Are there any restrictions on the types of investments a nonprofit corporation can make?
Yes, there are restrictions on the types of investments that a nonprofit corporation can make in Florida. Generally, courts in Florida have ruled that a nonprofit corporation must invest funds as a “prudent investor” would, meaning that investments must be made that are within the legal limits of the Florida Not-for-Profit Corporations Act. The Act specifies that when making investments, nonprofit corporations must look carefully at the market and note the general economic and political trends before acting. The Act also stipulates that any investments must be made with the care, skill, and caution a prudent investor would employ. This includes diversifying investments across different types of assets and minimizing risk while still achieving the organization’s goals. The Act also outlines a number of prohibited investments for nonprofit corporations, such as speculative investments, investments with substantial risk, and investments with a high degree of uncertainty. Nonprofit corporations must also adhere to fiduciary responsibility when it comes to investing funds and must only make investments that the board of directors has approved.
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