A nonprofit investment policy statement provides guidelines for how a nonprofit’s investments should be managed. It is an important document to ensure proper stewardship of assets. This article will provide an overview of the key elements to include in a simple nonprofit investment policy statement and recommendations for developing an effective policy.
purpose and scope
The investment policy statement should clearly state its purpose and scope, such as the types of assets it covers and the time horizon for investments. This provides clear direction for investment decision making.
investment objectives
The investment objectives section should state the nonprofit’s financial goals, such as diversification, risk tolerance, and target returns. This guides investment selection and asset allocation.
spending policy
The spending policy outlines the amount and frequency that funds can be withdrawn from the investment portfolio to support operations. This helps ensure portfolio stability.
asset allocation
The asset allocation section specifies the target percentages for different asset classes like stocks, bonds, and cash. This is a key determinant of investment returns and risk.
An effective nonprofit investment policy statement clearly defines investment goals, spending guidelines, and asset allocation strategy. Working with financial advisors and board members to develop a customized policy is recommended.