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Introduction

Not-for-profit organisations and philanthropic foundations in Australia manage substantial pools of capital on behalf of communities, causes, and beneficiaries who depend on that capital being preserved and deployed responsibly. The board members and trustees responsible for this capital carry fiduciary duties that are defined in legislation, governed by regulators, and subject to increasing public scrutiny. Despite this, most NFP boards operate without a formal investment governance framework, without a documented cash management strategy, and without access to financial advice that is built specifically for the NFP operating environment.

Build MyWealth works with NFP boards and philanthropic foundations across Australia who have reached the point where the capital they manage demands professional financial strategy. We understand the difference between a community foundation distributing grants from an endowment, a health charity managing research funding reserves, and a religious organisation overseeing property and investment assets accumulated over decades. We build financial strategies around the specific governance structure, regulatory obligations, investment time horizon, and values alignment requirements of each organisation.

Who We Work With

Build MyWealth typically works with NFP boards and foundations managing reserves or endowments of $1 million or more, organisations ready to move beyond term deposits into a properly governed portfolio, foundations managing annual distribution obligations from an endowment, and boards that need a formal IPS, a reporting cycle, and independent investment oversight.

Investment Governance for NFP Boards

The single most important step any NFP board can take to improve its financial management is to establish a formal Investment Policy Statement. An IPS is not a legal requirement, but it is widely regarded as best practice for any entity managing significant pools of capital. For NFP organisations, an IPS provides the documented framework that connects the board’s fiduciary obligations to the day-to-day management of the organisation’s investments and cash reserves.

Without an IPS, investment decisions tend to be made by whichever board member has the strongest opinion at the time, or by defaulting to term deposits because they feel safe. Neither approach serves the organisation’s long-term interests. An IPS sets the investment objectives, defines the acceptable asset classes, establishes the risk parameters, specifies the rebalancing discipline, and creates a benchmark against which performance can be measured. It also provides the governance mechanism for the board to evaluate and, where necessary, replace investment managers.

Build MyWealth helps NFP boards draft and implement Investment Policy Statements that are appropriate to the organisation’s size, complexity, and objectives. We do not provide a template. We build a governance document that reflects the specific circumstances of the organisation and the regulatory environment it operates in.

Cash Reserve Management and Portfolio Transition

Many Australian NFP organisations hold the majority of their investable capital in term deposits, often because the board has never been presented with an alternative that it felt comfortable approving. While term deposits provide capital stability, they also expose the organisation to inflation erosion, concentration risk with a single banking institution, and the opportunity cost of holding assets in a low-yielding structure when the organisation’s time horizon may be measured in decades.

The transition from a term deposit portfolio to a diversified investment portfolio is a process that must be managed carefully, with full board visibility, documented decision-making, and a clear understanding of the risk and return trade-offs at each stage. Build MyWealth manages this transition in stages, beginning with the establishment of the IPS, followed by a phased deployment of capital into a diversified portfolio that matches the organisation’s stated objectives and risk tolerance.

Illustrative scenario (for educational purposes only; actual outcomes will vary):

A community foundation holding $4.5 million in term deposits across two banking institutions earns an average return that, after accounting for inflation, delivers minimal real growth to the corpus. If the foundation distributes 4% per year in grants, the real value of the endowment declines over time, reducing the foundation’s capacity to fulfil its charitable purpose. A staged transition to a diversified portfolio, governed by a formal IPS and aligned with the foundation’s values, can provide the potential for real capital preservation while maintaining appropriate liquidity for grant distributions, subject to market conditions and the specific portfolio construction.

ESG and Ethical Investment Alignment

For NFP organisations and philanthropic foundations, the alignment between investment strategy and organisational values is not optional. Stakeholders, donors, and the public increasingly expect that the capital held by a charitable organisation is invested in a manner consistent with the organisation’s stated mission. An environmental charity holding fossil fuel investments, or a health foundation holding tobacco stocks, creates a reputational and ethical risk that the board must manage.

Build MyWealth constructs ESG-aligned and ethically screened portfolios for NFP clients. This is not a marketing label. It is a documented, measurable component of the investment governance framework. We define the ethical screens in the IPS, implement them through the portfolio construction, and report against them at every board reporting cycle. The screens are specific to the organisation’s mission and values, not a generic ESG overlay applied without thought.

For organisations considering ESG integration for the first time, we provide a structured assessment that identifies the areas where the current portfolio may be misaligned with the organisation’s values, quantifies the potential impact of applying screens or tilts, and presents the board with a clear set of options and trade-offs.

Fiduciary Duty and Board Governance

Board members of Australian NFP organisations carry governance obligations set out in ACNC Governance Standard 5 and the Australian Charities and Not-for-profits Commission Act 2012. These obligations include duties of care, diligence, good faith, and proper purpose in the management of the organisation’s affairs, including its financial affairs. Board members with relevant professional expertise may be expected to bring that expertise to board decision-making.

In practice, these obligations mean that a board that fails to establish a formal investment governance framework, fails to review the organisation’s investment performance, or fails to manage conflicts of interest in investment decision-making is exposed to regulatory and legal risk. The risk is not theoretical. The ACNC has the power to investigate governance failures and, in serious cases, to take enforcement action.

Build MyWealth supports NFP boards by providing the independent financial advice, the governance documentation, and the ongoing reporting that enables the board to demonstrate it is meeting its fiduciary obligations. We attend board meetings when required, present investment performance reports against the benchmarks established in the IPS, and provide the board with the information it needs to make informed decisions. We are an independent adviser, not a product provider, which means our recommendations are not influenced by commissions, platform fees, or proprietary investment products.

For board members and foundation trustees who also hold significant personal superannuation balances, proposed legislative change adds a further layer of planning complexity. Division 296, now referred to as the Better Targeted Superannuation Concessions tax, is proposed to apply from 1 July 2026 subject to Royal Assent. The revised measure has not yet been enacted. If passed, it would apply an additional 15% tax on earnings from superannuation balances above $3 million, and an additional 10% on earnings above $10 million. Both thresholds will be indexed. All planning should be treated as provisional. Build MyWealth advises on provisional strategies now so clients are positioned to act the day the law is settled.

Philanthropic Foundation Strategy

Philanthropic foundations in Australia, whether structured as private ancillary funds, public ancillary funds, or charitable trusts, operate under specific regulatory frameworks that govern their minimum distribution rates, their investment powers, and their reporting obligations. The financial strategy for a foundation must account for the obligation to distribute a minimum percentage of the corpus each year while preserving the real value of the endowment over the long term.

This creates a specific investment challenge: the portfolio must generate sufficient income and growth to fund distributions, cover investment management costs, and keep pace with inflation, all while operating within the risk parameters appropriate to a charitable entity. A portfolio that is too conservative will see its real value erode over time. A portfolio that is too aggressive exposes the foundation to drawdowns that may force a reduction in grant-making.

Build MyWealth works with philanthropic foundations to build investment strategies that balance these competing demands. We model the interaction between distribution rates, investment returns, inflation, and time horizon to identify the portfolio construction that gives the foundation the highest probability of sustaining its grant-making capacity over 20, 30, or 50 years.

The Four-Pillar NFP Investment Governance Framework

Every NFP board and philanthropic foundation client of Build MyWealth is taken through our Four-Pillar NFP Investment Governance Framework before any recommendations are made. This proprietary diagnostic ensures that the organisation’s financial management is assessed against the standards expected of a fiduciary body managing capital on behalf of others.

Pillar 1: Governance documentation. Does the organisation have a current, board-approved Investment Policy Statement? Does the IPS define the investment objectives, acceptable asset classes, risk parameters, rebalancing discipline, and performance benchmarks? Is the IPS reviewed at least annually?

Pillar 2: Portfolio alignment. Is the current portfolio consistent with the IPS? Are the asset allocation, the underlying investments, and the liquidity profile appropriate for the organisation’s time horizon, distribution obligations, and cash flow needs? Is the organisation’s capital concentrated in term deposits or a single institution when a diversified approach may be more appropriate?

Pillar 3: Values alignment. Are the organisation’s investments consistent with its stated mission and values? Are ethical screens or ESG criteria documented in the IPS and implemented in the portfolio? Can the board demonstrate to stakeholders and donors that the capital is being invested responsibly?

Pillar 4: Reporting and accountability. Does the board receive regular, clear, and independent investment performance reporting? Are investment returns measured against the benchmarks in the IPS? Is the board equipped to evaluate and, where necessary, challenge or replace investment managers? Are conflicts of interest in investment decision-making identified and managed?

This framework is not a product pitch. It is the diagnostic process that ensures every recommendation we make is grounded in the governance standards expected of a fiduciary body, and that the board has the documentation and reporting it needs to fulfil its obligations.

Why NFP Boards Choose Build MyWealth

Sangram Rana is an IFA Excellence Awards finalist for Risk Adviser of the Year 2022, 2023, and 2025. SMSF Adviser of the Year 2022 and 2023. Client Outcome of the Year 2022. Published in Australian Financial Review, Money and Life, Professional Planner, Life Insurance Guide, CommBank Brighter Magazine, and Benefolk.

Build MyWealth has supported NFP boards with governance documentation, IPS development, and independent investment reporting cycles.

Build MyWealth is an independent financial adviser with no proprietary products, no platform commissions, and no conflicts of interest in the advice we provide to NFP boards. We provide independent advice designed to prioritise the organisation’s interests, with transparent fees and no product commissions. Any platform or implementation costs are disclosed and agreed upfront. That independence is the foundation of every engagement.

What Happens in the First 30 Days

Draft IPS outline prepared and presented to the board for review and approval.

Reserve segmentation completed across operating reserves, strategic reserves, and endowment capital.

Phased portfolio transition plan documented with clear milestones and board sign-off points.

Board reporting template established so investment performance is measured against documented benchmarks from day one.

Frequently Asked Questions

What financial issues do NFP boards most commonly overlook?

The most frequent gap is the absence of a formal Investment Policy Statement. Without an IPS, the board has no documented framework for making investment decisions, no benchmark for evaluating performance, and no governance mechanism for resolving disagreements about how the organisation’s capital should be managed. The second most common issue is over-concentration in term deposits. While term deposits feel safe, they expose the organisation to inflation erosion and, over a long time horizon, can materially reduce the real value of the capital the board is responsible for preserving. The third is the failure to align investments with the organisation’s stated values, which creates reputational risk that most boards do not recognise until it is raised publicly.

When does professional investment advice become necessary for an NFP organisation?

There is no single threshold, but as a general guide, once an organisation’s investable capital exceeds the level where the board can no longer manage it through term deposits alone without exposing the organisation to material inflation risk, professional advice becomes important. For organisations with a long time horizon, such as endowments and foundations expected to operate in perpetuity, the case for professional investment governance is strong regardless of the absolute dollar amount. The fiduciary duties of the board under ACNC Governance Standard 5 and the ACNC Act 2012 apply at every level of capital, and independent advice helps the board demonstrate it is meeting those obligations.

How does ESG screening work in practice for NFP portfolios?

ESG screening begins with defining the specific criteria that are relevant to the organisation’s mission and values. These criteria are documented in the Investment Policy Statement and implemented through the portfolio construction process. Screens can be negative (excluding specific sectors or companies) or positive (tilting toward companies or funds that meet specific environmental, social, or governance criteria). Build MyWealth reports against these screens at every board reporting cycle, so the board can verify that the portfolio remains aligned. The screens are specific to each organisation, not a generic overlay, and the board retains full control over what is included and excluded.

What happens when an NFP organisation has accumulated significant capital but has no investment governance framework?

This is one of the most common situations we encounter. An organisation may have accumulated several million dollars in cash reserves or term deposits over many years, but the board has never established a formal investment strategy because the capital grew gradually and no single decision point triggered a review. The risk is that the capital is being eroded by inflation, concentrated in a single banking institution, and managed without a documented rationale that the board could defend if challenged. Build MyWealth addresses this by taking the board through our Four-Pillar NFP Investment Governance Framework, establishing the IPS, and then managing a phased transition to a portfolio that is appropriate for the organisation’s objectives and time horizon.

How does Build MyWealth coordinate with an NFP organisation’s existing accountant and auditor?

We work directly with the organisation’s accountant and auditor as part of the advisory process. Investment governance, financial reporting, and audit requirements are interconnected, and building them in isolation creates gaps. In practice, this means we provide the accountant with the investment performance data and portfolio valuations needed for financial reporting, and we provide the auditor with the governance documentation, including the IPS and board minutes, that demonstrates the organisation’s compliance with its fiduciary obligations. We attend board meetings when required and present investment reports in a format that is accessible to board members who may not have a financial background.

Is Your Board Investment-Governance Ready?

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Build MyWealth is a trading name of Accounting Cloud Pty Ltd. Sangram Rana is a Corporate Authorised Representative (ASIC No. 1306106) of Lifespan Financial Planning Pty Ltd (AFSL 229892).

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