Date of Graduation

1995

Document Type

Thesis

Degree Name

Master of Nonprofit Administration (MNA)

Abstract

This research examines the investment policies and practices of California social service and advocacy organizations by investigating the level of complexity of their investment activities and whether the mission of their organization is taken under consideration, as a social investment screen, when making investment decisions.

The nonprofit sector is an essential and influential part of our society as well as our economy. The management of this sector's growing assets is of key importance to its long-term financial stability. With the growing popularity of social investment and the increasing diversity of social investment strategies, it is also a valuable time to examine whether the organization's own social purpose is being incorporated into its investment strategy.

The study concludes that among California advocacy and social service organizations, the majority are seeking a return on their investments and a large portion have fairly complex investment portfolios. The research also concludes that approximately half of California social service agencies and approximately 63 percent of advocacy organizations considered the organization's social mission when making investment decisions. However, the majority of these organizations were investing their funds in money market accounts, certificates of deposits and checking accounts. Only 28.5 percent of California social service agencies and only 40 percent of advocacy organizations which indicated that they considered the organization's social mission when making investment decisions were using more complex vehicles of investment, such as mutual funds, individual stocks or bonds.

The study also identified an area of deficiency in the financial management of investments for these organizations. Written investment policies were infrequent among advocacy organizations and social service organizations, even among those organizations which reported having very sophisticated investment strategies. An appendix to this study includes sample policies from several organizations which did have investment policies, and is offered here as a source of information and inspiration for financial managers.

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