Not-For-Profits

Transparent financial governance is crucial for NFPs – their reputation is a key element of their ability to raise funds and attract high quality staff. It also underpins an NFP's ability to work effectively with other stakeholders – government or community bodies who need to know they are partnering with high quality organisations. Transparent financial governance is also crucial in a sector where compliance responsibilities loom ever larger.

Effective financial governance reduces risk for the organisation and its leaders. By helping to put in place policies and structures that have been tested and refined over many years, Perpetual can ensure your organisation’s financial governance policies are best-practice and evolve over time to meet changing needs.

Strategic financial governance practices must be aligned to the strategic goals of your NFP. Investment and spending policies that are tuned to your mission, your financial position and plans for service expansion. Structures and policies that reflect the risk profile and risk appetite of your organisation, stakeholders and board. At Perpetual we’ve worked with a wide variety of NFPs over decades. Our governance recommendations and implementation can help NFPs achieve their goals whilst ensuring compliance, integrity and accountability to stakeholders.

At Perpetual, we work with many NFPs who have seen improvement across all aspects of their operations when they optimise governance. Firstly, they achieve better financial results. Just as importantly, improved financial governance helps generate more support from funders and philanthropists and opens doors for partnerships with other NFPs, government and community groups.

• Perpetual also works with NFPs in the Aged Care sector. This white paper explores the challenge – and opportunity – of new investment approaches in Aged Care.

For many NFPs, successful management of their capital – and the cashflows they generate from fundraising – are crucial to sustainable success.

Investment Policy Statements

An Investment Policy Statement defines how an NFPs investment portfolio is to be managed and how investment decisions will be made. It is a crucial element of sound financial governance. Perpetual’s Investment Policy Statement service helps NFPs develop a prudent, ‘best practice’ Investment Policy.

Spending Policy

Linking a well thought-through Spending Policy to the overarching Investment Policy will further enhance financial governance. A Spending Policy sets out how distributions from your long term investment portfolio are paid into your operating revenue. It helps balance the NFPs short-term operational needs with the long-term sustainability of that investment portfolio. Perpetual’s Spending Policy workshop helps NFPs decide what approach is best for their organisation.

Strategic investing

There is no one-size fits all investment strategy that will work for all NFPs. The nature of the mission, cashflows, size, liquidity needs, stakeholder relationships and, crucially, board expectations and experience will all be important influences on the strategies NFPs adopt to manage their funds. At Perpetual we work with NFPs to develop, implement and optimise investment strategies that address all these issues. 

Risk management

As with all investors, NFPs need to understand and manage investment risk. Act too boldly and your organisation’s activities could be affected. Invest too conservatively and you reduce your ability to fund future activities by allowing the real value of your capital to fall. Our “protect and grow” philosophy balances risk and return and is executed using sophisticated investment strategies that are tailored to NFP’s needs.

Strategic asset allocation

Having the right mix of assets is not simply a question of investment methodology. When we build portfolios for our NFP clients we take into consideration issues like cashflows, time horizons, risk profiles and more. For some clients, asset allocation decisions will be all about generating income to fund regular activities. For others it will be about maximising long-term growth. We have worked with many NFPs over the years where these questions involved a change of strategy. These strategic shifts can be as different as the organisations that need them. For example:

• moving away from property ownership towards more liquid investments.
• a strengthened focus on building up cash reserves.
• a decision not to invest to generate income but to focus on higher longer-term returns to grow the portfolio and fund a planned long-term shift in the mission.

Reporting

We recognise that in a very real sense, NFPs are often managing other people’s money – whether it’s donors, governments or communities. That makes accountability, communication and reporting vital. Perpetual advisers work closely with our investment team and with NFP boards and leaders to tailor regular investment reporting and board presentations so NFP leaders always understand what’s happening with the funds they’re accountable for.  

Investment experience

Investing for NFPs is a specialist skill and Perpetual offers NFP clients the benefit of extensive experience and real scale. Perpetual is one of Australia’s largest managers of philanthropic funds, with $2.9 billion in funds under advice for charitable trusts and endowment funds as at the end of FY20.

Perpetual’s investment philosophy is built around quality, value and risk management. We take a long-term approach to investing and believe high quality investments perform over time. 

We enact this investment philosophy by diversifying across asset classes, industry sectors and individual investments and ensuring the assets in portfolios meet our stringent quality investment criteria.

• Like to know more about the investment philosophy and process used by Perpetual Private’s award-winning investment team, including sustainable and ethical investing?

Perpetual works closely with NFPs and other philanthropy sector stakeholders to build capacity across the sector through thought leadership, network building, education and practical assistance. Here are just some of the capacity building activities Perpetual invests in.

Stanford PACS

Perpetual has an ongoing partnership with Stanford University’s Center on Philanthropy and Civil Society (Stanford PACS). That partnership brings top-quality thinking from PACS leaders such as Lucy Bernholz, Rob Reich, Paul Brest and others to Australia to talk on issues as varied as philanthropy in the digital age, more effective giving, philanthropy and civil society and more. Perpetual has also sponsored educational visits to Stanford for a wide range of NFP and philanthropy leaders across Australia.

• See leaders from Stanford PACS and Perpetual debate the future of philanthropy.

CFO series

In any NFP it is the CFOs, finance teams, investment committees and boards who drive the organisation’s financial governance and long-term sustainability. To help these leaders Perpetual’s NFP investment experts offer them access to white papers, financial tools and resources and opportunities to network with peers.

Data for decision making 

Perpetual is committed to providing tools and resources to support our not-for-profit clients. Through our partnership with Seer Data & Analytics, we provide clients with exclusive access to our IMPACT Philanthropy Application Program (IPAP) data, to help them make data driven decisions. Perpetual’s NFP clients can access client tools and resources here.

Strategic grantmaking can be a complex and time-consuming process. Perpetual’s grantmaking consulting service gives not-for-profit organisations the opportunity to leverage our skills, experience and best practice processes. Utilising our IMPACT Philanthropy Application Program, or designing a bespoke end-to-end grant making strategy, we can help your organisation get the best outcomes from your grantmaking while reducing costs in time, worry and workload.

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“Since enlisting Perpetual to manage our grant rounds, FightMND has been able to extend our reach to a greater range of organisations who support people living with MND in different ways, whilst still supporting our longer-term partners in the sector. This has laid the foundations for greater collaboration across the MND community so that together we can improve the lives of people with MND in Australia.”

Dr Fiona McIntosh – CEO, FightMND