Can a non profit organization invest it's funds in a capital markets?

Asked over 3 years ago - Delaware

Can a non profit corporation purchase shares in for profit companies? Can a non profit organization invest it's funds in a capital market on a whole?

Attorney answers (2)

  1. Theodore B Godfrey

    Contributor Level 13

    1

    Lawyer agrees

    Answered . Non-profit organizations are allowed to have endowments and those endowments can invest in securities. The issue is - what is the ultimate purpose of the endowment? If it's clearly to aid the mission of the organization, it's theoretically possible but it should be clear that the purpose of the endowment is to support the mission of the organization.

    Your non-profit should have legal counsel if it is thinking about an endowment; if it cannot afford a lawyer, it cannot afford to dump non-profit money into the stock market. Good luck.

  2. Jonathan B. Lefkowitz

    Contributor Level 13

    1

    Lawyer agrees

    Answered . In general, the answer is yes. However, is the not-for-profit a public charity, a private foundation or some other type of entity? Is the for-profit a publicly traded company or a private company? Is the for-profit have any connections to members of the Board of the not-for-profit? There are potential conflict issues if there are connections between the for-profit and not-for-profit. Also, organizations should invest there funds wisely or, in other words, not make too many risky investments (if any).

Can't find what you're looking for? Ask a Lawyer

Get free answers from experienced attorneys.

 

Ask now

24,034 answers this week

2,755 attorneys answering

Ask a Lawyer

Get answers from top-rated lawyers.

  • It's FREE
  • It's easy
  • It's anonymous

24,034 answers this week

2,755 attorneys answering

Legal Dictionary

Don't speak legalese? We define thousands of terms in plain English.

Browse our legal dictionary