I’m on a Non-Profit Board and There’s Money to Invest. Now What?

Before diving in, we want to share something important: smaller non-profits are often overlooked by the investment management industry. Fees tend to be high, investment choices are often limited, and genuine guidance is rare.

Our team is passionate about changing that. We’re here to help organizations like yours grow and thrive — and we encourage you to start a conversation. If nothing else, we hope you leave an interaction with our team feeling a little more confident and informed.

Now, let’s get to what you came here to read.

Serving on a non-profit board means safeguarding your organization’s mission and financial future. If your board is considering investing funds, it’s essential to establish a disciplined, mission-aligned investment strategy. Below is a step-by-step guide, including a sample Investment Policy Statement (IPS) for your board’s consideration.

1. Start With the Organization’s Mission and Purpose

Every investment decision should be anchored in your organization’s core mission and long-term goals, not just financial returns.

It’s also important that decisions reflect the best interests of the organization as a whole, rather than the personal market concerns or risk preferences of individual board members. In our experience, some board members may tend toward a more conservative approach, even though the organization is designed to exist in perpetuity and can often take a longer-term view.

2. Prepare for Uncertainty—Scenario Planning

Ensure you have enough cash reserves to cover short-term needs and develop contingency plans for funding gaps or market downturns.

Many organizations keep a few months’ worth of expenses in a checking account, with an additional 3–6 months in a high-yield savings or money market account. Funds beyond that level can typically be invested for longer-term growth. Each organization’s needs will be different depending on the stability of its funding sources.

3. Build or Review Your Investment Policy Statement (IPS)

An IPS provides your board with a clear roadmap for investing, outlining objectives, risk tolerance, liquidity needs, and spending policies. It fosters discipline and clarity — especially during periods of uncertainty — and helps pass along institutional knowledge to new board members.

Key Elements of a Strong IPS:

• Purpose and Scope: Why you’re investing and what you aim to achieve.
• Delegation of Responsibilities: Outlines who makes investment decisions and oversees the process.
• Objectives and Constraints: Investment goals, risk tolerance, time horizon, liquidity needs, and donor restrictions.
• Strategic Asset Allocation: Guidelines for Asset Mix and Rebalancing.
• Spending and Liquidity Policy: The “When and How” of distributions. We’ve found that allowing larger distributions after strong investment years — and scaling back in tougher years — helps support greater long-term wealth creation.
• Risk Management: Metrics and processes for monitoring and managing risk.
• Responsible Investing: Any commitments to socially responsible or mission-aligned strategies.
• Monitoring and Review: How performance will be measured, and how often the IPS is reviewed and updated.
• Acknowledgement and Approval: Board approval and signatures to formalize commitment.

4. Stay Disciplined—Avoid Reactionary Decisions

Stick to your IPS during both good and bad markets. Nonprofits that follow a clear, structured plan typically achieve stronger long-term outcomes than those that make impulsive decisions in response to market swings.

That said, it’s important to reassess your investment approach when circumstances change. Significant shifts in funding levels, funding sources, or operating costs should prompt a review to ensure your strategy aligns with your organization’s evolving needs.

5. Review Your Outcomes

• Fees vs. Services: Understand your total cost — including product fees, commissions, and advisor fees — and what services you’re receiving in return. These may include things like:
  • IPS development or review
  • Ongoing investment management
  • Handling of appreciated stock gifts
  • Cash flow (budget) analysis
  • Ongoing education and board support

  A common challenge for many nonprofits is making it as easy as possible for donors to support their mission. We recommend working with your advisor to develop a strategy for accepting the most tax-efficient types of gifts, such as Qualified Charitable Distributions (QCDs) and appreciated securities. This approach helps donors maximize the impact of their contributions while allowing your organization to make the most of every dollar received.

• Performance vs. Risk: Assess long-term performance (after all fees and over a full market cycle or 5+ years) relative to the risk taken. Comparing actual results to what you reasonably expected provides valuable feedback for future decisions.

To help start the conversation for your organization, fill out the form below to request a free IPS sample template – once you submit your request, you will be redirected to the page to download the sample IPS template.

Our team is happy to provide a complimentary review of your specific situation — just let us know!