Investment Policies: Are we planning for results?



A recent study  reported on in the Chronicle of Philanthropy stated that nearly 40 percent of small and midsize charities and nonprofit associations do not have guidelines to ensure that their investment reserve is diversified, and nearly 20 percent have no policy at all for governing how their reserve is managed.   Having worked at nonprofits of both small and midsize, organizations that avoid clear investment guidelines, do so at their peril.  An organization must invest in many different areas to ensure success.  One of those key areas should be the development of a clear and thoughtful investments policy.  What are the long-term goals of the institution and how does the organization guide its investments to achieve those goals.  Too often, nonprofits without clear investment policies and goals will assume as a reactive stance to market conditions.  This inevitably will not help an organization meet their goals.


Organizations should have clear investment diversification and management policies.  It should have a group (Board, Board subcommittee or outside agent) responsible for the implementation of this plan and the governing body should review progress of this group regularly throughout the year ensuring they are following the plan or making decisions that are in the long-term best-interest of the organization.

Question for discussion: How does your nonprofit manage its investments effectively?


One thought on “Investment Policies: Are we planning for results?

  1. Heather Stombaugh June 11, 2013 / 2:15 pm

    Your comment, “An organization must invest in many different areas to ensure success,” could not be more on point. In my experience, too few organizations have retained earnings of any kind, so the concept of investment diversification never makes it to the table. The board must take action on both fronts: first to invest, and second to diversify. This is why we salt our boards with bankers, brokers, analysts, and other financial wizards. We need their talents to define policies and propose/review investment decisions to build long-term sustainability. I think investment diversification–and investment in general–starts with the nominating committee. Great post, George!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s