A robust investment policy statement (IPS) is central to a nonprofit or foundation board's fiduciary duty to be responsible stewards of its assets. Glenmede frequently works with boards to help create or update IPSs. An IPS should include the risk tolerance, return objectives, spending objectives and asset allocation guidelines for the portfolio. It should also identify unique circumstances that may require special considerations.

Tax-exempt status enables nonprofits to invest their financial resources in most of the same investments as for-profit businesses, with some limitations. However, there are some rules that must be followed to maintain 501(c)(3) tax-exempt status, such as no private benefit past an insubstantial degree and no insiders (such as board members, directors or key employees).

While a tax-exempt investment policy may include a number of different components, the most important consideration is the ability to protect and grow a nonprofit's initial invested assets. This allows them to more effectively invest in stock and other securities as a means of earning additional income for their mission.

According to Ramon de Oliveira, non profit investment policy may also address spending policy, cash thresholds, asset allocation and asset management, and other aspects of a nonprofit's business activities. While these may seem like relatively minor concerns, they can have a significant impact on the effectiveness of the organization's operations and financial results. If a nonprofit's investment policy is not working, it's time to review it and make changes as necessary.

Nonprofit organizations have a responsibility to be transparent about their activities. This helps ensure that the public trusts their organization and understands how they operate. Transparency also helps to reduce corruption and bribery. It can also protect employees from a company's actions and hold upper-level staff accountable.

When nonprofits are transparent, it also allows potential investors to make informed decisions about how much to invest in the organization and what kind of returns they can expect. This is especially important for companies that depend on donations or other financial contributions to stay afloat.