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 South Dakota. The South Dakota Nonprofit Corporation Act outlines the types of investments that a nonprofit in South Dakota can legally make. For example, a nonprofit cannot invest in a for-profit business, but it can invest in technologies that will help to further the organization’s mission or in real estate that is directly related to its activities. Additionally, the South Dakota Nonprofit Corporation Act also includes a requirement that nonprofits must include a statement in their Articles of Incorporation which provides that the organization will not directly or indirectly participate in any “speculative, hazardous, or risky venture” that may put the organization’s assets at risk. This includes investments in stocks, bonds, or other securities that are not appropriate for a nonprofit’s mission or its financial resources. Furthermore, a nonprofit’s board of directors must approve of any investment before the organization can make it. Directors have a fiduciary duty to act in the best interest of the organization and must make sure that all investments are prudent and do not put the assets of the organization at risk. If the board of directors is ever in doubt about a potential investment, they should seek qualified legal advice before making the investment. In conclusion, investments by nonprofit organizations are subject to restrictions in South Dakota, and the board of directors has a responsibility to ensure that all investments are prudent and in line with the organization’s mission.

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

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