August 5, 2021

Pro Tips for Nonprofits: Choosing the right financial adviser

[This article is part of a four-part series offering helpful advice for nonprofit leaders and organizations from the folks at Duncan Williams Asset Management.]

As a natural segue from our previous article on the importance of nonprofits seeking synergistic partnerships, this article explores the added value the right financial advisor can provide to a nonprofit organization.

Nonprofits are passionate about their missions, yet sometimes this passion can affect decision-making beyond the traditional scope of their work. Nonprofits work hard for donations, and deciding how to manage these donations in-house can surely add undue stress.
This is where a financial advisor comes in.

The relationship between a financial advisor and a nonprofit is a two-way street built upon an alignment of interests between the two organizations.

An excellent financial advisor works with several nonprofits and has a wealth of experience in the needs and common roadblocks these organizations face. Additionally, a financial advisor serves in a fiduciary capacity, meaning that the nonprofit’s interests come before the advisor’s own interests.

As a fiduciary, the advisor can help determine the appropriate amount of risk to take in the nonprofit’s portfolio, which grants the organization some level of financial independence as the donations within the portfolio grow. A competent advisor can alleviate stress on the nonprofit’s upper management and allow the organization to return its focus to the pursuit of its mission.

However, some further due diligence may be required when deciding on a financial advisor for your organization. For example, utilizing a fee-only advisor can remove any conflicts of interest that may arise with investment recommendations. Fee-only advisors cannot accept any commission from product sales; they only charge a fee that is calculated as a percentage of total dollar value of the account.

Moreover, researching the employees’ credentials at any given firm is also critical. Look to see if there are any CFA® charterholders or CFP®’s on staff, both of which are earned designations based on proficiency. CFA stands for Chartered Financial Analyst® while CFP stands for Certified Financial Planner™.

Using tools like brokercheck.org can help ensure that a capable advisor manages your donations.

When working with a competent, service-oriented advisor, the nonprofit has the ability to leverage the advisor firm’s resources, connections, and reputation.  A strong partnership can yield access to potential volunteers, financial support, access to a larger network, and even some joint-marketing opportunities.  In this way, the nonprofit organization can gain more than just good investment advice. Simultaneously, the financial advisory firm’s interests are very closely aligned with the nonprofit; because of the fee structure, the advisor benefits as the investment portfolio grows.

The Talent Retention Practices annual survey conducted by nonprofit HR, a leading human resources firm in the United States in the nonprofit sector, found nonprofits experience a total average turnover of 21.3%. In this high-turnover environment, having a financial advisor as a constant can add a sense of continuity to the organization.

Here are some additional benefits of partnering with a competent, engaged financial advisor:

  1. Financial planners can be valuable fundraising allies for nonprofits, and each organization can assist the other via their diverse networks.
  2. Often, a financial planner’s clients will need to make charitable gifts for nonprofit or faith-based organizations. Having a relationship with an advisor can be a valuable resource for donor referrals.
  3. Though a financial management firm is a for-profit organization, supporting the community is common between nonprofit and financial advising industries. And through a relationship with a service-minded advisor, nonprofits can also find an eager group of volunteers and supporters in the financial management firm.


Authored by Duncan Williams Asset Management



David Scully

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