A discussion guide for boards and leadership teams
Why this matters
For many charities, the Investment Policy Statement (IPS) is treated as a technical or compliance document—reviewed infrequently, updated incrementally and often inherited from a previous era of the organization.
In reality, an IPS is one of the most powerful strategy tools a board can use. It shapes how financial assets support mission delivery, organizational resilience and long-term impact.
This guide is designed to help boards and leadership teams pause, reflect and ask better questions—before making decisions about asset allocation, managers or structures.
You do not need to answer every question at once. The value is in the conversation.
What you’ll find in this guide:
1
Purpose & Time Horizon
Clarifying the role of capital in your mission
- What role do our financial assets play in advancing our mission today?
- What role should they play five, ten or twenty years from now?
- Which assets are truly long term in nature and which are tied to near term program or operational needs?
- Are we managing all assets as if they might be needed tomorrow
- What would medium or long-term stewardship mean for our organization, even if we are not a perpetual institution?
Reflection: Many charities unintentionally manage all capital as short-term capital. Over time, this can limit growth, flexibility and impact.
2
Risk: What Are We Actually Trying to Avoid?
Reframing risk in a charitable context
- How does our board define investment risk?
- Are we more concerned about short term volatility—or long- term erosion of purchasing power?
- What risks matter most to our mission: market swings, inflation, funding instability or missed opportunity?
- Do we distinguish between portfolio risk and organizational risk?
- How do we balance caution with the need to sustain and grow our impact?
Reflection: For many charities, the greatest long-term risk is not volatility—it is being too conservative for too long.
3
Liquidity & Cash Flow Reality
Moving from assumptions to evidence
- What are our actual annual cash needs?
- How predictable are our expenditures and funding sources?
- What portion of our assets truly requires near term liquidity?
- How often do we draw on reserves—and under what circumstances?
- Are we holding excess liquidity “just in case,” without a clear rationale?
Reflection: Liquidity at the portfolio level is different from liquidity at the individual asset level. Understanding the difference can unlock flexibility.
4
Governance & Capacity
Designing for the board you have
- How much time and expertise can our board realistically dedicate to investment oversight?
- Are we relying on a small number of individuals with specialized knowledge?
- Do we expect volunteer directors to act like professional investment managers?
- Where do we want fiduciary responsibility and decision making to sit?
- How do we ensure continuity as board members rotate?
5
Values & Mission Alignment
Consider how capital is invested, not just granted
- Should our organizational values apply only to our programs and granting—or also to how capital is invested?
- Are there investment practices or sectors that clearly conflict with our mission?
- What does responsible or values-aligned investing mean for us, if anything?
- How important is transparency and reporting on values alignment?
- How do we balance mission considerations with fiduciary responsibility?
Reflection: Values alignment is not all or nothing. It begins with clarity about what matters most.
6
Asset Mix & Complexity
Matching strategy to capacity
- Do we understand the strategies and risks in our current portfolio?
- Are we meaningfully diversified—or simply spread across labels?
- Do policy restrictions (e.g., limiting investments to Schedule A banks) reduce risk or do they unintentionally concentrate it?
- Do we have access to institutional-grade investment opportunities?
- Are we paying for simplicity or paying more because of fragmentation?
- Is our investment approach aligned with our size and internal capacity?
7
Fees & Value
Understanding what we pay—and why
- What fees do we pay for investment management, administration and custody?
- Where do those fees go and who ultimately benefits?
- Are we receiving the appropriate value, expertise and scale in return?
- Do our fees strengthen our organization—or external profit margins?
- Could a different structure reduce cost or improve value?
Reflection: Low fees do not always equal low cost. Value matters.
8
Roles & Responsibilities
Clarifying who does what
- What decisions are set by policy versus delegated to managers or advisors?
- How often is our IPS reviewed and by whom?
- What information does the board need to fulfill its fiduciary role?
- How do we evaluate success—beyond short-term performance?
Triggers for Review:
When should an IPS be revisited?
Consider reviewing your IPS when:
- Assets grow or change materially
- Your funding or revenue model shifts
- Market conditions change significantly
- Board composition or expertise changes
- You take on new long-term commitments
An IPS should be a living document—stable, but not static.
Tips for Using This Guide
- Use this in a board or committee discussion
- Don’t try to answer everything in one meeting
- Document areas of alignment and uncertainty
- Treat unanswered questions as signals, not failures
- Revisit annually or when conditions change
Final Thought
A well-designed IPS does more than guide investments. It creates alignment between mission, governance and financial stewardship—helping charities move from caution to confidence.
The right questions are often more important than the right answers.