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6 Things Your Nonprofit Should Expect – But Might Not Be Getting – From Your Investment Advisor

6 Things Your Nonprofit Should Expect – But Might Not Be Getting – From Your Investment Advisor

Running a nonprofit organization requires a dedicated team of individuals, ranging from the folks on the front lines bringing your mission statement to life to your board of directors. Each player serves an important role in helping your organization achieve its goals. Since most nonprofits run much “leaner” than typical corporations, each and every person needs to do the most efficient possible job of bringing his/her special skills to the table.

One of the key players in your formula for success is your investment advisor. And although you may not realize it, there are many ways your investment advisor can help your nonprofit—beyond his/her already critical role of managing your organization’s investment assets. 

Spending Policy Direction: Do you know what the appropriate spending rate should be for your organization? How should that rate be calculated? Should it be adjusted in response to the prevailing economic climate? How does your current spending rate perform against major indices, using historical data? Your investment advisor should be able to help you answer all of these questions . After all, your spending rate is the lifeblood of your organization. You need to be sure you’re striking the right balance between funding existing organizational needs and protecting the future interests of your nonprofit, as laid out by your mission statement. 

Cash-Flow Analysis: Managing ongoing cash flow can be one of the biggest challenges faced by your nonprofit organization. However, it can also be one of the most valuable tools in your organization’s toolkit, since it allows your leadership to anticipate cash surpluses and shortfalls (and to prepare in advance for such events). This kind of analysis is particularly important for organizations that generate donations at irregular intervals, throughout the year. A good nonprofit investment advisor should work with you at the strategic level to help determine how best to manage endowment cash flows to sustain your unique organizational needs. 

Help Defining and Implementing an Investment Policy Statement (IPS): An IPS is a client-specific document designed to address the unique circumstances, objectives, and constraints that dictate the investment-related activities of a nonprofit. Your IPS should also clearly define the roles and responsibilities of each party involved in your nonprofit’s investment-related activities, including the investment advisor, board of trustees, and investment committee. Your nonprofit’s long-term, strategic allocation should be clearly defined here, and your investment-operation guidelines should be clearly outlined. Finally, your IPS should provide guidance about how your organization will handle ongoing monitoring and review of your overall investment program, and who from your organization will be involved in doing so. An effective investment advisor can counsel you on how best to put this plan on paper and ensure its enforcement. 

Insight into relevant federal and state regulation : Nonprofits are covered by several laws, regulations, and guidelines that address issues such as maintaining careful investment policies, acceptable spending rates (including both income and appreciation), individual donor restrictions, your role as a fiduciary and your ability to delegate investment authority. Because federal and state statutes and regulations are regularly amended, reviewed, and interpreted, your investment advisor can help you keep abreast of how any changes might impact your investment strategy. 

Investment Expertise: It’s critical that your endowment fund be globally diversified and rebalanced on a regular basis. The investment advisor should be keenly aware of not only your nonprofit’s regular spending needs, but also your more sporadic financial needs. Your investment advisor and your nonprofit team will want to maintain an open line of communication to be sure that all parties are aware of approaching cash needs and how best to manage the portfolio in advance of those needs. 

Advise You on Planned Giving Strategies: In addition to all the key items listed above, a good investment advisor should also be able to generate ideas to help with your donor-development process. That means your advisor will stay tuned-in to your local community, ready to provide connections and suggestions about potential long-term donors and partner organizations.

For more information about how an experienced investment advisor can help your nonprofit, contact Joe Gazdalski with RegentAtlantic’s Neighborhood Nonprofits Group at 973-425-8420 ext. 222 or by email: jgazdalski@regentatlantic.com.

 

 

Important Disclosure Information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable. Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request. This article is not a substitute for personalized advice from RegentAtlantic. This information is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

Important disclosure information

Please remember that different types of investments involve varying degrees of risk, including the loss of money invested. Past performance may not be indicative of future results. Therefore, it should not be assumed that future performance of any specific investment or investment strategy, including the investments or investment strategies recommended or undertaken by RegentAtlantic Capital, LLC (“RegentAtlantic”) will be profitable.

Please remember to contact RegentAtlantic if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and services, or if you wish to impose, add, or modify any reasonable restrictions to our investment management services. A copy of our current written disclosure statement discussing our advisory services and fees is available for your review upon request.

This article is not a substitute for personalized advice from RegentAtlantic. This article is current only as of the date on which it was sent. The statements and opinions expressed are, however, subject to change without notice based on market and other conditions and may differ from opinions expressed in other businesses and activities of RegentAtlantic. Descriptions of RegentAtlantic’s process and strategies are based on general practice and we may make exceptions in specific cases.

RegentAtlantic does not provide legal or tax advice. Please consult with a legal and or tax professional of your choosing prior to implementing any of the strategies discussed in this article.

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