Nonprofit Organizations


Developing an Effective Investment Solution for Your Nonprofit Organization

Nonprofit organizations face many challenges when it comes to investing funds for their benefactors. Most organizations avoid directing the investing themselves due to lack of experience, limited resources and potential liability.

One option is to hire an internal manager, but the salaries and benefits for experienced investment staff can be very expensive. And, finding the right investment manager can be difficult and time-consuming.

Outsourcing May Be the Best Solution

Outsourcing your investment needs may be the best solution for most small to midsized nonprofits. There are numerous advantages, including lower cost, opportunities to choose from many resources and the option to change managers if necessary.

However, your organization must still develop a process for choosing the right investment manager and evaluating performance on an ongoing basis. This is why having a local investment advisor to act as a ‘concierge’ could be an ideal solution to help you to create an effective investment process.

Gathering Information for Your Portfolio

The first step in creating an effective investment process for your organization is todetermine the specific objectives you wish to accomplish with your investment funds, and then choose and align your investments with your goals.

Next, you will want to consider the time horizon for your funds – will you need to access funds immediately, or in five years, or 20 years? Determining the appropriate amount of risk to take in order to grow the funds toward your objectives is also a critical decision

Lastly, don’t forget to take other special considerations in account, such as how aligning your investment policy with your organization’s mission and values.

Establishing Your Investment Process

Based on the data gathered, you will need to develop an appropriate asset allocation policy. This policy should be documented in a written investment policy statement that can serve as a guide for your portfolio.

The next step is to construct your model portfolio. The portfolio must be monitored on an ongoing basis to determine whether any adjustments need to be made due to changing economic or market conditions. 

Finally, it’s extremely important to keep your key decision-makers informed of the progress you’re making toward the organization’s investment goals. You will want to communicate performance on a regular basis.

Customizing Your Portfolio

Most nonprofits want to align their investments with the values that guide their organization. Investing in companies that operate counter to your mission can be frustrating, and may also result in difficult conversations with your benefactors.

To avoid these conflicts and their negative consequences, you will want to have the ability to customize your portfolio by excluding certain social sectors, such as gambling and firearms. Some investment solutions even allow you to exclude specific companies that may operate counter to your organization’s mission.

Gaining the Value of Professional Assistance

Creating an effective investment process for your nonprofit organization can be easy when you find the right advisor to assist you. To learn more about how to best align your investments with your goals, contact me today to schedule an appointment.

Nancy A. Loveland is a CERTIFIED FINANCIAL PLANNERTM professional and a Registered Principal with United Planners Financial Services of America, with offices in the north central Phoenix area. She provides customized investment services to nonprofit organizations and individuals. Ms. Loveland earned a bachelor’s degree from Kent State University and an MBA from Wheeling University. She has more than 25 years of experience in the financial services industry.


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