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Template · Finance

Investment policy

A board-approved policy for investing reserves or endowment funds: goals, risk, allowed investments, who decides, outside managers, reporting and review.

Download for Word (.docx)Rich Text (.rtf)Plain text (.txt)

Three editable formats: Word (.docx), Rich Text (.rtf) and plain text (.txt). Reviewed October 21, 2026.

How to use this template

  1. Download it as a Word file (.docx), which opens in Microsoft Word, Google Docs, Pages and LibreOffice, or as Rich Text (.rtf) or plain text (.txt). All three are editable.
  2. Fill in every blank. Blanks are in square brackets, like [ORGANIZATION NAME], and are highlighted in the preview below. Delete any bracketed notes you don't need.
  3. Make it yours. Check it against your bylaws and your state's rules, and change anything that doesn't fit. Have your board approve it where it says so.
  4. Printing? Print this page: the printout leaves out the site's menus and shows the template with lines for the blanks.

An investment policy is the board's written rulebook for money the charity doesn't need to spend soon: an operating reserve, a board-designated fund or a donor's endowment gift. It says what the money is for, how much risk is acceptable, who makes decisions and how the board checks on them. It is not investment advice, and this template doesn't suggest any particular investments, mix or returns. Those are decisions for your board, with professional help if you need it.

Read our guide to investing reserves and endowments first. It explains the prudence rules behind this policy.

Why write one

State law sets the standard for how charities manage invested funds, and the rules vary by state. New York is one example. Its Attorney General's guide to the New York Prudent Management of Institutional Funds Act (NYPMIFA) says the Act "requires every institution to adopt a written investment policy setting forth guidelines on investments and delegation of management and investment functions" (N-PCL § 552(f)). The guide says there's no "one size fits all" policy and lists subjects one may cover:

  1. general investment objectives
  2. permitted and prohibited investments
  3. acceptable levels of risk
  4. asset allocation and diversification
  5. procedures for monitoring investment performance
  6. scope and terms of delegation of investment management functions
  7. the investment manager's accountability
  8. procedures for selecting and evaluating external agents
  9. processes for reviewing investment policies and strategies
  10. proxy voting

This template follows that list. Check what your own state's law requires.

How to adapt it

  • Write separate sections for separate pots. Money you may need within a year or two usually needs a different approach from a permanent endowment. Say which section applies to which fund.
  • Follow donors' terms first. A gift agreement's restrictions on investing or spending come before this policy. See restricted funds.
  • Leave numbers to the board. Fill in target ranges, limits and spending rates only after the board, with advice, has decided them.
  • Name roles, not people, so the policy survives turnover.
  • Get advice from an independent investment professional and, for endowments, a lawyer who knows your state's law.

Preview

Investment policy: [ORGANIZATION NAME]

Approved by the board on: [DATE]

Next review: [DATE, AT LEAST ONCE A YEAR]

1. Purpose and scope

This policy governs how [ORGANIZATION NAME] invests the following funds:

FundWhat it's forTime horizonDonor restrictions?
[FOR EXAMPLE: OPERATING RESERVE][PURPOSE][SHORT / MEDIUM / LONG][NONE / DESCRIBE]
[FOR EXAMPLE: ENDOWMENT FUND NAME][PURPOSE][SHORT / MEDIUM / LONG][NONE / DESCRIBE, WITH GIFT AGREEMENT DATE]

Where a gift agreement sets different terms, the gift agreement governs for that fund.

2. Objectives

For each fund, the board's objectives are:

  • [FUND]: [FOR EXAMPLE: KEEP THE MONEY AVAILABLE AND STABLE / PRESERVE PURCHASING POWER OVER TIME / PROVIDE A STEADY AMOUNT FOR SPENDING EACH YEAR]

3. Risk

The board accepts the following level of risk for each fund, having considered the factors required by [STATE] law:

  • [FUND]: [DESCRIPTION OF ACCEPTABLE RISK, AS DECIDED BY THE BOARD]

4. Permitted and prohibited investments

  • Permitted: [TYPES OF INVESTMENTS THE BOARD HAS APPROVED]
  • Prohibited: [TYPES THE BOARD HAS RULED OUT, INCLUDING ANY FOR MISSION OR VALUES REASONS]
  • Any investment not listed needs approval from [THE BOARD / THE FINANCE COMMITTEE].

5. Allocation and diversification

FundAsset typeTargetAllowed range
[FUND][ASSET TYPE][PERCENT][MINIMUM] to [MAXIMUM]

If a fund moves outside its range, [ROLE] will rebalance within [NUMBER] days or report to the board.

Any decision not to diversify a fund will be recorded with the reasons and reviewed at least once a year.

6. Spending from endowment funds

Appropriations for spending from endowment funds will be decided by [THE BOARD] each year, considering the factors required by [STATE] law and the terms of each gift. The decision and the reasons will be recorded in the minutes. [STATE ANY SPENDING RULE THE BOARD HAS ADOPTED, OR "NONE ADOPTED"]

7. Roles

WhoResponsibility
BoardApproves this policy, the objectives and any changes; receives reports; approves spending from endowment funds
[FINANCE OR INVESTMENT COMMITTEE]Oversees the investments within this policy; recommends changes; selects and reviews outside managers
[TREASURER]Reports to the board; keeps records; signs transfers within approved limits
Outside manager or adviser, if anyInvests within the written terms of the delegation; reports as agreed

8. Delegation to outside managers

If the board delegates management of any fund, it will:

  1. select the manager with care, including checking their independence and any conflicts of interest;
  2. set the scope and terms in writing, including fees, and keep them consistent with the fund's purposes; and
  3. monitor the manager's performance and compliance with those terms at least [FREQUENCY].

The manager is accountable to [COMMITTEE OR BOARD] and must report [WHAT AND HOW OFTEN].

Selection process: [HOW CANDIDATES ARE FOUND, COMPARED AND APPROVED]

9. Monitoring and reporting

  • [ROLE] will report to the board at least [QUARTERLY / TWICE A YEAR] on each fund's value, performance against its objectives, allocation against its ranges, fees paid, and any exceptions.
  • Costs will be reviewed to make sure they are reasonable for the services received.

10. Proxy voting

Votes on shares held in the funds will be [CAST BY THE MANAGER UNDER THESE GUIDELINES: (GUIDELINES) / DECIDED BY (COMMITTEE)].

11. Conflicts of interest

Anyone with a role under this policy follows the charity's conflict of interest policy and discloses any interest in a manager, adviser or investment.

12. Review

The board will review this policy at least once a year, and whenever the charity's finances or circumstances change significantly. Changes take effect when approved by the board and recorded in the minutes.

Date reviewedChangesApproved by
[DATE][CHANGES, OR "NONE"][NAME]

Template from Golden Hint: goldenhint.org/resources/templates/investment-policy. Reviewed October 21, 2026. General information, not legal or tax advice.

General information. Not legal, tax or financial advice. Rules change and every situation is different, so check the official sources and talk to a qualified professional before you act. More about this.

Keep going

Sources

Checked on October 21, 2026. Rules and fees change, so follow the links for the current version.

  1. New York Attorney General Charities Bureau: A Practical Guide to the New York Prudent Management of Institutional Funds Act (March 2011)

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