As advisors, we are always trying to stay ahead of the curve when it comes to developing solutions for our clients’ current and potential needs. This thoughtful awareness is exactly how our FDIC Investment Placement Service was developed. While working with leaders of non-profit organizations, we recognized challenges surrounding the management of their cash liquidity. Our team combined my 25-year career in banking with feedback from nonprofit leaders to develop this unique service that helps non-profits maintain a financial growth strategy without the burden of constant research, figuring out reinvestment strategies, and filling out the paperwork to make it happen.
Two Financial Strategy Options
Bank CDs
Investing in a CD is a great financial strategy for non-profits because a CD allows for long-term savings with guaranteed growth that is protected from risk. It is not uncommon for a non-profit to have many CDs or even to build a CD ladder, which means you will have multiple CDs of varying durations, and as each matures, you can either cash them or roll them over into a potentially higher yielding CD. This allows savings to increase while also providing regular access to funds as needed. However, having multiple CDs requires you to track the maturity date for each one. And if you plan to re-invest the money as each CD matures, to get the best investment, you need to take the time to research best options at the date of maturation. After researching, you’ll need to work with a banker to complete paperwork for each new CD investment.
As you can see, though a CD financial strategy is beneficial, it can become complex to manage, which may lead to you reinvesting in a option that is less beneficial, just because it is easier.
Bank Money Market
If you need a place to keep your money for a short period of time or for your money to be more accessible/liquid than with a CD, a bank money market may be the best option for you. Bank money markets are FDIC insured and provide immediate availability without having to wait until a maturity date like with a CD. You have several ways to access these funds – by transfer, checks (you can write 6 per month) or bank withdrawal. Banks often offer promotions with fixed rates for a time period; however, for the most part rates on money market accounts are variable which means the bank can adjust them up or down at any time. Therefore, since the rates can fluctuate, it is important to look at your monthly statements to make sure they are competitive. If you see your rate decreasing or not keeping up with what other banks are offering – it may be time to seek other investment options.
Avizo's FDIC Investment Placement Service
Both Bank CDs and Money Markets are FDIC insured and the rule with FDIC coverage is you are insured up to $250,000 per depositor, per FDIC bank, per ownership category. This means that an organization not only needs to track maturations and shop rates, but they also need to be aware of the amount(s) they have in each bank.
If you’re the leader of a non-profit, tracking CD’s and Money Market rates is likely just one of MANY administrative/financial duties you’re responsible for. When working with us, you will only have two steps in the management of your organization’s liquidity: selection and signature. Here is how Avizo’s FDIC Investment Placement Service works.
Our team will maintain a list of your organization’s Certificates of Deposit (CDs). We monitor them and as they mature, we reach out to up to 10 different banks to collect current rates and other relevant data. We compile the information and present options for you. You will select the rate/term you prefer. Then, we go back to the banks to let them know your decision and work with the selected bank to get the appropriate paperwork ready. You will review and sign the paperwork. After that, the process continues with us monitoring until the next CD is maturing or you have additional liquid funds, at which point, we start the process again.
Take a look at our visual – the steps in green are the ones you’ll be responsible for while we take care of the rest.
Serving Non-Profits
Leaders of non-profits have so much to balance between serving their community, answering to their Board of Directors, managing their team and volunteers, and running the operations. Our FDIC Investment Placement Service is just one way to ensure your organization has a sound financial growth strategy without sacrificing the time it takes to maintain excellent cash management. Our team also specializes in non-profit assurance services, non-profit tax and bookkeeping , and non-profit organizational strategic planning. As leaders in non-profit accounting, we are passionate about helping service-based organizations reach their goals. Contact us if you’d like to set up a conversation to talk about what services can benefit your organization.
Disclaimer: Always check with your bank before opening any accounts to confirm the terms and conditions, as they can vary from bank to bank.
Diane Anderson
Diane is our Chief Operating Office and also directs Avizo’s business development efforts. Her background is in banking – after an extensive 25-year career that began while she was still in college and ended serving as Market President – Diane made the switch from banking to business consulting.
