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

Yes, there are restrictions on the types of investments a nonprofit corporation can make in Washington. The Washington Nonprofit Corporation Act generally prohibits non-profit corporations from engaging in activities that are “speculative, involve the receipt of unreasonable benefits, or involve more than an insubstantial element of personal gain.” Nonprofit corporations are also prohibited from investing in businesses that are unrelated to their mission. Washington law also requires nonprofit corporations to seek approval from the Washington Secretary of State prior to any investments that total more than 30% of the nonprofit’s total assets. Any investments that total more than 60% of the nonprofit’s assets must be approved by the board of directors at an open meeting of the board. In addition, any investments of more than five percent of the nonprofit’s total assets must be approved by a majority of the board of directors. The board of directors must also approve any purchases of stock in excess of five percent of the total value of a publicly traded company. Nonprofit corporations must also follow certain guidelines when making investments. For instance, they must invest in assets that are diversified and can be sold quickly if needed. They must also make investments that are prudent and do not pose a significant risk of loss to the nonprofit. These investments must also be consistent with the nonprofit’s mission and purpose.

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

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