It's a question every nonprofit and association asks. A study released this morning in Washington has some answers. (Normal is, of course, subjective, though can we all agree Skip in accounting was wearing shorts to work way too early in the season?)
Raffa Wealth Management surveyed over 150 associations and nonprofits about 2012. Raffa president Dennis Gogarty
says the nonprofit sector is in good shape
in terms of the percentage of its budget it puts into reserves. (The average is 60% to 80%) The average ROI lagged
traditional indexes by 1% to 2%. Why might that be? Many organizations don't have investment guidelines
and they reacted to market trends by moving around their investments. Some other findings
: 38% of respondents lack guidelines on investment diversification; 30% of orgs made changes to their asset allocations in 2012, most to be more aggressive; and 70% reinvested all of their dividend income in 2012.
American Association of Immunologists finance director Todd Breach
says it's critical to not overreact
to market conditions like the 2008 financial crisis. He saw an organization with a $20M investment portfolio lose $3M
when the market crashed. The knee-jerk reaction was to completely change its investments, which caused a lag in the portfolio's recovery. (We switched our cash hoarding location from queen size bed to twin bed. Our investments were safe, but it really affected our romantic relationships.) GuideStar CFO James Lum
says this study should be the beginning of more transparency
in the nonprofit world. He'd like to see more openness with revenue streams, grants, and the impact of the organizations.
The study results will be used by SOCAP International to determine how it should be making investments compared
to its peers, says CEO Matthew D'Uva
. The organization has traditionally relied on an investment adviser but Matthew says he'll look more closely at how organizations of a similar size
invest. Another area to consider changing is how much the organization leans
on its investment adviser compared to the financial committee and the board.
The Center for Strategic and Budgetary Assessments is a nonprofit and also a not-for-loss organization, jokes chief administrative officer/CFO Ilana Esterrich
. So it's taken a more conservative
approach to its investment strategy. When she joined the organization in late 2011, she set out to update
its investment policy statement to make its portfolio more diverse, especially since the center relies primarily on government and foundation grants
. In light of sequestration
, Ilana says the center wanted to have less reliance on government, so bringing in more diversity helped improve ROI.
Businesses in Montgomery County, Md., that give 2%
of their operating income to charity, with a majority of it going to a Montgomery County cause can get a full page ad
in every issue of Bethesda Magazine
. It's a new initiative from the magazine's publisher Steve Hull
and C.Fox Communications president Carrie Fox
called Community Profits Montgomery. They felt there wasn't enough being done to recognize business that are helping in the community, so it's free to join the organization. So far 18
businesses have signed on.
Steve and Carrie
say the group was modeled after the Minnesota Keystone program, which was launched in 1976 and has 400 members that include big corporations. Montgomery County is increasingly split
between affluent residents and people in need of help, says Steve. Community Profits Montgomery will have its first event
this week to highlight some of those community needs and how some businesses are giving back. Steve's long-term hope
is that Community Profits Montgomery will encourage more businesses to meet the 2% threshold.
The recent IRS scandal
regarding tax-exempt status for nonprofits has the industry concerned about image. National Council of Nonprofits president Tim Delaney
says sure the issue will distract Congress from the tax reform the industry has been waiting for. But more importantly is a concern that the work of nonprofits will be affected by all the media coverage
. Most news stories have the terms "political scandal" and "nonprofits" within striking distance of each other. The organization is on a mission
to remind the public (namely the media) that "federal law is crystal clear that 'charitable nonprofits,' which are tax exempt under section 501(c)(3) of the Tax Code, may not lawfully engage in partisan political
We not only write about nonprofits, occasionally we're part of them. Bisnow editor Tania Anderson
and her 9-year-old daughter, Alexandra Harbourt
, ran in this weekend's Girls of the Run
Northern Virginia 5K race at Bull Run Regional Park. Nearly 10,000
other elementary age girls and their buddy runners walked, ran, and sprinted their way to the finish line
. The nonprofit teaches girls about fitness
and trains them over a few months to complete a 5K.
Say you win the $590.5 million Powerball jackpot. Lump sum or payments? Go public or stay private? Tell Bisnow's Tania Anderson.