-for-profit groups that took part in the study receive State funding.

"Falling deposit rates have thrown [the investment risks for not-for-profits] into focus, with the majority seeing a prolonged low interest rate environment as an important funding risk," said Rory Mason, the managing director of Key Capital Private.

Teresa Harrington, the head of PWC's not-for-profit practice, warned that many such groups "do not have clear governance structures in place to enable them to consider investment matters".