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

Yes, there are certain restrictions on the types of investments that a nonprofit can make in South Dakota. These restrictions are outlined in the nonprofit organization’s governing documents, such as its charter, articles of incorporation, and bylaws. Generally, a nonprofit is prohibited from making investments with the expectation of personal gain or profit from a particular venture. Investments that nonprofit organizations can make in South Dakota include: investments in government-issued securities, such as bonds and notes; investments in stocks, mutual funds and other equity securities; deposits in FDIC-insured financial institutions; and investments in real estate, such as office or retail space. It is important to note that investments should be made with care, as South Dakota nonprofit organizations are held to a fiduciary standard of care. Nonprofit organizations must take action that is in the best interests of the organization, and must exercise the degree of diligence, care and skill that such fiduciaries would practice in the conduct of their own affairs. This means that any investment activity must be carefully monitored and managed in order to ensure that it is creating a return that is in line with the organization’s charitable mission. If a nonprofit organization fails to meet these obligations, it could become subject to legal action.

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