An investment policy statement (IPS) is a written document that outlines an organization’s investment objectives, constraints, and guidelines. It serves as a roadmap for making investment decisions and helps ensure that investments are aligned with the organization’s overall mission and goals. For non-profit organizations, an IPS is particularly important as it provides a framework for managing endowment funds and other investments that are essential to their long-term financial health.
Creating an effective IPS requires careful consideration of various factors, including the organization’s risk tolerance, investment horizon, and liquidity needs. Non-profit organizations often have unique investment challenges, such as managing funds with varying time horizons and balancing the need for growth with the preservation of capital. A well-crafted IPS can help address these challenges and ensure that investments are managed prudently and in accordance with the organization’s values.
Investment Policy Statement Template for Non-Profit Organizations
There are many resources available to assist non-profit organizations in developing an investment policy statement. One valuable resource is the Investment Policy Statement Template for Non-Profit Organizations, developed by the National Council on Nonprofits. This template provides a comprehensive framework for creating an IPS that meets the specific needs of non-profit organizations.
The template includes sections for outlining the organization’s investment objectives, constraints, guidelines, and responsibilities. It also provides guidance on asset allocation, risk management, and performance measurement. By following the template’s structure and incorporating the organization’s unique circumstances, non-profits can create an IPS that serves as a valuable tool for managing their investments.
In addition to the National Council on Nonprofits template, there are various other resources available to help non-profit organizations develop an IPS. These resources include online tools, webinars, and professional advisors who specialize in non-profit investment management. By leveraging these resources, non-profits can ensure that their IPS is tailored to their specific needs and meets the highest standards of investment governance.
Benefits of an Investment Policy Statement
Having a well-defined investment policy statement offers numerous benefits for non-profit organizations. An IPS provides clarity and direction for investment decisions, ensuring that they are aligned with the organization’s mission and goals. It also helps mitigate risk by establishing clear guidelines for asset allocation and risk management.
An IPS fosters transparency and accountability, as it outlines the organization’s investment philosophy and decision-making process. It also facilitates communication between the organization’s board, investment committee, and investment manager, ensuring that everyone is on the same page regarding investment strategy. By implementing an IPS, non-profit organizations can enhance their investment governance and demonstrate their commitment to responsible financial management.
Moreover, an IPS can help non-profit organizations attract and retain donors and investors. By demonstrating a structured and prudent approach to investment management, organizations can instill confidence in stakeholders and encourage them to support the organization’s mission. An IPS can also be used as a marketing tool, showcasing the organization’s commitment to financial stewardship and its dedication to maximizing the impact of its investments.
Conclusion
An investment policy statement is an essential tool for non-profit organizations to manage their investments effectively. By utilizing resources such as the Investment Policy Statement Template for Non-Profit Organizations, non-profits can create an IPS that meets their unique needs and ensures that their investments are aligned with their mission and goals.
An IPS provides clarity, reduces risk, fosters transparency, and enhances communication within the organization. It also helps attract and retain donors and investors, demonstrating the organization’s commitment to responsible financial management. By implementing an effective IPS, non-profit organizations can ensure that their investments contribute to their long-term financial health and support their mission of making a positive impact on the world.
