Why Community Foundations and Charities with Foundations Need to think about their Investment Governance
The community foundation movement is relatively young in New Zealand, but is fast gathering steam. The purpose of this paper is to explain what investment governance is and to explain its importance and value in the context of community foundations and other charities with foundations.
This paper argues that community foundations have the potential to hold a special, privileged position by virtue of their structure and community role in defined geographic regions and that this privileged position heightens the level of fiduciary obligations they owe to their communities. It will also be argued that the scrutiny of their internal investment governance practices will only increase in the near future for several reasons. Together, these factors mean community foundations must act now to put in place strong, objective and standardised investment governance procedures and be able to outwardly demonstrate to those whose support they rely on to grow (their communities, donors, lawyers and other professionals) that they have done so.
Further, charities that have their own foundations must do the same in order to be able to compete for funds on the basis of investment governance capability and trustworthiness.
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