In this video interview, Perpetual’s Scott Hawker explains why every not-for-profit should have an Investment Policy Statement (IPS) in place to help deliver on their mission.
An IPS provides a framework for the financial governance of your organisation, from assuring management of a reasonably predictable flow of funds to the organisation to providing a mandate for the investment adviser as to how the funds are going to be invested. It can also give comfort to donors that their money is being professionally managed.
Here’s a summary of the process involved in creating an IPS:
1. Talk to your board or investment committee about the organisation’s investment objectives.
2. Seek professional advice – whether you are developing your first IPS, or reviewing the relevance of an existing IPS.
3. Work with your investment specialist to determine your portfolio objectives including spending policies
, investment objectives, risk tolerance and implementation considerations.
4. Clarify the mission and strategic objective of your organisation.
5. Align your portfolio to your needs.
6. Develop a framework for sound corporate governance around investments to reduce risk and provide confidence for stakeholders (including the process for reviewing the IPS).