A nonprofit investment policy statement provides important guidelines for how a nonprofit organization should manage its financial assets and investments. While each nonprofit’s investment policy will be tailored to its specific situation and needs, some key elements are commonly found in a simple nonprofit investment policy statement sample.
Purpose and objectives
A nonprofit investment policy statement usually begins by stating its purpose, which is to establish policies for the organization’s investments that aim to preserve principal, ensure liquidity, and maximize returns. It also outlines the investment objectives, such as target asset allocation, risk tolerance, time horizon, etc.
Responsible parties
The investment policy defines the parties responsible for managing the nonprofit’s investments and their specific duties. This typically includes the board of directors, finance committee, investment advisors, and staff.
Authorized investments
The policy specifies the types of securities and assets the nonprofit is permitted to invest in, which may include cash, CDs, money market funds, fixed income, equities, mutual funds, etc. Concentration limits may be defined.
Asset allocation
The long-term target asset allocation across investment categories is outlined, based on the nonprofit’s risk tolerance, time horizon, liquidity needs, and objectives.
A simple nonprofit investment policy statement provides crucial guidance to nonprofit staff and investment managers. Key elements cover the policy’s purpose, responsible parties, authorized investments, and target asset allocation based on the organization’s unique situation.