Nonprofit endowment investors depend on the stock market to be reasonably consistent so they can meet their philanthropic program spending. Unfortunately, the stock market has been extremely unpredictable or volatile, zigzagging like a rollercoaster, reacting emotionally to the latest news. So how do nonprofits with a true endowment navigate these volatile market conditions? Here are 3 things nonprofits should know about investing endowments in turbulent markets.
Market Turbulence May Be Here Awhile
Don’t let the recent uptick in the stock market make you believe we’re out of the woods. At the end of the first quarter of 2023, the Fed has hiked interest rates 9 times trying to tamp down inflation that won’t quit. There is still reason to tread with caution. Make sure your nonprofit has an ample cash reserve and continues to add to it.
Kick the Tires on Your Portfolio and Strategy
This is not the time to be oblivious as to what investments are in your nonprofit endowment. Get educated! Ensure your nonprofit program funding needs, time horizon and the corresponding endowment investment strategy are aligned. If they are not or you don’t know, get a professional assessment.
Rebalance Your Endowment If You Haven’t In Months
Your nonprofit’s endowment investment strategy is likely to be out of whack compared to where it was earlier in the year. With the recent market volatility, it’s time to bring your endowment’s target stock and bond positions, or allocations, back in line with your stated endowment investment policy if you haven’t already. Ask your investment professional if you are unsure whether your endowment has been rebalanced to comply with your investment policy.
Talk to the financial experts at Fairlight Advisors to learn more about managing your nonprofit’s investments. Schedule a free consultation today!