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How to Invest Your Charity Money Wisely

Wise investments can be the best thing that ever happened to a charity. Every penny you gain with your investments is another penny you can spend to make the world a better place. Charity work is very important, and you can’t afford to make any mistakes with charity money. Knowing the legal requirements as well as smart practices can help you maximize your positive impact on the issues you’re passionate about.

1

Follow the Law

Charity funds can be invested, but some things are off limits. Your local government likely has a list of guidelines for you to follow. You also can’t invest irresponsibly. If you’re wise to investment from personal experience, you may be able to handle the investment of your charity money on your own. If you don’t have any experience, you might want to call in an expert or spend a while learning to trade.

Maintaining a wide variety of investments, rather than putting all of your money in one place, maximizes your potential for return and minimizes the risk of loss. It also diminishes the appearance of impropriety, where it may seem as though you’ve given a large sum of money to a single entity due to a bias.

Keep thorough records of your investments as well as how they’re performing. They’ll become an important part of your annual report. You’re obligated to inform your trustees about what you’re doing with your money.

2

Seek the Right Types of Investments

It helps to invest in things that reflect the values of your charity. It wouldn’t make much sense for a charity centered around heart health to invest in a fast food company, but it would make perfect sense for that same charity to invest in a medical equipment manufacturing company. If your investments can help advance your cause, it will show people how dedicated you are.

Investments that complement or correlate with your goal are nearly the same as donating the money, but with added benefits. When you think about the reach you’ll get from your funding, it’s almost foolish not to pursue those opportunities. You’ll be doing the most good.

Post information about your investments on your website so that the people who donate to your charity will be able to see exactly where their money is going. This is an important part of transparency, and organizations like CharityWatch consider where the money is going when they’re grading charities.

3

Carefully Watch Your Investments

You need to keep a close eye on your investments. Some of them may not perform so well. While it’s okay to have a little faith and take a few risks with your own money, you won’t want to do that with money that belongs to your charity. Investments that seem as though they may become problematic need to be cut off before any major damage can be done. Responsible investment management is crucial in this situation.

4

Invest The Right Amounts at the Right Times

Don’t invest charity money just because you have it. Invest because there’s a valuable opportunity that you’ve thoroughly researched. Invest when there’s room for growth – not when the forecast of your investment seems to be uncertain. Always stick with a sure thing, or at least as close to one as you can get. It’s better to wait out an investment and see how it performs than it is to assume that things look favorable and throw a lot of money at it. Start with a little and invest more if you’re seeing the results you want.

Further information

Remember that investments have a tendency to grow slowly. It’s rare that you’ll wind up with a surplus of cash very quickly. It’s also important to remember that what you gain from investing your charity money is still more than you started with – even if that growth is only a little bit. Every dollar counts.

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Page last edited May 28, 2018 History

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