How do I invest $40,000 for one year for a non-profit corporation?

November 29, 2006 7:29 PM

How do I invest $40,000 for one year for a non-profit corporation? The non-profit art space that I started recently recieved a couple grants amounting to about $40,000. Yay! We will spend all the money gradually over the course of this year. Initially I thought I could open an account with ING Direct or Emigrant Direct, but they do not offer accounts to corporations, only personal accounts. Our bank's interest rate is terrible and I'm sure we can do better. Does anyone have any advice for short term, near zero risk investing?
posted by puppy kuddles to work & money (13 comments total)

Look into CDs. I've seen them at credit unions as high as 5.5%. They can definetly be purchased in the amounts you are looking at and from any reputable institution will be insured (eg: zero risk).
posted by Riemann at 7:33 PM on November 29, 2006

Find a local bank (I mean a LOCAL bank, not a national chain with a local office) that is involved in supporting non-profits. Ask them to advise you. Even if you don't get the best rate, you'll begin to develop a relationship with a local business that can provide other types of support and advice. And, the interest amount now will be small anyway, don't sweat the money, go for the relationship!

I have recruited the VP of a local bank for the Board of my non-profit, he's been a huge help in a number of ways.
posted by HuronBob at 8:03 PM on November 29, 2006 [1 favorite]

You can open a money market mutual fund account at Vanguard, and will have the ability to write checks of at least $250. This doesn't lock up your money, and current rates are about 4.65%.
posted by lsemel at 8:49 PM on November 29, 2006

Some banks offer 6-month CDs at reasonable rates.
posted by chrisamiller at 8:53 PM on November 29, 2006

"...short term, near zero risk investing" will be low yield. It's pretty much a foregone conclusion. Higher yields are offered to compensate for long term commitment and/or willingness to accept greater risk.
posted by Steven C. Den Beste at 10:08 PM on November 29, 2006

Since it's a non-pro you'll probably want to play it excruciatingly safe. As many have already said, CDs might be your best bet. E-Trade is offering 5.05% on a their plain old savings accounts--top that brick and mortar bank, and 5.3% on their 6 month CDs. The partner and I have been using their services for nearly all of our banking needs for nigh on a year and a half, and they sure beat the hell out of Wells Fargo or Washington Mutual(in my fairly biased opinion) when it comes to customer service and ease of use.

Laddered 6-month CDs staggered a month apart can give you a respectable return while giving you optional access to your funds on a regular basis.
posted by nenequesadilla at 10:09 PM on November 29, 2006

Ditto what others have said. At the end of the day, you can only expect to earn about (inflation + 1%). Better than nothing.
posted by randomstriker at 11:39 PM on November 29, 2006

NetBank offers business accounts to small businesses, including non-profits. Their CD rates aren't bad. Looks like E-Trade has thier 6-month rate beaten by .10, so it's pretty much six of one, half a dozen of the other.

(If you want to know more about NetBank, just email me. I, uh. . . . know about it.)
posted by Medieval Maven at 4:02 AM on November 30, 2006

If you want a market-level risk with higher than CD/Interest reward, you could put your money into any S&P500 index mutual fund.
posted by torpark at 6:16 AM on November 30, 2006

Get your non-profit a board member from the financial industry. Have them advise accordingly.
posted by mrbugsentry at 7:32 AM on November 30, 2006

HuronBob's suggestion is VERY good. I always suggest that every nonprofit board have a banker, a lawyer, a legislator, and a communicator (marketer, broadcaster, etc) on them. For now, just start to build a relationship with a local bank manager/official.
posted by Rock Steady at 7:45 AM on November 30, 2006

I also think HuronBob's idea is good. Assuming you spend this money evenly through the year, your average balance will be about $20,000. There's little point in breaking your back trying to find a place with an extra 1% interest rate. That amounts to only $200 a year. Service and convenience might be worth more than that.
posted by JackFlash at 8:37 AM on November 30, 2006

Energy trusts might be worth a look. I don't see much risk in them and they are turning about 15% per year right now. As a disclaimer, I currently own less than 20 shares of PGH.
posted by kc0dxh at 9:30 AM on November 30, 2006