What sort of guidance does a nonprofit need when it comes to receiving gifts and investing assets? Amy Pieper is director of nonprofit services at The Commerce Trust Company, a division of Commerce Bank. Pieper says most nonprofits need help “establishing proper guidelines that provide a road map describing how donor gifts are accepted, how the investments should be managed and how the funds can be used. These guidelines provide a strong foundation that helps board members ensure that the assets are working to further their mission, both now and in the future.”
In addition to an investment policy statement, many boards develop a gift acceptance policy that provides guidance for all types of assets received including cash, marketable securities, and unique assets such as real estate, pieces of art or personal property. These policies state whether the board must pre-approve the acceptance of assets, procedures for pre-acceptance and the policy for retention or sale of the gifted assets once they are received. This is often a good time to define what types of donor restrictions may be placed on the funds as well. Pieper says a “well-defined gift acceptance policy will take care of the majority of the situations that may arise.”
A gift acceptance policy is a helpful document to have in place as the economy improves and donors give more. Fortunately, national giving statistics over the last four years indicate that giving has increased with improvements in the overall economy. According to Pieper, the donors driving this growth are savvy. She says, “They want to make sure their donations are making an impact. Commerce Trust can help organizations be good stewards of assets thereby helping donors feel good about making a major gift.” Major gifts can come through trusts or other planned giving techniques. Nonprofits can look to organizations like Commerce Trust to provide donor education seminars and information to assist with planned giving programs and opportunities.
Pieper says the bottom line is “to find an investment consultant who has experience working directly with nonprofits and their boards through all market cycles.” An experienced professional can help create and implement an investment plan customized for your organization. “Beyond investments, you want someone who can provide additional support or resources to assist with both board and donor education resources,” according to Pieper. Once the appropriate guidelines are in place, they will provide continuity when the board experiences turnover and guidance throughout different market cycles.
As an example, Starlight Theatre started working with Commerce Trust during the 2003 Future Generations Campaign. The campaign raised $15.7 million for renovations and additions to restrooms and other operational structural needs. “We have never had an endowment,” says Brenda Mortensen, Starlight vice president of finance. “As part of that campaign, we wanted to set aside $2.5 million to begin the endowment. We reached out to Commerce Trust to help us with investment and giving policies. They helped us draft policies which included delineating roles for the board of directors and the investment committee, which in Starlight’s case is the finance committee.”
Mortensen meets with Commerce Trust staff quarterly and the full committee meets annually. “Our policy is structured to build and retain capital. The interest from the endowment supports operations, but the key is to have a rainy day fund so we can ensure Starlight’s future. Starlight is an integral part of Kansas City, and we want to be here in the future.”
Starlight works to protect contributions. “When donors invest their dollars, they are making a difference. It is mission critical that they understand how their gifts are spent. We are extremely conscious of good financial choices. Commerce Trust is a pivotal partner for us in helping with the endowment management. They not only manage trusts but they are intrinsically involved in candid conversations that have guided our policies, evaluating risks and helping protect the funds that allow us achieve our objectives.”
