Are there any restrictions on the types of investments a nonprofit can make?

Yes, there are restrictions on the types of investments a nonprofit organization can make in Vermont. According to the Vermont Nonprofit Corporations Law, the organization’s Board of Directors and officers are responsible for making decisions on investments. They must evaluate these investments and consider whether they are compatible with the nonprofit’s mission and objectives. The Board of Directors is also responsible for creating a written policy that outlines the specific restrictions on investments. Generally, these policies must limit investments to those that are consistent with the organization’s purpose and provide the most efficient and effective use of its resources. The civil and criminal law of Vermont also impose restrictions on investments for nonprofit organizations, including prohibiting investments in organizations that engage in fraudulent activity or violate their non-profit status. Additionally, state law prohibits investing in companies that are identified as “fraudulent,” which are defined as those engaging in “material and intentional misrepresentation, false statements, or other deceptive practices.” Lastly, the Trust and Financial Powers Act imposes limitations on investments, including prohibitions on investing in securities that are not registered with the Vermont Department of Financial Regulation, as well as investing in securities that exceed the organization’s net worth. These restrictions are in place to protect the interests and assets of the nonprofit organization and ultimately the public.

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