Are there any restrictions on the types of investments a nonprofit can make?
Yes, there are restrictions on the types of investments a nonprofit can make in North Carolina. According to the North Carolina Nonprofit Corporation Act, nonprofit organizations are restricted in their investments to those that are deemed suitable. This means that the investments must be reasonable and prudent. Furthermore, the nonprofit cannot invest more than 20% of its assets in a single company or organization. An organization also cannot invest in securities that are listed on the stock exchange, unless the board of directors determines that such an investment is appropriate and safe. Nonprofits are encouraged to look into investments of a lower risk, such as US Treasury securities, mutual funds, and other types of investments that have been determined to be low risk. Nonprofits must also consider their investing policies, which should be detailed in their bylaws or other organization policies. These policies should include criteria that the board of directors must use when determining the types of investments that the organization can make. Finally, nonprofits must be aware of any restrictions imposed by state or federal law relating to investments. In North Carolina, nonprofits are given some flexibility with their investments, however, they must still adhere to the state laws and regulations when making decisions regarding their investments.
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