HOW DOES A NON PROFIT ORGANIZATION SET UP AN INVESTMENT POLICY?

{ 2 comments… read them below or add one }

ProfessorC May 11, 2010 at 3:21 pm

They usually have the finance committee research options or contract with a CPA firm/ or community foundation to handle that aspect.

therainbowseeker May 11, 2010 at 3:49 pm

Several factors drive an investment policy

1.) Operating/Capital Cash flow requirements – determines liquidity and ROI (return on investment) requirements

2.) Endowment size (if its too small diversification may not be possible or may be too expensive)

3.) Growth potential through gifts/stock donations, etc…
How much will you be adding to the endowment over time and at what interval?

4.) Risk toleration – self-explanatory

5.) Social/Advocacy Goals – are there mission-related investment goals or restrictions that will drive or limit the investment choices (i.e. non-smoking/alcohol/firearms, affordable housing, social ventures, environmental concerns, etc…)

Make sure to consult your legal counsel and CPA.

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