Managing a nonprofit organization's investments demands careful oversight, an understanding of fiduciary duties, and a commitment to the mission. As a board member, you bear the fiduciary responsibility for safeguarding the organization's assets, a task often facilitated through delegation to a specialized finance or investment committee. Recognizing this critical role, we've developed a detailed checklist to ensure that every aspect of your organization's investment strategy aligns with your fiduciary duties and long-term objectives.

Understanding Your Fiduciary Responsibility

The fiduciary responsibility of board members is underpinned by three fundamental principles: the duty of care, loyalty, and obedience to the mission. These responsibilities are not only moral obligations but are also enforced under state and common law, including the Uniform Prudent Management of Institutional Funds Act (UPMIFA).

To help your board fulfill these responsibilities, we recommend establishing an annual review process using a structured checklist. This proactive measure ensures that the board maintains a disciplined approach to governance and stays aligned with legal obligations and organizational goals.

Here are some topics to consider when reviewing your fiduciary responsibilities.

Committee Charter

Ensure your organization has a clearly defined committee charter that outlines the oversight committee's roles, responsibilities, and composition. Regular reviews of the charter help reaffirm the committee's purpose and processes, ensuring effective governance.

Spending Policy

A robust Spending Policy is crucial. It should detail authority over distributions, define appropriate spending rates, and align spending with investment returns and the long-term strategy. Regular updates to this policy can adapt to changing financial landscapes and organizational needs.

Investment Policy Statement (IPS)

An effective Investment Policy Statement should clearly state the objectives, responsibilities, and asset allocation strategies. It should also establish benchmarks for performance evaluation. Annual reviews ensure that the IPS remains relevant and effective in guiding the organization’s investment decisions.

Investment Fees

Review all investment fees, including advisory, custodial, and transaction fees and those associated with underlying investment vehicles, regularly. Comparing these fees to industry standards ensures that your organization's resources are used efficiently.

Conflict of Interest Policy

Maintaining a clear and rigorous Conflict of Interest Policy is fundamental. Ensure all board members understand and annually affirm the policy, which should outline procedures for disclosing and managing potential conflicts effectively.

Access to Investment Records

Guaranteeing access to accurate and timely investment information allows for informed decision-making. Ensure all investment-related documents and performance reports are centralized and accessible to all board members.

Download and Share the Fiduciary Checklist

To help your board navigate these complex responsibilities, we invite you to download our comprehensive Fiduciary Checklist for Nonprofit Board Members. This PDF document is designed to be shared with your board and oversight group so everyone is equipped to perform their fiduciary duties. Fill out the form below to download the Fiduciary Checklist.