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Non-Profit Financial Advisor Services


You might wonder why a nonprofit would need a financial advisor. After all, generating cash flow is not generally a central part of a nonprofit’s mission. But nonprofits have finances just like the rest of us. Their money must be managed responsibly to ensure the organization stays financially healthy. And financial advisors could offer services to help increase the impact of an organization’s mission. Let’s break down what they could do.

Why Do Nonprofits Need Financial Advisors?

Nonprofits need financial advisors because, like any other person or organization, they have money that must be managed responsibly. One could argue that nonprofits need a financial advisor more than for-profits.  A financial advisor will allow nonprofits to think less about money and focus their time and energy on the organization’s mission instead.

Nonprofits also have some unique financial concerns that may not be an issue with for-profits. For example, nonprofits tend to rely more heavily on fundraising and donations to stay in operation. These things can ebb and flow.

Plus, depending on the type of nonprofit, it may rely on grants and have an endowment to consider. These things must all be managed, which can be a challenge. Fortunately, financial advisors can help nonprofits keep things running smoothly.

5 Ways Financial Advisors Could Help Nonprofits

SmartAsset: Non-Profit Financial Advisor Services

Financial advisors can provide services that are tailored to the needs of a nonprofit organization. Here are five things that could benefit your organization:

Fiduciary responsibility. Fiduciary responsibility is a legal obligation of a financial advisor to work in their client’s best interest, not in the best interest of the advisory firm. This means simply making the best financial recommendation for the client and not, for example, recommending products that will be more lucrative for them or their employer.

Not all financial advisors are fiduciary financial advisors. A report from the Associated Press says that perhaps 15% of financial advisors or less are fiduciaries. Of course, a nonprofit will want to work with a fiduciary and many financial advisors are willing to maintain that relationship with them.

Investment management. Nonprofits often have investments, whether that is in the form of an endowment or some other form. Because cash flow can be unpredictable for nonprofits at times, having a formidable endowment can help them survive when times are tough. This is especially true when economic conditions are uncertain.

And these days, investing is often about more than just achieving the highest possible return. For nonprofits especially, it will be important that their money is invested in a way that aligns with their mission and values. Nonprofit financial advisors can help them invest their money the right way. That means not only helping their money grow but also helping the causes the nonprofit is working toward.

Financial guidance. Nonprofits may have neither the time nor the financial knowledge to manage their own finances directly. Financial advisors can provide unbiased advice to help nonprofits achieve their mission. They do this by providing results-driven advice, and not advice that is based on selling products or would put their mission in jeopardy.

Transparent communication. Financial advisors can help nonprofits by providing periodic reviews of their investments. For example, they might send their clients an ongoing review of their investment policy statement and a periodic benchmarking of their investment portfolio. This helps nonprofits see not only how their investments are doing, but also how their money is being used.

Socially responsible investingWhile every nonprofit is unique, chances are high that most nonprofits today will want to invest in a socially responsible way. Financial advisors are aware of this and will work with the nonprofit to build a portfolio that is socially responsible and sustainable.

There are a few different issues that fall under “thematic investing” as it’s sometimes called. Financial advisors can help nonprofits tailor their portfolios to meet the demands of the specific issues most important to them.

Bottom Line

SmartAsset: Non-Profit Financial Advisor Services

Making money may not be the goal for nonprofits, but they have donations, fundraising, and other sources of funding that must be managed. They must also be able to pay their employees and otherwise fund their operations. Financial advisors can help nonprofits manage these finances and more, such as their investments or their endowment. For nonprofits, they often provide fiduciary and unbiased financial advice that works in the best interests of the client.

Tips for Investing

  • A financial advisor can guide you through major financial decisions, like determining your investing strategy. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Deciding how to invest can be a challenge, especially when you don’t know how much your money will grow over time. SmartAsset’s investment calculator can help you estimate how much your money will grow to help you decide which type of investment is right for you.

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