How to find the best adviser for your not-for-profit

Guide

Working with a financial adviser can bring knowledge, expertise and digital solutions

In today’s volatile markets, effective investment management can prove challenging for even the most diligent and financially well-qualified not-for-profit (NFP) boards. Financial advisers can assist this process by bringing knowledge of financial markets and the investment landscape. Boards should make sure they ask some important questions of prospective financial advisers to understand their offering.

  1. How strong is your organisation?

    You want a financial adviser with sufficient scale and strength to weather the storms with you. Ask about their size and reach, the longevity of the business and their financial position. What’s their credit rating? Are they well-capitalised? Do they have a good track record of working with NFP organisations?

  2. What can we expect from your account management?

    Make sure they’re going to deliver the type of service you need. Find out what kind of hands-on service you can expect. How often will they meet with you in person – and who will be there? How frequently will they communicate with you outside of these meetings? Ask if they will tailor reports to meet your governance needs – and request samples.

  3. What experience do you have in the NFP sector?

    As a NFP, your organisation is very different from a for-profit business. You are more answerable to your stakeholders and communities, so accountability and transparency are essential. Also, from a financial perspective, this means that you may make different investment and financing decisions. As an investor, you need to demonstrate you’re maximising the value of the funds donated to your organisation – but you also need to show you’re not taking inappropriate investment risks. When it comes to finance, your tax-free status means you may want to move any depreciating capital equipment from your balance sheet.

    It’s really important your financial adviser understands all of these issues and has experience advising other NFPs. Ask who else they work with – and take up references.

  4. Do you have experience in social and ethical investing?

    You may wish to avoid investment in industries that you or your stakeholders consider have a negative impact on society and the environment. Or you may wish to specifically target investments that have a positive social impact. Either way, you need a financial adviser with experience in building a portfolio that takes into account all of these considerations.

  5. What are ALL of the fees involved in managing our portfolio?

    Financial advisers use different fee models, which sometimes makes them hard to compare. Some charge a flat fee for their services, which keeps things simple and transparent. Others charge based on funds under management – or add on performance fees. Some charge transaction-based fees.

    To make sure your NFP gets value for money out of the relationship, look for total transparency.  What will be the total cost to your organisation? What will this cover? What would their fees equate to on a particular portfolio? Ask about all types of fees: advisory, brokerage, performance, transactions.

  6. Can you offer us advice that is in our best interests?

    Some financial advisers still receive commissions or bonuses for recommending particular products. Others are only allowed to recommend solutions from their own company. Ask your adviser what payments they can receive for recommending particular products for you and if they’re allowed to recommend products from external providers.

  7. How else can you help us to achieve our goals?

    Often, a financial adviser will be able to support your organisation in other areas. They may be able to bring in streamlined banking solutions that can reduce the time and cost of administration, freeing funds to be put towards your mission. They may have specialist leasing finance that matches your tax-free status. If they work extensively in the sector, they may have experts who can support you with Board mentoring, staff education and general thought leadership.

Most NFPs are under-resourced because they push as much time and money as possible into the ‘front line’. A financial adviser can add much needed resources by bringing in important knowledge, expertise and digital skills and solutions. Don’t forget ask these questions before you engage an organisation.

We can help your organisation reach full potential and make a difference. Learn about our smart business solutions for not-for-profits, or reach out to a specialist today by contacting notforprofits@macquarie.com. All of our financial recommendations are tailored to your organisation’s specific needs and aspirations.


Unless stated otherwise, this information has been prepared by Macquarie Bank Limited ABN 46 008 583 542 AFSL & Australian Credit Licence 237502 and does not take into account your objectives, financial situation or needs. Before making any financial investment decision or a decision about whether to acquire a credit or lending product, a person should obtain and review the terms and conditions relating to that product and also seek independent financial, legal and taxation advice. All applications are subject to Macquarie’s standard credit approval criteria.