Should your association have an investment policy?

A fairly common nonprofit/association best practice is to accumulate 3-6 months of reserves in your operating reserve funds. Having a “rainy day/emergency fund” is a good risk management policy, and should be reflected in your organization’s policy manual. Let’s say you reach that goal; great news for the association and kudos to you and the board of directors! Now what?

Here are a few options for your board to consider to maximize your association’s assets and potential investments.

• Maybe you had a recent dues increase; how about freezing dues for a period of time? (Demonstrates fiscal responsibility)
• Does your association rent an office or building? What would it look like if you owned your own building? (Demonstrates big vision)
• Would it be a wise to invest in your people for professional development and training? (Demonstrates vision and leadership)
• How about updating your webpage, digital/social media presence? (Demonstrates membership attentiveness)

You might be able to accomplish some of these items through simple annual budgeting, if your financial standing is strong enough. Adopting an investment policy will ensure the membership knows their board of directors is being good stewards of their finances. The key to smart investing for the nonprofit/association is to make sure the policy is reflected in the strategic plan and in your policy manual.