attorneys for nonprofits San Luis Obispo

Managing a nonprofit’s assets means more than keeping track of capital assets such as equipment, tools, real property, income and expenditures. It also means managing assets in a way that creates a sustainable financial future and making sure the organization’s mission continues to be served. The attorneys for nonprofits from San Luis Obispo’s Toews Law Group, Inc. have prepared these tips to help nonprofit Boards of Directors understand why managing investment assets is a critical board function.

Assets include:

  • Real property
  • Mission specific assets (such as collection for a museum, talent for a nonprofit opera, ballet, or symphony, and other resources that specifically support the nonprofit’s mission
  • Donors and donations, including endowments and grants
  • Investment accounts

It’s good business practice to protect tangible assets such as real estate and equipment, and to maintain goodwill with employees, volunteers, the community, donors and funding institutions. Goodwill is an important factor in building a strong donor base that funds operations. However, many nonprofit Board of Directors overlook a critical aspect for managing and growing financial assets such as cash, endowments, grants and investments.

Yes; nonprofits can make investments and have an investment portfolio but there are some differences between managing investments for a for-profit business and for a nonprofit organization. In California, investments by a nonprofit are governed by the Uniform Prudent Management of Institutional Funds Act (UPMIFA). The UPMIFA is a uniform code followed by almost every state. Other more general laws governing California corporations may also apply – including those prohibiting self-dealing transactions, and avoiding speculation by considering the safety of the capital.

Investments are one way to help solve the problem of uneven cash flows, and even provide assurance that endowments and grant funds are being optimized for the designated purposes. For example, if allowed by the terms of the endowment or grant, placing those funds in an appropriate, dedicated investment account serves some important purposes including:

  • Providing assurance that the money has been set aside and is only being used for the intended purposes
  • Makes large donations easier to manage
  • Earn interest

The Board of Directors, acting in its fiduciary responsibility and working with the guidance of experienced attorneys for nonprofits, such as San Luis Obispo’s Toews Law Group, Inc. can establish an investment policy,

Getting the right information

Important considerations when managing an investment portfolio include being careful to not jeopardize the organizations nonprofit status. Properly constructed policy and procedures are key to protecting the organization and so is getting the appropriate legal guidance.

As attorneys for nonprofits, the San Luis Obispo Toews Law Group, Inc. serves as counsel to dozens of nonprofit organizations ranging from family foundations to amateur sports leagues. The firm also advises businesses, service clubs and trade organizations about organizing charitable affiliates to carry out charitable activities, and advises charitable organizations about forming for-profit subsidiaries without jeopardizing tax exemptions. The firm provides counsel on all aspects of forming and operating nonprofits including developing a Board of Directors, setting up an executive committee, acknowledging donor contributions, and finding reasonable insurance.

This information has been prepared by Toews Law Group, Inc. for informational purposes only and is not legal or tax advice. The transmission of this information is not intended to create an attorney-client relationship. Contacting us does not create an attorney-client relationship.