Every nonprofit organization benefits from endowments. They can provide financial stability and serve as a nest egg of capital to generate income. It’s important to remember that not all endowments are built the same. Managing and spending these funds needs a responsible and strategic approach. A well-defined endowment spending policy dictates how the funds are utilized and should align with the organization’s Read More
Endowment Advisor Search? Prepare With Three Actions
Is your nonprofit getting ready to do an endowment advisor search? Here are three actions your nonprofits should take before you speak to an external advisor. Is your nonprofit getting ready to do an endowment advisor search? Here are three actions your nonprofit should take before you speak to an external endowment investment advisor. Before we discuss preparation, I have a question. Have you ever been in a Read More
Three Things Financially Resilient Nonprofits Do
If there is anything a two-year global health and economic crisis has shown nonprofits is that financial stability is fragile. Even with good nonprofit financial planning, organizations survive on the thinnest of margins, focusing all resources on the philanthropic mission, often with very little wiggle room to maneuver out of a emergency. An untimely mistake or an unanticipated loss can require a sufficient cash Read More
Nonprofit Investing and Emerging Markets
At Fairlight Advisors, we have long advocated that a nonprofit endowment investment strategy include a well-diversified, global market portfolio which includes both equity and fixed income allocations to emerging markets. The last five years of returns have been lumpy for Emerging Markets to say the least. While there were some bright spots such as China’s faster recovery from the pandemic in Q’3 of 2020, there were Read More
What’s on the Fixed Income Menu: An Array of Solutions for Nonprofit Reserves
Imagine a toolbox with only one tool: a hammer. The hammer is versatile for projects big and small, but if you’re building a house, as we all know, a toolbox with a lonely hammer won’t get the job done. In the same way, building a financially resilient nonprofit needs a variety of financial planning tools to fund the philanthropic mission. Yet several small to midsized nonprofits park all their funds—whether for Read More
Three Things to Know NOW to Launch Your Nonprofit Endowment
A nonprofit with a few years under its belt will eventually ask itself, "Should we have an endowment?” And while this is not a straightforward decision, on balance, the answer is yes. From a fundraising perspective, a nonprofit endowment demonstrates to prospective donors that this is an organization that has meaningful financial support to fulfill its philanthropic mission. But also recognize that managing an Read More
Are You Ready for Your Nonprofit Endowment?
We’ve heard lately from several small nonprofits asking whether they’re too small to start an endowment. The quick answer is, no! The choice to start an endowment is not based on size but more on purpose. An endowment is a pool of funds set aside for a medium or long-term spending need, regardless of size or mission. When a nonprofit maintains an endowment, it indicates that it is committed to uninterrupted community Read More
Nonprofit Endowment Investing and Geopolitical Risk
It has been less than a week since Russian military forces invaded Ukraine and already pundits are predicting dire global economic and investment consequence. Still, the outlook is very uncertain as no one can predict how sanctions will affect President Putin’s actions, as well as those of other actors in this crisis. Uncertainty is never a time to change one’s long-term nonprofit endowment investment strategy. Read More
What Your Nonprofit Endowment Needs and Why
“We don’t need any policies.” That was an actual quote from a nonprofit board member in response to whether the organization should establish an Investment Policy Statement to govern the organization’s endowment. A policy and procedure nerd like me was horrified at the lax approach to nonprofit governance. Policies can be interpreted as unnecessary, bureaucratic rules that limit flexibility, yet a clear and concise Read More
What Is An Endowment and Tips Your Nonprofit Needs to Know
What is an endowment and should we have one? Nonprofit leaders frequently ask us these questions so we break down the details here. An endowment is the most recognized strategy an organization uses to invest a large donation typically restricted by a donor to support a specific program either over a set time frame or indefinitely. For example, a wealthy philanthropist could donate multi-year funds to their favorite Read More
