Fall 2014 issue of Horizons

NOT-FOR-PROFIT

Fiduciary Responsibilities of Not-for-Profit Investment Committees by Mike Ferman, CPA

D o you know your fiduciary duties? Whether you have been serving on an investment committee for a long time or you are newly appointed, it is important to understand the significant responsibility you are undertaking for the non-profit organization involved. Members of the investment committee are entrusted with the stewardship of important assets that can help grow and enhance the organization, or help it weather difficult times. The work of your committee may affect an important charity or Better Business Bureau rating, or factor into the decisions of savvy donors seeking well-run not-for-profit partners.

over fund assets, render investment advice for a fee, or have discretionary authority in the administration of the fund. As a fiduciary, you must operate the fund for the exclusive benefit of the organization. Second, a fiduciary must carry out their duties with the care, skill, and diligence that would be exercised by a reasonably prudent person familiar with such matters (known as the Prudent Man Rule). A fiduciary also must diversify the investments of the fund to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so. Finally, a fiduciary must operate the fund in accordance with the documents and instruments governing the fund, including

Who is a Fiduciary? A person is a fiduciary to the extent that they exercise discretionary authority or control

page 64 | horizons Fall 2014