List of permitted cash assets that a 501(c)(3) nonprofit organization can have.
Certainly! Here’s an extensive list of permitted cash assets that a 501(c)(3) corporation for nonprofit can have, including trust funds:
- Cash in Bank Accounts: Including checking accounts, savings accounts, and money market accounts.
- Certificates of Deposit (CDs): Time deposits with fixed maturity dates and fixed interest rates.
- Treasury Securities: Such as Treasury bills, notes, and bonds issued by the U.S. Department of the Treasury.
- Municipal Bonds: Bonds issued by state or local governments to fund public projects.
- Corporate Bonds: Bonds issued by corporations to raise capital, including both investment-grade and high-yield bonds.
- Money Market Funds: Mutual funds that invest in short-term, low-risk securities like Treasury bills and commercial paper.
- Cash Equivalents: Short-term investments easily convertible to cash, such as commercial paper, banker’s acceptances, and short-term government securities.
- Trust Funds: Trust funds established by the nonprofit for specific purposes, managed according to fiduciary responsibilities, and invested prudently.
- Endowment Funds: Funds set aside for long-term investment, with the earnings used to support the nonprofit’s programs and activities.
- Operating Reserves: Cash reserves held to cover operating expenses or unforeseen emergencies.
- Donor-Advised Funds: Funds contributed by donors for specific charitable purposes, with the nonprofit having advisory privileges over their distribution.
- Restricted Funds: Funds designated by donors for specific purposes, such as scholarships or capital projects.
- Investment Funds: Pooled funds managed by professional investment managers, which the nonprofit invests in for potential growth and income.
- Charitable Gift Annuities: Arrangements where donors make irrevocable gifts to the nonprofit in exchange for fixed payments for life.
- Life Income Funds: Trusts that provide income to the nonprofit for a specified period, with the remaining assets passing to the nonprofit upon termination.
- Revocable and Irrevocable Trusts: Trusts established by donors, with the nonprofit named as beneficiary, either during the donor’s lifetime or through their estate.
- Unitrusts and Annuity Trusts: Trust arrangements where the nonprofit receives either a fixed payment (annuity trust) or a percentage of the trust’s assets (unitrust) annually.
- Charitable Remainder Trusts: Trusts that provide income to a designated beneficiary for a specified period, with the remaining assets passing to the nonprofit upon termination.
- Foundation Grants: Grants received from private foundations to support the nonprofit’s charitable activities.
- Program-Related Investments: Investments made by foundations in the form of loans, loan guarantees, or equity investments to support the nonprofit’s charitable programs.
- Real Estate Investment Trusts (REITs): REITs are companies that own, operate, or finance income-generating real estate across a range of property sectors. Nonprofits may invest in publicly traded REITs for potential income and diversification.
- Exchange-Traded Funds (ETFs): ETFs are investment funds traded on stock exchanges, holding assets such as stocks, commodities, or bonds. Nonprofits may invest in ETFs to achieve diversification and potentially higher returns.
- Mutual Funds: Mutual funds pool money from many investors to invest in a diversified portfolio of securities, such as stocks, bonds, or money market instruments. Nonprofits may invest in mutual funds to achieve diversification and professional management.
- Venture Capital Funds: Venture capital funds invest in early-stage or emerging companies with high growth potential. While riskier, nonprofits may invest in venture capital funds to support innovation and potentially earn higher returns.
- Private Equity Funds: Private equity funds invest in privately held companies, often with the goal of providing capital for expansion or restructuring. Nonprofits may invest in private equity funds to potentially earn higher returns over the long term.
- Commodities: Nonprofits may invest in commodities such as precious metals, agricultural products, or energy resources as part of a diversified investment strategy.
- Derivatives: Derivatives are financial instruments whose value is derived from an underlying asset or index. Nonprofits may use derivatives for hedging purposes or to gain exposure to specific market factors.
- Structured Products: Structured products are complex financial instruments created by combining traditional securities with derivatives. Nonprofits may use structured products for customized investment solutions or risk management.
- Cryptocurrencies: While relatively new and volatile, some nonprofits may consider investing in cryptocurrencies like Bitcoin or Ethereum as part of their investment portfolio.This is not a complete list..
It’s important for nonprofits to develop clear investment policies, seek professional financial advice, and ensure compliance with relevant laws and regulations when managing their cash assets and investments.
