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With today’s nonprofits facing rising operating expenses, inflation, and an increasingly complex economic environment, it’s no wonder that many organizations want to improve their financial sustainability. There are many ways to do so, from starting an endowment to improving your budgeting practices, but the avenue that makes the most sense for many nonprofits is to hire an investment advisor.
Just like the world of investments, partnering with a nonprofit financial advisor can feel complicated. That’s why we’ve compiled this FAQ guide—to answer common questions and provide tips for making the most of your partnership with an investment advisor. We’ll cover:
- What is a Nonprofit Investment Advisor?
- Why Should You Hire Nonprofit Financial Advisors?
- How Do You Choose a Nonprofit Investment Advisor?
- What Should You Look For in Nonprofit Investment Advisors?
- How Much Do Nonprofit Investment Advisors Charge?
- Working With Infinite Giving: Top Nonprofit Investment Advisors
Let’s get started so you can begin your organization’s journey toward greater financial sustainability with the right help.
What is a Nonprofit Investment Advisor?
Nonprofit investment advisors are professional financial advisors who manage nonprofits’ investment portfolios and cash management strategies. They have both financial expertise and dedicated nonprofit experience, allowing them to provide tailored services for 501(c)(3) organizations.
Registered Investment Advisors (RIAs) are also fiduciaries, meaning they have a legal responsibility to work in your organization’s best interest. Brokers and bankers, on the other hand, do not have this responsibility, opening up your organization to more risk.
Why Should You Hire Nonprofit Financial Advisors?
Your nonprofit might hire an investment advisor for many reasons—to improve your organization’s financial sustainability, manage an endowment, or even open a new reserve fund for an upcoming capital campaign. Or, you might just be interested in managing your nonprofit's finances more proactively and not know where to start.
Regardless of the reason you seek them out in the first place, working with a nonprofit investment advisor can result in impactful benefits for your organization. These include:
- Improved cash management. What do you do with your nonprofit’s funds once you raise them? Do they sit in a savings account and lose value over time due to inflation? An investment advisor can help you develop new cash management strategies that put your funds to work in low-risk, highly liquid holdings.
- Personalized investment management and support. Take the weight of managing your nonprofit’s investment portfolio off your board members’ shoulders. A professional RIA can build, manage, and monitor a diversified portfolio of assets designed to maximize growth while minimizing risk.
- Professional Investment Policy Statement (IPS) creation. Outlining nuanced investment policies on your own can be a difficult, time-consuming task. A nonprofit investment advisor will create this document for you at no extra charge, providing you with important guidelines and guardrails to use long-term.
- Less risk for your board members. Without an investment advisor, your board of directors must take responsibility for all your cash management activities, which can expose your organization to unnecessary risk. Avoid this risk and potential conflicts of interest by working with a professional fiduciary advisor.
- Long-term help meeting your financial growth goals. The best financial advisors don’t just handle investments—they’ll also work with you to further other financial growth goals and improve a variety of your organization’s financial practices.
Additionally, a nonprofit financial advisor will help you navigate other ins and outs of effective cash management, like evaluating your risk tolerance and choosing strategies based on your goals and established best practices. With an expert on your team, your organization will be better equipped to further its financial goals and achieve more for your mission.
How Do You Choose a Nonprofit Investment Advisor?
To find the right fit for your organization, take the following four steps.
1. Evaluate your needs and goals.
First, clarify where your nonprofit stands and what you hope to accomplish by partnering with a nonprofit investment advisor. For instance, are you starting from scratch and just want to move your reserve funds out of a savings account? Are you interested in accepting stock donations and learning how to leverage them?
Outline your initial thought process and needs, then consider your investing goals. Determine if you want to prioritize managing an endowment, stewarding your reserve funds, or diving into growth investing. Your priorities may shift over time, but it’s important to have a general idea of how you want to approach your partnership with the advisor.
Do you need to open a brokerage account?
At this stage, it’s also crucial to think about brokerage accounts.
If your organization already has one, you can move on to step two. If not, add opening a brokerage account to your list of needs and evaluate your options for doing so. A brokerage account allows your nonprofit to invest and receive stock donations, since these accounts can hold stocks, bonds, and mutual funds in addition to cash.
You can either open a traditional brokerage account through a large bank or brokerage firm, or you can choose a nonprofit investment advisor who will open one for you. Here’s a quick overview of the pros and cons of each option:
- Traditional brokerage accounts: Opening a brokerage account with a large bank or brokerage firm involves a manual application and approval process that often takes weeks. You also get less of a transparent view of the process, and you must handle any stock donations you receive on your own—including complex processes like liquidation and receipt creation.
- Nonprofit investment advisors: An advisor like Infinite Giving, on the other hand, provides a more streamlined application process that you can start in as little as 20 minutes. Once approved, you can also tap into benefits like real-time donor transparency, automatic stock liquidation and receipt creation, and advice from nonprofit experts.
So, if you need to open a brokerage account and don’t want to go through the traditional hurdles with a bank, look for an investment advisor who can open one for you.
At Infinite Giving, our advisors can help you open a brokerage account with up to $5 million in FDIC coverage (compared to a traditional bank account’s $250,000 in coverage) in as little as three business days. Our online application process takes work off your plate and allows you to improve your organization’s cash management strategies faster.
2. Research qualified financial advisors to consider.
Keeping your needs and goals in mind, use guides like this one and recommendations from peers to find a few nonprofit investment advisors to consider. Research each one by exploring their websites, paying special attention to:
- Their pricing structure and fees
- The investment strategies they use
- Their professional credentials
- Any testimonials or case studies they have
We dive deeper into the top qualities you should look for in an advisor later. Use this list for reference, along with the list of your organization’s unique needs, to narrow down your options.
3. Meet with your top choices.
Next, schedule consultations with your top contenders to discuss the prospect of working together. In these meetings, ask questions about their advising styles, typical communication cadences, investment strategies, and any additional services they offer. Confirm details about their pricing model and fees, and explain your organization’s goals briefly.
You should also ask for references from other organizations they’ve worked with. After the consultation, call the references they provided and talk to these nonprofits to hear more about their experiences.
4. Choose the best fit for your organization.
Finally, take everything you’ve learned into consideration and come to a decision with your nonprofit’s leadership team. Your board members will interact with your nonprofit investment advisor often, so make sure you have their buy-in before moving forward. Additionally, don’t forget to evaluate if the advisor is a culture fit for your organization. They’ll become a long-term partner for your nonprofit, so it’s important that they share your values and are excited to work with you.
What Should You Look for in Nonprofit Investment Advisors?
As you start your search for the right advisor, there are a few things to keep in mind. Make sure that any nonprofit investment advisor you consider brings the following qualities and services to the table:
- A fiduciary responsibility to work in your best interest (i.e., they’re an RIA, not a broker or banker)
- Experience working with similar nonprofits and/or organizations with similar financial goals
- Conservative investment portfolios with low-risk, highly liquid strategies like treasury bills and mutual funds
- Personalized cash reserve management strategies that align with your risk profile and goals
- The willingness to create an IPS at no additional cost
- The ability to attend board meetings and provide board reports on a regular basis
- A commitment to transparency, whether through quarterly financial reports or an online dashboard
- Alignment with your organization’s values
These are the basics, but some nonprofit investment advisors offer additional specialized services to improve your experience. Depending on your nonprofit’s preferences, you might search for an advisor who also offers an investment management dashboard or non-cash giving tools to simplify the stock donation process.
For example, Infinite Giving provides organizations with branded non-cash donation pages so they can easily accept gifts of stock, cryptocurrency, donor-advised fund grants, and more. Our advisors value kindness and sustainable nonprofit growth, so if you’re looking for an experienced advisor committed to building a better world, Infinite Giving could be the right fit for you.
How Much Do Nonprofit Investment Advisors Charge?
Investment advisors don’t typically have one standard price tag for their services. They might use pricing models that charge a per-hour or -service rate, an annual retainer, or only a percentage of your Assets Under Management (AUM).
At Infinite Giving, our pricing model includes:
- No account setup, admin, or brokerage fees
- 0.65% of AUM
- A minimum account balance of $100,000
- $99/month for our optional donation page add-on
As you explore the pricing structures of various investment advisors, look out for additional fees they may not include in their service charges. This could include a fee for administration and account setup, for example.
Working with Infinite Giving: Top Nonprofit Investment Advisors
Our nonprofit investment advisors are dedicated to helping growing nonprofits steward their finances and diversify their revenue streams. Our advisors understand the financial challenges nonprofits face—we’ve been in your shoes as nonprofit board members, volunteers, and former executive directors. We believe financial stewardship should be more accessible to nonprofits, and we’re committed to our mission of using technology to help nonprofits grow.
By offering low-risk, highly liquid portfolios, FDIC coverage up to $5 million, and specialized non-cash giving tools, we provide organizations with the expertise and support they need to further their financial goals. Watch our video to learn more about our services:
If you’re looking for nonprofit investment advisors with low fees, a fast application process, and a true commitment to transparency, contact our team today.
Additional Resources
Still have questions about working with nonprofit investment advisors? Don’t hesitate to contact our team. In the meantime, check out these additional resources to learn more about stewarding your nonprofit’s finances:
- Investment Consulting for Nonprofits | Infinite Giving. Explore Infinite Giving’s approach to investment advising and more details about the services we offer nonprofits.
- Cash Management for Nonprofit Organizations: Basics + 8 Tips. Want to improve your cash management strategies and boost sustainability? Read our guide to learn the basics and best practices.
- Nonprofit Investing: The Ultimate Guide to Grow Your Giving. The world of nonprofit investing can feel overwhelming. Before you get started, explore our guide to get a handle on essential concepts.
