By Nick Frigerio, Planning and Research Associate, Associate Vice President

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Nonprofits have a core mission at the forefront of everything they do for the communities they serve. They have a unique responsibility to invest funds provided by donors that share a passion for that organization’s mission. In fact, nonprofit organizations have the same capital needs as business owners to maintain sustainability.

Sustainability, allowing organizations to have continuous resources available to carry out their mission, requires careful planning and financial stability. To begin the planning process, it is helpful to first construct an investment policy statement, outlining key considerations with respect to the organization’s overall objectives, operating budget, and investment strategy. This creates a disciplined outline of financial goals, liquidity requirements (distributions from investments used for running operations), investment return objectives (desired return, accumulation and contributions), and most importantly tolerance for risk. Other considerations may include taxes or investment restrictions providing further investment selection parameters*. With this information in place, organizations can invest their operating capital, further adding to their resources available for maintaining sustainability.

It is important to have investment portfolios reviewed throughout the year by an investment professional and maintaining clearly defined investment objectives helps to ensure that overall allocation remains consistent with the organization’s goals; and safely within the parameters outlined in the investment policy statement. Having an organized plan in place and knowing investments are being carefully managed allows nonprofit organizations to spend more time focusing on their mission.

If you’re a nonprofit and need guidance, Benjamin F. Edwards & Co. can help. Our financial advisors welcome the opportunity to work with you on analyzing your retirement plan needs, reviewing and providing feedback on your investment strategies.

Benjamin F. Edwards & Co. does not provide legal or tax advice. Specific questions on taxes or legal matters as they relate to your individual situation should be directed to your tax or legal professional.

 

* It is important to have this document reviewed by a tax or legal professional.