The CFA Institute has released guidance on the management of the financial resources of philanthropic organizations.  Specifically, the CFA Institute developed the Investment Management Code of Conduct for Endowments, Foundations, and Charitable Organizations to specifically address the management of what are typically longer-term or permanent financial assets of these organizations.  Board members and officers should be aware of the principles articulated in the Code of Conduct to successfully manage the investment of these types of assets and to ultimately protect the organization’s investments.

The CFA Institute intends for the Code of Conduct to be a "Best Practices" guide for those in the organization responsible for managing the organization’s financial assets.  The Code of Conduct also contains ethical principles, along with general policies and procedures related to the management of financial resources.

The Code of Conduct has five general principles:

  • Act with loyalty and proper purpose
  • Act with skill, competence, prudence, and reasonable care
  • Abide by all laws, rules, regulations, and founding documents
  • Show respect for all stakeholders (this includes the general public)
  • Review investment strategy and practices regularly

Organizations that would like to implement the principles from the Code of Conduct must adopt detailed policies and procedures that reflect and address the five general principles above.  The Code of Conduct contains illustrations and examples of some of these policies and procedures.  The illustrations and examples are not exhaustive, however, and the actual policies and procedures for each organization will depend on the particular circumstances, along with the regulatory and legal landscape, of each organization.

The Code of Conduct and a detailed description of the general principles stated above can be found here.

For more information and background about investment management rules affecting not-for-profit organizations in New York, please see our October 7, 2010 blog entry