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Whether you’re on the foundation or charity side of finance, you probably have some funds to manage . . . and you probably know that poorly stewarded money creates more problems than it solves.

As the principal, co-founder, and CEO of Innovest Portfolio Solutions, there are several common mistakes I’ve seen nonprofits make that weaken their portfolio—or worse, completely undermine their work.

But if you’d like to maximize the good you do through philanthropy or nonprofit work by building a powerful portfolio, here are some components that you must consider.


The more basic the question is, the more easily it gets overlooked. Ask yourself, “where does this money go and why?” If your answers hover at a surface level, know that you are in good company. Most nonprofits can’t answer this question, even if (or especially if) they have investment advisors who take over these decisions.

The fact is, your money can too easily work against you. A religious organization might unknowingly invest in companies that are involved in pornography or abortion. A free-market organization might undermine its own work by investing in environmental, social, and corporate governance. While it’s easier for larger organizations to align their investments than it is for smaller organizations, it is necessary and possible for both.

So, if you haven’t considered what you value and how to invest in that vision, well, you’re in good company . . . but it is time to find something better. There’s no need to undercut the good work you do by (unwittingly) investing in the wrong places.

Hiring an advisor you trust or organizing an investment committee that stewards your funds through their collective wisdom is a great place to start, and these decisions have helped every type of client I’ve worked with. But how you choose to protect your investments will not matter until they are clearly and deeply rooted in the values you want your money to support.


Now that you have values to ground your portfolio, you need to consider your portfolio growth goals: What kind of growth pattern do you have? What kind of growth pattern do you want to have?

As a general rule, the higher your spending, the more conservative your portfolio should be. Modest investment goals will smooth spending over time, honoring the age-old adage to “never spend above your means.”

On the other hand, the more aggressive your development is, the more aggressive your portfolio can be. If you are adding money to your investment fund—if you’ve hired outside consultants to help you grow your operating cash, foundation, or endowment—that’s your sign to be more aggressive (growth-minded) with your portfolio. Be realistic with what you have and what you want before you take the steps you need to get there.


Of course, a useful and realistic assessment also includes your tolerance for risk. The longer your investment time frame, the more risk you need to factor in, and the deeper your understanding needs to be. Future capital investments, for example, should be positioned differently from long-term endowments to mitigate their unique equity exposure to risk.

Now, if things do go downhill—as they currently are—then you need to understand how your portfolio will perform in bad markets so that you can employ an effective rebalancing program. Taking these measures will keep your portfolio performing, fueling the work you care about where and when it is needed most.


So, if you’ve got money to manage, consider your values, growth, and risk strategies to build a strong and stable portfolio for years to come. With sound investments that work for you, and that don’t undermine your work elsewhere, you can compound the good you do through your philanthropy and nonprofit work.

If you would like to discuss how we can help you answer these questions and design a portfolio that reflects your values and meets your needs, then just send me an email to schedule a call!

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