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This article was originally published on the NonprofitPro blog. You can read the full article here.
The prospect of investing your nonprofit’s funds can seem daunting—but it doesn’t have to be. With the right foundation, nonprofit investing can help you diversify your revenue streams, build up your reserve fund, and provide long-term financial sustainability so you can keep working towards your mission.
In fact, high inflation rates mean that any uninvested money kept in savings accounts is actually losing value over time. To retain the value of your donations and potentially increase them, start looking into investing. Use these three keys to start off on the right foot.
1. Understanding investment basics
Before setting up an investment account or even looking for an advisor, it’s important to understand exactly what investing looks like for nonprofits.
2. Working with a nonprofit investment advisor
One of the best ways to get the most out of your investments is to partner with someone who understands your unique situation. An RIA that specializes in nonprofit finances is likely to have a better grasp on your organization’s needs than banks or wealth advisors.
3. Developing a thorough Investment Policy Statement
Once you’ve chosen an advisor, the final key to start investing with a strong foundation is your Investment Policy Statement. This is a document that outlines and guides how your nonprofit will invest your funds. A thorough Investment Policy Statement protects you, your board, and your finances.
Entering the world of nonprofit investing opens up a wealth of possibilities for maintaining healthy reserve funds and increasing your overall fundraising potential. Once you get comfortable with investing your own funds, you can consider widening your financial prospects further by accepting noncash gifts like stocks and cryptocurrency from donors. Many of your donors are likely looking to the future of giving, and you should be too.
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