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Starting a nonprofit is a noble and fulfilling venture. However, managing the finances of a nonprofit organization is a big responsibility and one that can quickly become overwhelming. If you want your business to continue thriving for years to come, it may be time to think about how you manage your investments. Keep reading for some tips.
1. Hire an Investment Manager
If this is your first experience managing a nonprofit, you may not understand your investment opportunities. The best way to get familiar with your options and decide on the best course is to hire an investment manager.
This professional can make recommendations about how often to review your portfolio. What’s more, they may be able to suggest some good business practices, like paying for a nonprofit phone system. Keep in mind that a good investment advisor can also offer operational support.
2. Create an Investment Plan
Your next best step is to establish a specific investment plan for the next several years. You may choose to document these decisions in an official Investment Policy Statement so that the standard is made clear to all who are concerned. In this policy statement, outline these important details:
- The role of your investment manager
- The purpose of your investment portfolio
- How your portfolio and plan align with the nonprofit’s mission
- An outline of your investment plan
- Explanation as to how the investments will be measured and reported
- Established procedures for how unsolicited investment offers are handled
With these details outlined and reported, everyone at the nonprofit will understand the priorities and expectations of the investment portfolio.
3. Consider Your Cash Flow
Is your investment portfolio the primary source of cash flow for your nonprofit? Or is it aided by fundraising and donations? If the portfolio is the main source of capital for your nonprofit, you may want to be more moderate with your investments.
However, if you have funds coming in from other sources, you might be able to invest more aggressively.
4. Keep Your Strategies Straightforward and Simple
The worst thing you can do for your nonprofit is put the funds you already have at risk. That’s why it’s best to keep your strategy straightforward and simple. Ideally, this means that you will avoid high-risk investments, like commodities, real estate, oil and gas exploration, and junk bonds.
With these tips under your belt, you have everything you need to embark on an investment strategy for your nonprofit. Above all, put great care into hiring a manager or strategist who understands and respects the mission of your nonprofit and its financial goals.
If you have the right team on hand, you’ll be able to keep your nonprofit operational for years to come.
