What type of investments are prohibited for nonprofits?

Nonprofit organizations in Washington are subject to certain restrictions on their investments. An organization must meet certain criteria to be granted a nonprofit status and can lose that status if it fails to comply with these regulations. Nonprofits are prohibited from investing in speculative or high-risk investments, such as currency trading, stock market speculation, and futures trading. Nonprofits are also prohibited from investing in life insurance products, private placements, derivatives, and other high-risk investments. In addition, nonprofits are not allowed to participate in any type of gambling activity, nor are they allowed to make any investments that would result in insider trading. Nonprofits must also comply with IRS requirements that investment activities be primarily related to their charitable purpose. Therefore, it’s important for nonprofits to consider the impact of any potential investment and ensure that it furthers their charitable goals. For example, a nonprofit that is dedicated to environmental protection could invest in renewable energy-related companies, but not in companies that are involved in oil and gas production. Finally, nonprofits in Washington are required to abide by the Uniform Prudent Management of Institutional Funds Act. Under this act, nonprofits must manage their investments in a responsible and prudent manner, with the expectation that any investments are managed consistently with the organization’s charitable purpose and with the goal of providing long-term growth, income, and stability for the organization.

What type of investments are prohibited for nonprofits?

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