Carnegie Investment Counsel Highlights the Importance of UPMIFA Compliance for Nonprofits

PEPPER PIKE, Ohio, April 25, 2024 /PRNewswire/ -- Carnegie Investment Counsel, a leader in investment management for nonprofits and individuals, understands the critical importance of compliance with the Uniform Prudent Management of Institutional Funds Act (UPMIFA) for nonprofit organizations. Ensuring adherence to this legislation safeguards the assets of charitable institutions and enhances financial accountability.

UPMIFA provides a statutory framework that governs the management of invested funds held by charitable institutions. It's designed to offer guidance on prudent investment and spending of funds. It outlines how boards of charitable organizations can manage their funds in the most effective manner possible, while still maintaining the principle of "prudent management."

Key Aspects of UPMIFA for Nonprofits:

Because UPMIFA is adopted individually by each state, the requirements varylaw. Generally, the over-arching components of UPMIFA include:

• Prudent Investment Practices: Funds must be invested prudently, taking into account economic conditions and the specific needs of the institution.
• Spending Policies: Adopt spending policies that consider both the preservation of fund principal and the immediate needs of the institution.
• Financial Reporting and Audits: Regular financial reporting and annual independent audits are mandated to promote transparency.

Discussions on prudent endowment management and generational equity underscore the need for nonprofits to adjust their policies. The goal is that future beneficiaries receive equivalent value, accounting for inflation and changes in economic conditions, without compromising the fund's longevity.

"Understanding and complying with UPMIFA is not just about legal adherence—it's about honoring donor intent and ensuring the sustainability of funds that support vital community services," advises Megan Lencoski, Nonprofit Development Specialist at Carnegie Investment Counsel. "Compliance ensures both legal adherence and strengthens trust with donors by demonstrating sound fiscal stewardship."

Nonprofit leaders must be aware of their state's specific UPMIFA regulations and how they pertain to their organization. Nonprofits should consult with legal and financial experts to ensure their investment practices align with UPMIFA requirements. For an in-depth look at UPMIFA, read our blog post. 

About Carnegie Investment Counsel: Carnegie Investment Counsel is a Registered Investment Advisor that partners with your nonprofit to provide on your side, transparent investment management services. By aligning investment strategies with the unique goals and values of each organization, Carnegie helps nonprofits thrive and grow their impact for generations to come.

This commentary is for informational and educational purposes only. The information has been obtained from sources we believe to be reliable, but Carnegie has not independently verified the accuracy or authenticity of the information. Please consult legal advice as laws and interpretations are subject to change.

Carnegie Investment Counsel ("Carnegie") is a registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. For a more detailed discussion about Carnegie's investment advisory services and fees, please view our Form ADV and Form CRS by visiting: https://adviserinfo.sec.gov/firm/summary/150488

Contact: Mindy Mackey at [email protected] or 216.367.4114 or visit https://www.carnegieinvest.com/foundations-and-non-profits.html.

SOURCE Carnegie Investment Counsel