The basis for successfully investing non-profit reserves lies in addressing 10 key questions faced by all board and investment committee members.
This paper is intended to help people who have taken up the challenge and responsibility of investing money for the benefit of others. This is, for most, unpaid work carried out in an environment where:
- resources available for support and development are scarce
- a desire to help achieve important objectives meets a desire to avoid personal and organisational risk
- volatile and unpredictable markets have become the norm.
This is also a paper for people in a fortunate position. If your non-profit has a significant reserve or genuine endowment, you are in possession of a strategically valuable asset. An endowment is a precious resource. Reserves of any kind are obviously valuable, but more so when you consider some of the facts. For most non-profits, reserves remain outside the tax system, meaning there is no tax on income received or capital gains realised. Imputation credit refunds, accessible to many, are considered a valuable source of additional income. Investment income is passive income and together with capital growth its production allows a non-profit to generate additional funds (often untied) for the cost of a management or advisory fee. Reserves and endowments also help make non-profits more sustainable and increase their self-sufficiency.
Finally, managed well, endowments not only help an organisation to achieve its mission, they are used by savvy leaders to attract talent and funders. They can and have been used to demonstrate vision, ambition, strength, self-determination, predictable cash flow and sound management. This is important in an environment where government funding is under pressure and non-profits compete in a donor/sponsor market worth $8.61 billion per year.
Please find the white paper by Koda here: http://kodacapital.com.au/docs/investing-for-non-profits--koda-capital.pdf
