Why Charities need Investment Professionals

For far too long, charity organizations have been seen as outside the remit of professional business. The fact that the primary function is humane and generally related to the underprivileged, it has been accepted that charities and not-for-profit organizations need not concern themselves with the business of business. The misnomer here is that without cogent financial management and the investment of excess funding, the likelihood for repeat funding is slim to impossible.

There has thus been a marked increase in the number of business professionals moving into nonprofit positions and jobs. From project managers to professional fundraisers and financial managers, the charity sector is open for business. This skills shift has also started to change the way charity financial management is perceived and carried out in practice.

 

Charities, fundraising, and wealth management

The charity and fundraising sector have long been the analysis of sustainability experts who have questioned the rationale to give free money to rectify social ills in our society. This is arguably not sustainable. This is one of the main aspects of the sector that has come under heavy criticism, in that many charities and nonprofit organizations are not sustainable without this external funding. This is a dire mistake in modern judgment and charity management in the sense that any fluctuation in incoming funds will then have a drastic effect on the work done. Generally, for work that involves improving the livelihoods of the poorest in society and looking to provide safety nets for young and old alike, there must be a better way to ensure that the help is given to those in society who really need it. The goal is to become long-term and sustainable.

 

Social enterprise

The idea of social enterprise has come to the fore recently in that this model will provide a way to generate funds to support the core charity functions of the organization; it is not CSI, as the core function of the organization remains the charity initiative. Yet, there will be a business able to generate income as part of this.

 

Professional charity management

Charity management has become more focused on impact and a clear return on investment. Yes, it is important to save the world and those in it, but this should be accompanied by a noticeably clear balance sheet showing how funds are generated and used. There is the need to adjust the bottom line to include the people and profit, but it is clear that social and financial accounting and management have improved drastically in the charity sector.

 

Savings and investments

Based on the provisions made by both donors and national fundraising legislation, retaining excess donated or raised funds can oftentimes be disallowed. This must be negotiated, and any excess funds invested to increase the opportunity for returns.

Savings and investments can not be left to the directors or management. This is where a professional wealth management firm would be required to ensure that the good works of charities can be maintained and continued. It is the ultimate expression of capitalist development in that the capitalist system can be utilized to advance principles of socialist and human-centered development.

 

The Future for Charities

The need for a professional charity sector is being felt worldwide as the need for social assistance and aid intensifies in the current climate. The world is wealthier than it has ever been, and yet there is still large sectors in even the most advanced societies that struggle to survive. The efficient and effective use of donor funds and a clear analysis of all the options available to those who manage charity finances is a must, and investment will be one of these options for further investigation.

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