Many charities and not-for-profits (NFPs) face a common challenge: how to make the most of their investment funds while staying true to their mission.
Whether you’re on a board, an investment committee, or simply managing a donation fund, ensuring your investments are working hard (and smart) can significantly improve the long-term impact of your organisation.
At Stockspot, we work with a wide range of charitable and NFP clients, and we often see the same investment mistakes. The good news? They’re fixable.
The most common mistakes
1. Over-reliance on cash or term deposits
It’s natural for charities to want to “play it safe,” but many end up being too conservative. Cash and term deposits might feel secure, but they often don’t even keep up with inflation. That means your funds are actually going backwards and losing value over time.
2. Paying too much in fees
Management fees, platform fees, fund fees, they add up quickly. And every dollar spent on fees is a dollar not going toward your cause. We regularly find clients unknowingly paying 1 – 2% more than they need to. That might not sound like much, but over years, it’s a huge opportunity cost.
3. Lack of diversification
Some investment strategies we see are heavily skewed towards Australian shares or a single asset class. That’s risky. A diversified mix, including global shares, bonds, and gold, smooths out returns and protects against market shocks and volatility.
What can you do instead?
1. Set a clear investment policy
It starts with a well-defined investment policy. This helps align your investment goals with your organisational values, time horizon, and risk tolerance. It also provides consistency, even when there’s turnover on the board or committee.
2. Use low-cost, diversified portfolios
ETFs (Exchange-Traded Funds) offer a great way to access diversified portfolios at a low cost. They also improve transparency, which is critical for governance and reporting. At Stockspot, our portfolios combine global shares, Australian shares, bonds, and gold, tailored to different risk levels.
3. Automate the right behaviours
Rebalancing, reinvesting dividends, and staying invested through market cycles, these are the strategies that drive strong long-term returns. But many charities struggle to do them consistently. An automated platform can help make sure they’re done properly, without emotion or bias.
Why this matters
Charities and NFPs have a responsibility not just to raise funds, but to steward them effectively. Every extra percent you earn on your investments means more funding for your NFP to make an impact.
For example, a $1 million portfolio earning 6% instead of 3% could deliver an extra $30,000 a year. That could fund a new service, expand your mission reach, or help even more people in need.
Investing doesn’t need to be complex or risky. In fact, some of the best strategies are also the simplest: stay diversified, keep fees low, and think long-term.
If you’re unsure whether your current investment approach is working hard enough, we’re happy to help and help you identify the red flags all charities and NFPs should be aware of. Our team has worked with a number of charities and not-for-profits, both large and small, across Australia and we’re passionate about helping you grow your impact, so you don’t end up paying too much for too little.
