A thoughtful investment policy that fits the culture and circumstances of the organization is in order for every nonprofit, from the small organization with one or two months of revenue in reserve to the large international nonprofit with an abundant endowment portfolio. Consider blowing the dust off your current investment policy and ask the following questions:
- During the past five years, how has the policy been helpful to the Investment Committee, Finance Committee and/or staff? If it hasn’t been helpful, why not?
- What major changes have occurred at the organization since the investment policy was adopted? How might these changes influence the suitability of the investment policy?
- How closely were the provisions of the policy followed during the past five years? If there are instances when the policy wasn’t followed, why?
- Does the policy accurately reflect the size and scope of the pool of funds available for investment? For example, a nonprofit with a modest amount of funds to invest may have a rather simple and straightforward policy while an organization with millions to invest is likely to need a more complex and detailed policy.
This article was written by the Nonprofit Risk Management Center (NRMC). NRMC is a MCN partner and provides training, technical assistance and informational resources for controlling risks that threaten a nonprofit’s ability to accomplish its mission. For more information about all of MCN’s partners and discount programs for members, visit Cost Saving Programs for MCN Members.