How well do you understand your nonprofit or social impact organization’s financial health?
How well are you demonstrating to grantors and major donors that your organization is financially sound enough to withstand unplanned incidents and risks?
Is the organization financially prepared to fulfill the mission over the long term?
How confident are you that the organization has enough in emergency reserves?
How well is your endowment or board-designated fund preparing the organization for the future?
Knowing the answers to the above questions is vital to building a resilient mission-focused organization. What you don’t know, can’t expect, or can’t control could harm the organization. Ensuring a nonprofit’s strength and longevity is often based on robust financial planning and management. It is important to understand the organization’s unique risks and deploy strategic financial management before crises happen to give grantors and donors confidence that the nonprofit mission can be fulfilled. Fairlight’s Institutional Financial and Investment Consulting Services were developed to help nonprofits and social impact enterprises fulfill the philanthropic mission and navigate through financial uncertainty by leveraging our expertise in nonprofit finance, cash and reserves management, risk management and investing.
Financial Resilience Program
This platform is a six-month engagement to develop the critical financial policies, procedures and reporting tools necessary for organizations to meet current spending needs, fulfill strategic plans and prepare for the unexpected. For one upfront engagement fee and then subsequent, fixed monthly fees, the Client works with Fairlight to create the following:
Liquidity Policy to establish guidelines in the management of short-, medium-, and long-term funds, ensure the organization can meet expected and unexpected cash obligations at a reasonable cost, while maintaining appropriate reserves to support strategic and mission objectives.
Cash Reserves Optimization/Allocation to maintain nominal cash value of assets, earn a competitive market rate return for cash equivalents and preserve principal and generate income commensurate with inflation to main purchasing power for future outlays.
Investment Policy to prescribe a prudent and acceptable investment philosophy and investment management procedures to satisfy the long-term goals of the organization’s endowment or unrestricted board-designated fund.
Resilience X-Ray to forecast organizational strength by monitoring risk factors such as governance, revenue timing, staffing, facilities, program operations and technology.
Clients may choose to engage Fairlight to maintain cash policies and Resilience X-Ray reporting on an ongoing basis for a monthly fee.
Endowment and Investment Management
Fairlight develops and implements a custom investment strategy inspired by the Global Model Portfolio to help organizations achieve long-term endowment health. The engagement consists of an Asset Allocation Analysis, Investment Policy Creation and Regular Investment Performance Monitoring.
Fairlight generally follows a Passive Investment Strategy for more efficient portfolio management. The benefits of passive investing are many:
Disciplined security buying and selling decisions
Broad diversification for lower risk
Lower expenses than comparable speculative or “active” investing
Limited tax exposure due to less buying and selling of securities
We always begin with Fairlight’s Nonprofit Financial Planning and Management framework:
Step 1: Analysis of the client’s current financial condition and modeling of investment options
Step 2: Investment and spending policy creation and maintenance
Step 3: Regular financial reviews and investment education