Charity leaders understand better than anyone the financial pressures that come with running a nonprofit. Balancing mission-driven work with financial sustainability is incredibly tough—especially in uncertain economic times. Many organisations are feeling the impact of financial instability including inflation and funding volatility, making it more important than ever to build financial resilience. While these challenges are not new, taking a strategic approach to financial management and investments can help safeguard your organisation’s ability to effectively deliver your charitable mission both now and in the future.
Some of the steps you can take, include:
1. Strengthening Your Reserves Policy
Financial reserves are important to charities and are vital to maintaining services when funding is uncertain and volatile. A well-structured reserves policy provides stability and flexibility when it’s needed most. Key considerations include:
- Reserves Target Calculation – Aim for 3-6 months of operating expenses, adjusting for your organisation’s unique risk profile and funding patterns.
- Types of Reserves:
- Operating Reserves – Support day-to-day expenses and bridge short-term funding gaps.
- Strategic Reserves – Fund long-term initiatives, innovation, and growth.
- Emergency Reserves – Provide a safety net for unexpected challenges, such as economic downturns or sudden funding shortfalls
2. Aligning Investments with Your Mission
If your charity hasn’t already got one, develop a Statement of Investment Policy and Objectives (SIPO) which will help to ensure that financial decisions align with your values and long-term goals. This document should include:
- Investment Objectives – Clearly define financial targets and expectations.
- Risk Tolerance – Establish parameters to balance growth with security.
- Asset Allocation – Diversify investments to protect and grow your reserves over time.
More and more charities are also prioritising ethical and responsible investment, ensuring that their funds not only deliver financial returns but also contribute positively to society and the environment. Aligning investments with your mission might include:
- Socially Responsible Investing (SRI) – Avoiding industries that conflict with your values.
- Environmental, Social, and Governance (ESG) Criteria – Investing in companies that demonstrate strong ethical practices.
- Impact Investing – Proactively supporting businesses and initiatives that create measurable social or environmental benefits alongside financial returns.
By integrating these principles into your investment strategy, your organisation can ensure that financial growth supports both your mission and a better world.
Trust Management has a guide to ethical investment that can help you, click here. Another good resource is Mindful Money click here.
3. Strengthening Financial Oversight
To build financial resilience, consider these key actions:
- Regular Financial Assessments – Review historical data, assess risks, and adapt to evolving financial needs.
- Board Engagement – Ensure reserves and investment strategies are understood, approved, and regularly reviewed at the board level.
- Transparency with Stakeholders – Keep funders, donors, and beneficiaries informed about financial policies and long-term planning.
Helping You Stay Mission-Focused
Strong financial foundations enable charities to do what they do best—create lasting social impact. By taking proactive steps to manage reserves and investments, your organisation can navigate uncertainty with confidence.
About Trust Management
Trust Management provides specialist services in accounting, property strategy and management. We’re professionals with a purpose, directly linked to yours. We’re deeply motivated to help others protect and enhance people, land and culture, totally committed to delivering the best professional support, because we understand the ripple effect – when we help you, we help you to help others.
If you’d like to explore how we can help, we’d love to hear from you. Get in touch today. We’re here to help our clients be in the very best position.
About Rachael McDonald
Rachael McDonald is the CEO of Trust Management. She is committed to delivering exceptional client results while driving positive social impact.
With nearly 25 years of experience in law and financial services across New Zealand, the Caribbean, and England, Rachael has advised a range of international clients, including financial institutions, private equity firms, asset managers, multinational corporations, and family offices.
Before joining Trust Management, Rachael was a partner at Mourant Ozannes, where she co-founded its British Virgin Islands branch. As Managing Partner, she led a team focused on investment funds, corporate finance, regulatory compliance, private wealth management, and business transactions.
Her expertise in organisational leadership, corporate finance, regulatory law, and leadership in professional services supports Trust Management’s mission to deliver exceptional value to clients.
Links:
Trust Management Guide to Ethical Investing
Mindful Money – Responsible Investment
