If your nonprofit organization is considering long-term investments and planned giving to support these investments, you will need a committee of dedicated board members to steward the process. Your investment committee does not need to be a team of investment bankers. But your investment committee does need to have good judgment about choosing expert assistance.

Define Committee Tasks

Your investment committee is like a board within your board. This committee should handle the following investment-related tasks:

• Define investment objectives
• Monitor your organization's investment plan
• Decide whether or not outside expertise is required
• Select the people who will manage your organization's investment portfolio
• Establish a process for investment-related decision-making
• Assess financial risks and manage costs

Create an Investment Plan

Your investment committee, working with the entire board, should establish the role of investments within your organization's fundraising strategy and annual budget. Ideally, the investment element of your fundraising plan should develop from a strategic planning exercise. This exercise will allow your organization to see how investments might affect your organization (PDF, 106 KB) in 5, 10, or even 20 years.

Your investment plan should consider the role of planned giving in your organization. The most common form of estate gift is a bequest of property or money from a donor's will. Bequests can be an important source of revenue to your organization, especially during a down economy. A bequest may be made with or without restrictions, which will determine how your organization can use the bequest. Your fundraising and membership materials can point out the tax benefits of bequests and other planned giving opportunities. They can also provide a process for your supporters to make planned giving arrangements with your organization.

Consider Needs and Risks

When deciding how best to invest, your committee should consider your organization's overall spending and income patterns. As your committee develops an investment plan, it should do the following:

• Determine how much return is needed (or can be expected) from your organization's investment portfolio
• Assess how much risk the organization is willing to accept
• Consider how liquid your organization's assets should be, and for how long
• Determine what kinds of investments will be acceptable to your organization
• Watch for potential bequests and work with board members who cultivate bequests to estimate when these contributions might occur
• Analyze the legal requirements of an investment fund, and consider how much of the fund's pay-out should be reinvested and how much should go toward your organization's annual budget

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