What types of investments can a nonprofit make?

Nonprofit organizations, or NPOs, in New York are governed by a set of laws that governs their activities, including investments. Generally, a nonprofit can invest for the purpose of providing a return that supports its charitable mission. The return should not be greater than necessary and NPOs must ensure that investments do not jeopardize their tax-exempt status. In New York, NPOs can invest in virtually any type of investment vehicle, including stocks, bonds, mutual funds, and ETFs. However, they must consider the risk associated with each investment and their ability to liquidate it in case of a financial emergency. Additionally, NPOs should not invest in speculative investments or involving too much risk. Investing in derivatives, such as futures contracts, options, and swaps, is generally not recommended because of the complexity and risk associated with them. NPOs are also allowed invest in real estate, such as residential, commercial, and industrial properties. Properties should be chosen carefully, paying careful attention to market conditions and ensuring that the purchase is compliant with local, state, and federal regulations. It’s also important to consider whether the property can be easily sold if the nonprofit needs to liquidate its investments. Finally, NPOs can also invest in alternative investments, such as venture capital, private equity, and hedge funds. These are more speculative investments, so they should only be considered if the NPO has a high degree of financial knowledge and access to the necessary expertise to manage the investments.

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What types of investments can a nonprofit make?

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