NYPMIFA, a New York State law impacting nonprofit investing and endowments, has been around since September 2010. Even so, almost 10 years later, many organizations are still not complying with its regulations. Some of the key factors organizations need to consider are:
- All financial resources (cash, CD’s, money markets, mutual funds, stocks, etc.) are considered investments, which subjects you to NYPMIFA
- NYPMIFA requires organizations to have an investment policy
- In deciding how to invest, the organization needs to consider 9 factors in making its determination. This analysis should be documented, and there should be an affirmative statement by the Board which confirms the organizational decision. Remember, decisions should be prudent, which means an investment strategy that is too aggressive or too conservative may not be deemed to be prudent.
- If an organization has endowments, the board needs to determine its spend down policy, which should be documented.
- Just because an organization has a spend down policy, doesn’t mean the Board has met its obligation in perpetuity. On an annual basis, the Board need to go through a contemporaneous 8-point review of its decision to either appropriate (release) or not appropriate funds. This review needs to happen for each endowment and needs to be documented
- The Board needs to appropriate the funds in order for them to be released. This involves an affirmative statement that should be documented in the Board minutes and should be based upon the formal assessment
We recently did a presentation on NYPMIFA and attached the slides from our PowerPoint here. If you have any questions, or would like us to review this with you or your board, please don’t hesitate to reach out to us.
Kenneth R. Cerini, CPA, CFP, FABFA
Ken is the Managing Partner of Cerini & Associates, LLP and is the executive responsible for the administration of our not-for-profit and educational provider practice groups. In addition to his extensive audit experience, Ken has been directly involved in providing consulting services for nonprofits and educational facilities of all sizes throughout New York State in such areas as cost reporting, financial analysis, Medicaid compliance, government audit representation, rate maximization, board training, budgeting and forecasting, and more.