How can nonprofits ensure good governance? By developing an effective Investment Policy Statement (IPS). But an IPS is more than a perfunctory piece of paper—with proper attention, it can boost an organization’s chances of success.
This comprehensive, but easy-to-read guide to charitable-giving strategies and related investment advice is organized around the choices that investors face: purely philanthropic strategies, partly philanthropic strategies, and investments. The introductory essay, “Your Philanthropy, Empowered,” addresses how donors can define their philanthropic mission, make an impact, size their capacity to give, and implement their philanthropic mission.
The strategies discussed include direct gifts, charitable IRA rollovers, donor-advised funds, private foundations, charitable pledges, bequests, charitable lead annuity trusts, charitable remainder trusts, charitable gift annuities, and pooled income funds.
Why do nonprofits maintain operating reserves, even if they have endowments or other long-term investments? In a word: volatility. You never know when volatility may spike and markets may tumble, effectively reducing the size of distributions, and perhaps disrupting fundraising efforts.
All over the country, there are distressed communities that need investment. But except for the occasional local charity, there really hasn’t been a straightforward way for individuals and nonprofits to invest in these neighborhoods in need, until now.
No matter how conservative or aggressive an endowment or foundation portfolio was positioned over the past 30 years, its returns probably exceeded the historically low inflation rate, which made maintaining distributions almost effortless.