Investment policies aren’t only relevant for nonprofits with millions of dollars. If your organization maintains reserve funds—whether for unexpected emergencies or achieving long-term objectives—having a clear investment policy is essential. These policies help guide the responsible management of reserve funds, ensuring they serve their intended purpose while mitigating investment risks.

Creating investment policies begins by defining the purpose of different funds or investment pools. Some not-for-profits maintain only one investment pool, lumping current operating funds with reserve funds and combining restricted with designated and short-term with long-term funds.

If this is the case with your organization, you need to differentiate these pools according to their purposes, time horizons and any restrictions or designations that may apply to them. To ensure you're properly categorizing the funds, consult legal and accounting documents, such as your organization's bylaws, donor agreements, board minutes and cash flow models.

Please select this link to read the complete article from OSAP Mission Partner Clark Schaefer Hackett (CSH).